FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
Commission file number 000-23447
MIDWAY AIRLINES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-3915637
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 WEST MORGAN STREET, SUITE 1200
DURHAM, NORTH CAROLINA 27701
(Address of principal executive offices)
(Zip Code)
919-956-4800
(Registrant's telephone number, including area code)
Indicate by checkmark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X| No |_|
As of November 12, 1998 there were 8,602,395 shares of Common Stock, $.01 par
value, of the registrant outstanding.
<PAGE>
PART I. Financial Information
Item 1. Financial Statements
<PAGE>
Midway Airlines Corporation
BALANCE SHEETS
(Dollars in Thousands)
September 30 December 31
1998 1997
(unaudited)
----------- ----------
Assets
Current assets:
Cash and cash equivalents $ 28,381 $ 54,509
Restricted cash 10,770 2,811
Short-term investments 8,250 751
Accounts receivable:
Credit cards 6,392 1,937
Travel agencies 7,502 5,443
Other 2,208 674
Inventories 3,078 2,109
Prepaids and other 9,131 6,723
--------- ---------
Total current assets 75,712 74,957
Equipment and property
Flight 105,671 45,214
Other 6,523 5,968
Less accumulated depreciation and
amortization (9,025) (4,608)
--------- ---------
Total equipment and property, net 103,169 46,574
Other noncurrent assets:
Equipment and aircraft purchase deposits 16,786 17,133
Aircraft lease deposits and other 5,038 3,448
--------- ---------
Total other noncurrent assets 21,824 20,581
Total assets $ 200,705 $ 142,112
========= =========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 7,503 $ 6,777
Accrued expenses 5,543 4,324
Accrued excise taxes 3,699 1,421
Accrued income taxes 1,212 3,698
Advance ticket sales 28,461 21,859
Other current liabilities 4,216 5,709
Current maturities of long-term debt and
capital leases obligations 5,283 9,016
--------- ---------
Total current liabilities 55,917 52,804
Noncurrent liabilities:
Long-term debt & capital lease obligations 79,766 39,187
Other 180 308
--------- ---------
Total noncurrent liabilities 79,946 39,495
--------- ---------
Total liabilities 135,863 92,299
Stockholders' equity:
Preferred Stock -- --
Common Stock 86 85
Additional paid-in-capital 45,520 45,364
Retained earnings ($49.8 million of
accumulated deficit eliminated in the
quasi-reorganization as of June 30, 1997) 19,236 4,364
--------- ---------
Total stockholders' equity 64,842 49,813
Total liabilities and stockholders' equity $ 200,705 $ 142,112
========= =========
See accompanying notes.
<PAGE>
Midway Airlines Corporation
Statements of Operations
(Dollars in Thousands)
For the Three Months Ended
September 30,
1998 1997 (1)
----------- -----------
(Unaudited)
Operating revenues:
Passenger $ 48,151 $ 41,211
Cargo 627 493
Contract and Other 693 1,418
----------- -----------
Total revenues 49,471 43,122
Operating expenses:
Wages, salaries and related costs 7,969 6,208
Aircraft fuel 4,734 4,907
Aircraft and engine rentals 7,355 7,335
Commissions 3,205 3,200
Maintenance, materials and repairs 3,875 3,832
Other rentals and landing fees 2,420 2,393
Depreciation and amortization 1,759 612
Other 14,192 11,828
Special recapitalization charges -- --
----------- -----------
Total operating expenses 45,509 40,315
----------- -----------
Operating income 3,962 2,807
Other income (expense)
Interest income 1,100 512
Interest expense (1,727) (448)
----------- -----------
Total other income (expense) (627) 64
----------- -----------
Income before income taxes and
extraordinary gain 3,335 2,871
Income tax benefit (expense) 2,384 (1,149)
----------- -----------
Income before extraordinary gain 5,719 1,722
Extraordinary gain -- --
----------- -----------
Net income $ 5,719 $ 1,722
=========== ===========
Earnings per share ($)
Basic earnings per share:
Income before extraordinary gain $ 0.67 $ 0.29
Extraordinary gain -- --
----------- -----------
Net income $ 0.67 $ 0.29
Diluted earnings per share:
Income before extraordinary gain $ 0.59 $ 0.28
Extraordinary gain -- --
----------- -----------
Net income $ 0.59 $ 0.28
Weighted average shares used in
computing earnings per share
Basic 8,577,747 5,859,375
Diluted 9,727,215 6,249,858
(1) Certain September 30, 1997 amounts were reclassified to reflect
classifications in the December 31, 1997 audited financial statements and
September 30, 1998 unaudited interim financial statements.
See accompanying notes.
<PAGE>
Midway Airlines Corporation
Statements of Operations
(Dollars in Thousands)
For the Nine Months Ended
September 30,
1998 1997 (1)
----------- -----------
(Unaudited)
Operating revenues:
Passenger $ 151,429 $ 132,900
Cargo 1,592 1,493
Contract and Other 2,679 3,820
----------- -----------
Total revenues 155,700 138,213
Operating expenses:
Wages, salaries and related costs 23,600 18,597
Aircraft fuel 14,745 16,145
Aircraft and engine rentals 22,088 22,850
Commissions 11,368 10,321
Maintenance, materials and repairs 12,003 12,401
Other rentals and landing fees 7,200 7,406
Depreciation and amortization 4,293 1,379
Other 40,435 35,983
Special recapitalization charges -- 1,225
----------- -----------
Total operating expenses 135,732 126,307
----------- -----------
Operating income 19,968 11,906
Other income (expense)
Interest income 3,022 1,314
Interest expense (4,400) (1,225)
----------- -----------
Total other income (expense) (1,378) 89
----------- -----------
Income before income taxes
and extraordinary gain 18,590 11,995
Income tax benefit (expense) (3,718) (5,015)
----------- -----------
Income before extraordinary gain 14,872 6,980
Extraordinary gain -- 15,272
----------- -----------
Net income $ 14,872 $ 22,252
=========== ===========
Earnings per share ($)
Basic earnings per share :
Income before extraordinary gain $ 1.74 $ 1.19
Extraordinary gain -- 2.61
----------- -----------
Net income $ 1.74 $ 3.80
Diluted earnings per share:
Income before extraordinary gain $ 1.52 $ 1.12
Extraordinary gain -- 2.44
----------- -----------
Net income $ 1.52 $ 3.56
Weighted average shares used in
computing earnings per share
Basic 8,566,408 5,859,375
Diluted 9,765,177 6,249,858
(1) Certain September 30, 1997 amounts were reclassified to reflect
classifications in the December 31, 1997 audited financial statements and
September 30, 1998 unaudited interim financial statements.
See accompanying notes.
<PAGE>
Midway Airlines Corporation
Statements of Cash Flows
(Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, December 31
1998 1997 1997
----------------------- --------
(Unaudited)
<S> <C> <C> <C>
Operating Activities
Net income $ 14,872 $ 22,252 $ 24,894
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization 4,293 1,379 1,999
Capitalized interest on purchase deposits (597) -- --
Special recapitalization charge -- 1,225 750
Extraordinary gain -- (15,272) (15,969)
Loss on disposition of assets 60 -- --
Changes in operating assets and liabilities
Restricted cash (7,959) (1,037) (811)
Accounts receivable (8,054) (9,380) (1,760)
Inventories (968) (337) (1,714)
Prepaid and other (2,461) (2,137) (226)
Aircraft lease deposits and other (660) (294) (462)
Accounts payable and accrued expenses 1,947 3,586 897
Accrued excise taxes and income taxes (206) 120 (1,505)
Advance ticket sales 6,603 7,464 2,708
Other current liabilities (1,486) (2,514) 243
Other noncurrent liabilities (131) (94) (279)
-------- -------- --------
Net cash provided by operating activities 5,253 4,961 8,765
======== ======== ========
Investing activities
Purchase of short-term investments (8,250) (73,758) (78,278)
Sale of short-term investments 751 60,826 77,527
Purchase of equipment and property (6,027) (7,096) (7,335)
Aircraft and equipment purchase deposits (975) (1,350) (17,133)
-------- -------- --------
Net (cash used) in investing activities (14,501) (21,378) (25,219)
======== ======== ========
Financing activities
Issuance of common and preferred stock 156 22,000 60,257
Proceeds from issuance of long-term debt 1,800 -- --
Repayment of long-term debt (19,025) (1,570) (1,481)
Accreted interest on long-term debt 441 1,114 1,518
Principal payments on capital lease obligations (252) (109) (136)
-------- -------- --------
Net cash (used in) provided by financing
activities (16,880) 21,435 60,158
======== ======== ========
Increase (decrease) in cash and cash equivalents (26,128) 5,018 43,704
-------- -------- --------
Cash and cash equivalents, beginning of period 54,509 10,805 10,805
Cash and cash equivalents, end of period $ 28,381 $ 15,823 $ 54,509
======== ======== ========
Supplemental cash flow information
Interest paid $ 2,447 $ 117 $ 125
======== ======== ========
Income taxes paid $ 6,204 $ 1,500 $ 2,600
======== ======== ========
Schedule of non-cash activities
Issuance of long-term debt for assets $ 51,425 $ 300 $ 34,531
Receivable offset against related
liabilities $ -- $ (59) $ (59)
</TABLE>
See accompanying notes.
<PAGE>
Midway Airlines Corporation
Notes to Financial Statements
(Information as of September 30, 1998 and for the nine months
ended September 30, 1998 is unaudited.)
1. Basis of Presentation
The interim financial statements of Midway Airlines Corporation (the "Company")
included herein are unaudited and have been prepared in accordance with
generally accepted accounting principles ("GAAP") for interim financial
reporting and, pursuant to the rules and regulations of the Securities and
Exchange Commission. The information furnished in the interim financial
statements includes normal recurring adjustments and reflects all adjustments
which, in the opinion of management, are necessary for a fair presentation of
such financial statements. The results of operations for any interim period
presented are not necessarily indicative of the results to be expected for any
other period. Certain information and footnote disclosures normally included in
the financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to the rules
and regulations of the Securities and Exchange Commission, although the Company
believes that the disclosures are adequate to make the information presented not
misleading. These condensed financial statements should be read in conjunction
with the financial statements, and the notes thereto, included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1997.
2. Significant Accounting Policies and Other Matters
Use of Estimates and Assumptions
Preparation of financial statements in conformity with GAAP requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during that reporting period. Actual results could differ from those estimates.
Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents include investments with an original maturity of three
months or less or which may be redeemed without penalty at any time. These
investments are stated at cost, which approximates market value. As of September
30, 1998 and December 31, 1997, approximately $10.8 million and $2.8 million,
respectively, of cash and cash equivalents were restricted as to withdrawal;
these funds serve as collateral to support letters of credit and a credit card
holdback, and are classified as restricted cash in the balance sheets.
Short-term Investments
Short-term investments consist of government securities and corporate bonds
which mature between three months and one year of the original investment date.
These investments are carried at cost, which approximates market value.
Hedged Loan Obligations
During December 1997, the Company entered into four Treasury Lock transactions
with Bombardier, Inc. The amount paid totaled $1.2 million which is recorded as
a long-term debt cost and will be amortized over the life of the related loans.
Income Taxes
<PAGE>
A change in estimate regarding the realization of deferred tax assets was made
during the quarter ending September 30, 1998. The deferred tax asset valuation
allowance has been reduced to reflect the benefit realized from the utilization
of net operating loss carry forwards. The benefit recognized during the nine
month period is $3.7 million, reducing the Company's effective tax rate to 20%.
Earnings per Share
At the time of the Company's initial public offering, a stock split of
682.9108392 for one was adopted and the holders of the Company's outstanding
preferred stock converted those shares into an equivalent number of common
shares. The per share amounts for the nine months ended September 30, 1997 have
been restated to reflect the stock split and the conversion of the Company's
preferred stock. The per share amounts for the three months ended September 30,
1997 have been restated showing the effect of the stock split and conversion
of the preferred stock.
Impact of Recently Issued Accounting Standards
In February 1998, the staff of the Securities and Exchange Commission issued
Staff Accounting Bulletin 98 ("SAB 98"), which revised the guidance for certain
earnings per share calculations related to an initial public offering. As a
result of SAB 98, the Company restated its September 30, 1997 net income per
share of $3.19 as presented in its Form S-1 registration statement, by excluding
the effect of cheap stock and recalculating the potentially dilutive effect of
securities under the provisions of SAB 98.
3. Prepaids and Other
Prepaids and Other consist of the following (in thousands):
September 30 December 31
1998 1997
--------------------------
Prepaid EETC costs $2,639 $ 0
Prepaid commissions 1,667 1,597
Prepaid passenger booking costs 1,991 1,392
Other 2,834 3,734
--------------------------
$9,131 $6,723
==========================
4. Other Current Liabilities
Other current liabilities consist of the following (in thousands):
September 30 December 31
1998 1997
--------------------------
Maintenance $ 554 $1,992
Landing fees 370 561
Other 3,292 3,156
--------------------------
$4,216 $5,709
==========================
5. Long-Term Debt
In February 1998, the interim loans which financed the purchase of the first two
CRJ aircraft in December 1997 were refinanced. The third, fourth, and fifth
aircraft were received in March, April, and June 1998, respectively, with
permanent financing completed in March, April, and July 1998, respectively. All
five aircraft bear an effective interest rate of 7.2% for 16.5 years. The
Company's first five CRJ aircraft serve as collateral for its obligations under
the terms of each of these notes used to purchase the aircraft as well as the
other loans provided by the lender.
<PAGE>
In August 1998, the Company acquired a spare engine for the F-100 fleet. The
engine was financed over three years at 8.39%.
The aggregate principal maturities at September 30, 1998 are as follows (in
thousands):
Year Ended September 30,
- - ------------------------
1999 $ 5,139
2000 5,519
2001 5,947
2002 5,790
2003 6,287
Thereafter 56,084
-------
Principal Balance at September 30, 1998 $84,766
6. Capital and Operating Leases
In August 1998, the Company completed an offering of $109,722,000 of Pass
Through Certificates, also known as enhanced equipment trust certificates (the
"EETCs"). The EETCs are not direct obligations of, or guaranteed by, the Company
and therefore are not included in the Company's financial statements. The cash
proceeds from the EETCs are deposited with an escrow agent and enable the
Company to finance (through either leveraged leases or secured debt financings)
the debt portion of eight CRJ aircraft, the last of which is scheduled to be
delivered in June 1999. In connection with the EETCs, the Company intends to
seek certain owner participants which will commit lease equity financing to be
used in leveraged leases of such aircraft. The Company has arranged for equity
participation for the first three CRJ aircraft, two of which were delivered in
September 1998 and one in October 1998.
At September 30, 1998, the future minimum lease payments required under the
operating leases entered into since December 31, 1997, that have initial or
remaining noncancelable lease terms in excess of one year are as follows (in
thousands):
Operating
---------
Year ended September 30,:
1999 $ 3,844
2000 3,064
2001 3,064
2002 3,064
2003 3,064
Thereafter 29,856
-------
Total minimum lease payments $45,956
=======
7. Earnings per Share of Common Stock
The following table sets forth the computation of basic and diluted earnings per
share:
<PAGE>
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
------------------------- -------------------------
1998 1997(1) 1998 1997(1)
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Numerator:
Net income $ 5,719,000 $ 1,722,000 $14,872,000 $22,252,000
Numerator for basic and diluted earnings per share 5,719,000 1,722,000 14,872,000 22,252,000
Denominator:
Denominator for basic earnings per share--
weighted average shares 8,577,747 5,859,375 8,566,408 5,859,375
Effect of dilutive securities:
Employee stock options 758,878 0 808,176 0
Warrants 390,590 390,483 390,593 390,483
Dilutive potential common shares 1,149,468 390,483 1,198,769 390,483
-----------------------------------------------------
Denominator for diluted earnings per share--
adjusted weighted average shares 9,727,215 6,249,858 9,765,177 6,249,858
=====================================================
Basic earnings per share $ 0.67 $ 0.29 $ 1.74 $ 3.80
Diluted earnings per share 0.59 0.28 1.52 3.56
</TABLE>
(1) Options to purchase 1,005,245 shares of common stock at $4.02 per share
were outstanding during 1997 but were not included in the computation of
diluted earnings per share for the three and nine months ended September
30, 1997 because the exercise price of the options was equal to the
average market price of the common shares and, therefore, the effect would
be nondilutive.
8. Commitments and Contingencies
The Company has executed an aircraft purchase agreement with Bombardier, Inc.
for the acquisition of up to 30 newly manufactured CRJ-200ER Canadair Regional
Jet ("CRJs") aircraft. As of September 30, 1998, the Company has taken delivery
of seven CRJ aircraft, with an additional thirteen aircraft scheduled to be
delivered through December 1999. The Company has options to acquire up to 10
additional CRJ aircraft over a two year period with delivery dates beginning in
the fourth quarter of 1999. In September 1998 the Company affirmed its decision
to return four Fokker F100s and its one Airbus to their lessors when the leases
were scheduled to expire between October 1998 and June 1999.
The Company expects to arrange a combination of third party debt and leveraged
lease financing for the additional CRJs now on order. In August 1998, the
Company completed an offering of $109,722,000 of EETCS financing a portion of
the purchase price of eight CRJ aircraft to be owned or leased by the Company.
In September 1998, leveraged lease transactions were closed for two of these
eight aircraft, and in November 1998 another leveraged lease transaction was
colded for the third of the eight aircraft. Lease payments are due semi-annually
in January and July.
For each aircraft that is purchased (as opposed to leased), the Company
anticipates an initial cash outlay of approximately $4 million. Standby lease
financing, on terms reasonably acceptable to management, has been arranged for
the CRJs to be delivered in 1999 and, if the options are exercised, to be
delivered in 2000.
Pursuant to an agreement with GE Aircraft Engines, a division of General
Electric International, Inc., the Company has agreed to purchase two CF34-3B1
spare engines to support the operation of the first ten CRJ aircraft. This
agreement also provides for the purchase of an additional spare engine for each
five CRJ aircraft Midway acquires. The Company expects to arrange financing for
the two spare CRJ engines the Company has agreed to acquire to date.
In September 1997, the Civil Aviation Security Division of the Federal Aviation
Administration ("FAA") conducted an investigation of the Company's compliance
with certain regulations requiring the Company to verify the accuracy of
background information provided by its employees who have access to secure
airport areas. The Company revised its background check procedures during the
course of the FAA's investigation and then obtained and verified the necessary
background information of those employees who had been identified by the FAA as
having insufficient background check documentation. This investigation will
likely result in the finding of violations of these regulations. While the
Company is unable to determine whether the FAA will pursue an assessment as a
result
<PAGE>
of the findings of this investigation, if such an assessment were sought, the
Company does not believe that such an assessment would have a material effect on
the Company.
The Company has been named as a defendant in certain pending litigation. The
outcome of these matters cannot be predicted, but it is management's belief that
whatever the outcome, the results will not, either individually or in the
aggregate have a material adverse effect on the Company's financial position,
results of operations or cash flows.
In March 1995, Midway reached an agreement with Airbus for the acquisition of
four firm Airbus A320 and four option A319 or A320 aircraft with deliveries
beginning in 1998. Pursuant to a renegotiation of the agreement in 1997, the
delivery dates of these aircraft have been moved to 2005 and later. The Company
is required to make deposits on the four firm aircraft in amounts to be
determined beginning in 2003. The Company is considering several alternatives
with respect to the A320s, including restructuring its agreement with Airbus or
selling its position.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Selected Operating Data
For the three months
ended September 30,
----------------------
1998 1997(1)
----------------------
Available seat miles (000s) 389,544 331,190
Revenue passenger miles (000s) 256,411 212,443
Load factor 65.8% 64.1%
Break-even load factor 61.3% 59.7%
Departures 9,329 6,516
Block hours 14,160 10,264
Total revenue per available seat mile (cents) 12.70 13.02
Yield (cents) 18.78 19.40
Average fare $93 $102
Cost per available seat mile (cents) 11.84 12.15
Onboard passengers 515,519 405,633
Average seats per departure 87 101
Average stage length 460 516
Aircraft (average during period) 18.5 13.0
Aircraft utilization (hours per day) 8.3 8.6
Fuel price per gallon (cents) 54.4 69.2
(1) Certain September 30, 1997 amounts were reclassified to reflect
classifications in the December 31, 1997 audited financial statements and
September 30, 1998 unaudited interim financial statements.
Three Months Ended September 30, 1998 Compared to Three Months Ended
September 30, 1997
Capacity. In the three months ended September 30, 1998, the company
produced 390 million ASMs, an increase of 58 million or 17.6% over the three
months ended September 30, 1997. The increase in ASM production is attributable
to 43.2% more departures (to 9,329), offset by a 10.9% shorter average stage
length (to 460 miles) and 13.9% fewer seats per departure (to 87 seats). These
changes resulted from the addition over the past nine months of seven 50-seat
CRJs which added frequency to shorter routes and from the fact that the Company
began flying new shorter haul routes.
Operating Revenues. The Company's operating revenues increased 14.7% to
$49.5 million for the three months ended September 30, 1998 from $43.1 million
for the three months ended September 30, 1997. The increase is attributable to a
20.7% increase in revenue passenger miles to 256 million offset slightly by a
3.2% decrease in passenger yield (revenue per RPM) to 18.8 cents. Total revenue
per ASM decreased 2.5% to 12.70 cents per ASM due to the 1.7 percentage point
increase in load factor to 65.8% offset by the 3.2% decrease in yield. Cargo
revenue increased 27.2% to $0.6 million for the three months ended September 30,
1998 from $0.5 million for the three months ended September 30, 1997. The
increase is due to increased mail , baggage, and other cargo carried in the
three months ended September 30, 1998. Other revenue decreased 51.1% to $0.7
million for the three months ended September 30, 1998 from $1.4 million for the
three months ended September 30, 1997, due primarily to the revenue sharing
agreement with our commuter affiliate.
Operating Expenses. The Company's operating expenses increased 12.9% to
$45.5 million for the three months ended September 30, 1998 from $40.3 million
for the three months ended September 30, 1997. Total expenses increased
primarily due to the increases in number of employees, wages, commissions, and
depreciation expenses partially offset by reduction in fuel prices. Total
operating expense per ASM decreased 4.0% to 11.68 cents from 12.17 cents. This
decrease is attributable to the reduction in fuel prices and the spreading of
the company's fixed costs over the larger ASM base discussed above in
"Capacity", partially offset by increases in wages and salaries, and related
costs, including profit sharing, and depreciation expenses.
<TABLE>
<CAPTION>
Three months ended Three months ended
September 30 September 30
1998 1997 (1)
-------------------------- -------------------------
Percent Cost Percent Cost
of per ASM of per ASM
Total Expenses (cents) Total Expenses (cents)
-------------- ------- -------------- -------
<S> <C> <C> <C> <C>
Wages, salaries and related costs 17.3% 2.05 15.4% 1.87
Aircraft fuel 10.3 1.22 12.2 1.48
Aircraft and engine rentals 15.9 1.89 18.2 2.21
Commissions 6.9 0.82 8.0 0.97
Maintenance, materials and repairs 8.4 0.99 9.5 1.16
Other rentals and landing fees 5.2 0.62 6.0 0.72
Depreciation and amortization 3.8 0.45 1.5 0.19
Other operating expenses 30.8 3.64 29.4 3.57
----- ----- ----- -----
Sub-total operating expenses
before recapitalization 98.6% 11.68 100.2% 12.17
Recapitalization charge 0.0 -- 0.0 --
----- ----- ----- -----
Total operating expenses 98.6% 11.68 100.2% 12.17
Other (income) expense 1.4 0.16 -0.2 (0.02)
----- ----- ----- -----
Total expenses 100.0% 11.84 100.0% 12.15
===== ===== ===== =====
</TABLE>
(1) Certain September 30, 1997 amounts were reclassified to reflect
classifications in the December 31, 1997 audited financial statements and
September 30, 1998 unaudited interim financial statements.
Wages, salaries and related costs increased $1.8 million or 28.4% to $8.0
million for the three months ended September 30, 1998 from $6.2 million for the
three months ended September 30, 1997. The increase is attributable to 137
additional full time equivalent employees on average for the three months ended
September 30, 1998 from the three months ended September 30, 1997 due to
increased staffing associated with the addition of the CRJs both in flight crews
and staffing at the RDU hub, and increased staffing in reservations due to the
cancellation of a third
<PAGE>
party service contract in May 1997 and the work being brought in-house. Wages,
salaries and related cost per ASM increased 0.18 cents or 9.6% to 2.05 cents.
The increase in unit costs is attributable to the items noted above as well as
the changes noted in "Capacity".
Aircraft fuel expense decreased 3.5% to $4.7 million for the three months
ended September 30, 1998 from $4.9 million for the three months ended September
30, 1997. The decrease was due to a 21.4% decrease in the average fuel price per
gallon to 54.4 cents from 69.2 cents, and the flying of the lower fuel burn CRJ
aircraft, partially offset by the 38.0% increase in block hours. Aircraft fuel
expense per ASM decreased 17.6% to 1.22 cents from 1.48 cents.
Aircraft and engine rental expense remained stable at $7.4 and $7.3
million for the three months ended September 30, 1998 and 1997, respectively.
Aircraft and engine rentals expense per ASM decreased 14.5% to 1.89 cents from
2.21 cents. The decrease in cost per ASM resulted from a combination of the
17.6% increase in ASMs discussed above in "Capacity" and no rental expense from
the five owned CRJs added beginning in December 1997.
Commission expense remained stable at $3.2 million for the three months
ended September 30, 1998 and 1997. This was due to the 16.8% increase in
passenger revenues partially offset by a decrease of travel agency revenues as a
percent of passenger revenue to 63.4% from 68.1% and a decrease in the
commission rate. Commissions expense per ASM decreased 15.5% to 0.82 cents from
0.97 cents, primarily driven by the 2.5% decrease in revenue per available seat
mile to 12.70 cents from 13.02 cents and the items noted above.
Maintenance, materials and repairs expense increased slightly to $3.9
million for the three months ended September 30, 1998 from $3.8 million for the
three months ended September 30, 1997. While the expense was relatively stable,
the cost per aircraft decreased, which is largely attributable to the new
maintenance contracts on most of the Company's Fokker aircraft and the addition
of the new CRJ aircraft, offset somewhat by increases driven by the growth in
block hours. Maintenance, materials and repairs expense per ASM decreased 14.7%
to 0.99 cents from 1.16 cents due to the changes noted above.
Other rentals and landing fees expense remained stable at $2.4 million for
the three months ended September 30, 1998 and 1997. Other rentals and landing
fees expense per ASM decreased 13.9% to 0.62 cents from 0.72 cents due to
decreased facility rent at the Orlando hangar beginning in the second quarter,
lower landing fees for the relatively lighter CRJ aircraft, lower landing fees
at RDU, and increased departures and ASMs.
Depreciation and amortization expense increased 187.4% to $1.8 million for
the three months ended September 30, 1998 from $0.6 million for the three months
ended September 30, 1997. Depreciation and amortization expense per ASM
increased 136.8% to 0.45 cents from 0.19 cents in the three months ended
September 30, 1997. The increase is attributable to the purchase of the five
CRJs and approximately $10.9 million in other fixed assets (mostly spare parts)
since July 1, 1997.
Other operating expense increased 20.0% to $14.2 million for the three
months ended September 30, 1998 from $11.8 million for the three months ended
September 30, 1997. Other operating expenses consist primarily of reservations,
ground handling, advertising, general and administrative expense and insurance.
The expense increase is attributable to the 43.2% increase in departures and
27.1% increase in passengers, partially offset by savings in insurance,
marketing and administrative expenses. Other operating expense per ASM increased
2.0% to 3.64 cents from 3.57 cents in the three months ended September 30, 1997.
Net interest expense increased $0.7 million for the three months ended
September 30, 1998. The expense increase is attributable to the debt service for
the loans incurred to finance the purchase of the five CRJs and Fokker spare
engine financing.
A change in estimate regarding the realization of deferred tax assets was made
during the quarter ending September 30, 1998. The deferred tax asset valuation
allowance has been reduced to reflect the benefit realized from the utilization
of net operating loss carry forwards. The benefit recognized during the three
month period is $3.7 million, reducing the Company's effective tax rate to 20%.
For the nine months
ended September 30,
--------------------------
1998 1997(1)
--------- ---------
Available seat miles (000s) 1,150,462 1,042,067
Revenue passenger miles (000s) 749,952 652,955
Load factor 65.2% 62.7%
Break-even load factor(2) 57.2% 56.4%
Departures 25,888 19,930
Block hours 40,469 32,088
Total revenue per available seat mile (cents) 13.53 13.26
Yield (cents) 20.19 20.35
Average fare $103 $109
Cost per available seat mile (cents) 11.92 12.11
Onboard passengers 1,473,240 1,223,838
Average seats per departure 90 101
Average stage length 479 531
Aircraft (average during period) 16.9 13.0
Aircraft utilization (hours per day) 8.8 9.0
Fuel price per gallon (cents) 58.1 73.2
(1) Certain September 30, 1997 amounts were reclassified to reflect
classifications in the December 31, 1997 audited financial statements and
September 30, 1998 unaudited interim financial statements.
(2) Excludes restructuring and recapitalization expenses.
Nine Months Ended September 30, 1998 Compared to Nine Months Ended
September 30, 1997
Capacity. In the nine months ended September 30, 1998, the company
produced 1,150 million ASMs, an increase of 108 million or 10.4% over the nine
months ended September 30, 1997. The increase in ASM production is attributable
to 29.9% more departures (to 25,888), offset by a 9.8% shorter average stage
length (to 479 miles) and 10.9% fewer seats per departure (to 90 seats). These
changes resulted from the addition over the nine months ended
<PAGE>
September 30, 1998 of seven 50 seat CRJs which added frequency to shorter routes
and began flying new shorter haul routes, as well as the Company's cancellation
of service on certain longer haul routes.
Operating Revenues. The Company's operating revenues increased 12.7% to
$155.7 million for the nine months ended September 30, 1998 from $138.2 million
for the nine months ended September 30, 1997. The increase is attributable to a
14.9% increase in revenue passenger miles to 750 million and a 0.8% decrease in
passenger yield (revenue per RPM) to 20.19 cents. Total revenue per ASM
increased 2.0% to 13.53 cents per ASM due to the 0.8% decrease in yield combined
with a 2.5 percentage point increase in load factor to 65.2%. Cargo revenue
increased 6.6% to $1.6 million for the nine months ended September 30, 1998 from
$1.5 million for the nine months ended September 30, 1997. The increase is due
to increased mail and other cargo carried in the nine months ended September 30,
1998. Other revenue decreased 29.9% to $2.7 million for the nine months ended
September 30, 1998 from $3.8 million for the nine months ended September 30,
1997, due primarily to the revenue sharing agreement with our commuter
affiliate.
Operating Expenses. The Company's operating expenses increased 7.5% to
$135.7 million for the nine months ended September 30, 1998 from $126.3 million
for the nine months ended September 30, 1997. Total expenses increased primarily
due to the increases in number of employees, wages, commissions, and
depreciation expenses partially offset by reduction in fuel prices, and the
absence in the first nine months of 1998 of the special recapitalization charge
which was reflected in the first nine months of 1997. Total operating expense
per ASM decreased 2.6% to 11.80 cents from 12.12 cents. Excluding the one-time
charges for the Recapitalization in 1997, operating expense per ASM decreased
1.7% to 11.80 cents from 12.00 cents. This decrease is attributable to the
reduction in fuel prices and the spreading of the Company's fixed costs over the
larger ASM base discussed above in "Capacity", offset by increases in wages and
salaries and related costs, including profit sharing, and depreciation expenses.
<TABLE>
<CAPTION>
Nine months ended Nine months ended
September 30 September 30
1998 1997 (1)
-------------------------- -------------------------
Percent Cost Percent Cost
of per ASM of per ASM
Total Expenses (cents) Total Expenses (cents)
-------------- ------- -------------- -------
<S> <C> <C> <C> <C>
Wages, salaries and related costs 17.2% 2.05 14.7% 1.79
Aircraft fuel 10.7 1.28 12.8 1.55
Aircraft and engine rentals 16.1 1.92 18.1 2.19
Commissions 8.3 0.99 8.2 0.99
Maintenance, materials and repairs 8.8 1.04 9.8 1.19
Other rentals and landing fees 5.3 0.63 5.9 0.71
Depreciation and amortization 3.1 0.37 1.1 0.13
Other operating expenses 29.5 3.52 28.5 3.45
----- ----- ----- -----
Sub-total operating expenses
before recapitalization 99.0% 11.80 99.1% 12.00
Recapitalization charge 0.0 -- 1.0 0.12
----- ----- ----- -----
Total operating expenses 99.0% 11.80 100.1% 12.12
Other (income) expense 1.0% 0.12 -0.1% (0.01)
----- ----- ----- -----
Total expenses 100.0% 11.92 100.0% 12.11
===== ===== ===== =====
</TABLE>
(1) Certain September 30, 1997 amounts were reclassified to reflect
classifications in the December 31, 1997 audited financial statements and
September 30, 1998 unaudited interim financial statements.
Wages, salaries and related costs increased $5.0 million or 26.9% to $23.6
million for the nine months ended September 30, 1998 from $18.6 million for the
nine months ended September 30, 1997. The increase is attributable to 106
additional full time equivalent employees on average for the nine months ended
September 30, 1998 from the nine months ended September 30, 1997 due to
increased staffing associated with the addition of the CRJs both in flight crews
and at the RDU hub, increased staffing in reservations due to the cancellation
in May 1997 of a third party service contract and the work being brought
in-house, and the Company's Profit Sharing Plan ($1.8 million in the first nine
months of 1998) implemented in 1998. Wages, salaries and related cost per ASM
increased 0.26 cents or 14.5% to 2.05 cents from 1.79 cents. The increase in
unit costs is attributable to the items noted above as well as the changes noted
in "Capacity".
Aircraft fuel expense decreased 8.7% to $14.8 million for the nine months
ended September 30, 1998 from $16.1 million for the nine months ended September
30, 1997. The decrease was due to a 20.6% decrease in the average fuel price per
gallon to 58.1 cents from 73.2 cents, and the flying of the lower fuel burn CRJ
aircraft, partially offset by the 26.1% increase in block hours. Aircraft fuel
expense per ASM decreased 17.4% to 1.28 cents from 1.55 cents.
Aircraft and engine rental expense decreased 3.3% to $22.1 million for the
nine months ended September 30, 1998 from $22.9 million for the nine months
ended September 30, 1997. The decrease in expense is attributable to the 1ower
lease rates for the F100s after the Recapitalization in February 1997 partially
offset by the rental of spare engines in 1998 while awaiting delivery of the two
spare engines being purchased by the Company. Aircraft and engine rentals
expense per ASM decreased 12.3% to 1.92 cents from 2.19 cents. The decrease in
cost per ASM resulted from a combination of the 10.4% increase in ASMs discussed
above in "Capacity" and no rental expense from the five owned CRJs, supplemented
by the overall decrease in lease rates for the Fokker aircraft.
Commission expense increased 10.1% to $11.4 million for the nine months
ended September 30, 1998 from $10.3 million for the nine months ended September
30, 1997. This was due to the 13.9% increase in passenger revenues partially
offset by a decrease of travel agency revenues as a percent of passenger revenue
to 66.5% from 69.9% and a decrease in the commission rate. Commissions expense
per ASM remained stable at 0.99 cents.
<PAGE>
Maintenance, materials and repairs expense decreased 3.2% to $12.0 million
for the nine months ended September 30, 1998 from $12.4 million for the nine
months ended September 30, 1997. The expense decrease is largely attributable to
the new maintenance contracts on most of the Company's Fokker aircraft and the
addition of the new CRJ aircraft, offset somewhat by increases driven by the
growth in block hours. Maintenance, materials and repairs expense per ASM
decreased 12.6% to 1.04 cents from 1.19 cents due to the changes noted above.
Other rentals and landing fees expense decreased 2.8% to $7.2 million for
the nine months ended September 30, 1998 from $7.4 million for the nine months
ended September 30, 1997. Other rentals and landing fees expense per ASM
decreased 11.3% to 0.63 cents from 0.71 cents, due to decreased facility rent at
the Orlando hangar beginning in the second quarter, lower landing fees for the
relatively lighter CRJ aircraft and lower landing fees at RDU, and increased
departures.
Depreciation and amortization expense increased 211.3% to $4.3 million for
the nine months ended September 30, 1998 from $1.4 million for the nine months
ended September 30, 1997. Depreciation and amortization expense per ASM
increased 184.6% to 0.37 cents from 0.13 cents in the nine months ended
September 30, 1997. The increase is attributable to the purchase of the five
CRJs and approximately $10.9 million in other fixed assets (mostly spare parts)
since July 1, 1997.
Other operating expense increased 12.4% to $40.4 million for the nine
months ended September 30, 1998 from $36.0 million for the nine months ended
September 30, 1997. Other operating expenses consist primarily of reservations,
ground handling, advertising, general and administrative expense and insurance.
The expense increase is attributable to the 29.9% increase in departures and
20.4% increase in passengers, partially offset by savings in insurance, and
marketing expenses. Other operating expense per ASM increased 2.0% to 3.52 cents
from 3.45 cents in 1997.
Net interest expense increased $1.5 million for the nine months ended September
30, 1998 due to the debt service for the CRJ and Fokker spare engine loans. Net
interest expense per ASM for the nine months ended September 30, 1998 was 0.12
cents compared to net interest income per ASM of 0.01 cents in the comparable
prior period.
A change in estimate regarding the realization of deferred tax assets was made
during the quarter ending September 30, 1998. The deferred tax asset valuation
allowance has been reduced to reflect the benefit realized from the utilization
of net operating loss carry forwards. The benefit recognized during the nine
month period is $3.7 million, reducing the Company's effective tax rate to 20%.
Liquidity and Capital Resources
Liquidity
The Company's working capital improved during the first nine months of
1998 compared to the first nine months of 1997. As of September 30, 1998, the
Company had cash, restricted cash, and short-term investments of $47.4 million
and working capital of $19.8 million compared to $31.8 million and $5.4 million
respectively as of September 30, 1997. During the nine months ended September
30, 1998, cash, restricted cash and short-term investments decreased $10.7
million from December 31, 1997, reflecting net cash provided by operating
activities of $13.2 million (excluding changes in restricted cash), net cash
used in investing activities of $7.0 million (excluding purchases and sales of
short-term investments), and net cash used in financing activities of $16.9
million. During the nine months ended September 30, 1998, net cash used in
operating activities was primarily due to increases in operating assets, net
cash used in investing activities was due to purchases of equipment and property
and equipment purchase deposits, and net cash used in financing activities
reflects repayment of long-term debt. During the nine months ended September 30,
1997, cash, restricted cash and short-term investments increased $19.0 million,
reflecting net cash provided by operating activities of $6.0 million (net of
changes in restricted cash), net cash used in investing activities of $8.4
million (excluding purchases and sales of short-term investments), and net cash
provided by financing activities of $21.4 million. During the nine months ended
September 30, 1997, net cash provided by operating activities was primarily due
to increases in operating liabilities, net cash used in investing activities was
due to purchases of equipment and aircraft purchase deposits, and net cash
provided by financing activities was due to the proceeds of the
Recapitalization.
Capital Resources
<PAGE>
Since the February 1997 Recapitalization, the Company has been able to
generate sufficient funds from operations to meet its working capital
requirements and does not currently have any lines of credit. The Company
believes that the working capital available from ongoing operations, combined
with financing for the purchase of the spare engines for the CRJ fleet and the
standby financing for the last seven CRJ aircraft to be delivered in 1999, will
be sufficient to meet its anticipated requirements for capital expenditures and
other cash requirements for the foreseeable future.
In August 1998, the Company completed an offering of $109,722,000 of Pass
Through Certificates, also known as enhanced equipment trust certificates (the
"EETCs"). The EETCs are not direct obligations of, or guaranteed by, the Company
and therefore are not included in the Company's financial statements. The cash
proceeds from the EETCs are deposited with an escrow agent and enable the
Company to finance (through either leveraged leases or secured debt financings)
the debt portion of eight CRJ aircraft, the last of which is scheduled to be
delivered in June 1999. In connection with the EETCs, the Company intends to
seek certain owner participants which will commit lease equity financing to be
used in leveraged leases of such aircraft. The Company has arranged for equity
participation for the first three CRJ aircraft, two of which were delivered in
September 1998 and one in October 1998. The Company has obtained commitments for
equity participation for the remaining five CRJs to be financed through the
EETCs, although there can be no assurance that such commitments will close. As
of November 12, 1998, approximately $67.5 of proceeds remain on deposit. If any
funds remain as deposits at September 30, 1999 (or earlier under certain
circumstances), such funds will be distributed back to the certificateholders.
Capital Expenditures
The Company's cash outflows for capital expenditures in the nine months
ended September 30, 1998 and 1997 were $6.0 million and $7.1 million,
respectively. Debt financed purchases in the nine months ended September 30,
1998 and 1997 were $51.4 million and $0.3 million, respectively.
In September 1997 the Company agreed to acquire 10 Canadair CRJ aircraft
between December 1997 and December 1998, and took options on 20 more aircraft
which would be delivered 10 each in 1999 and 2000. Of the 20 options, the first
three were exercised in April 1998 and seven were exercised in September 1998,
all to be delivered by the end of 1999. Seven aircraft have been received and
placed in service as of September 30, 1998. Several financing alternatives have
been arranged for the firm orders, including standby or long-term lease
financing, and short-term bridge financing. The Company expects to arrange a
combination of third party debt and leveraged lease financing for the remaining
CRJs, but will use the standby lease financing in the event that it cannot
arrange more attractive financing from third party sources. For each aircraft
that is purchased (as opposed to leased), the Company anticipates an initial
cash outlay of approximately $4 million. Leveraged leases were finalized in
September for the sixth and seventh CRJ aircraft which were delivered in
September, and in November 1998 for the eighth CRJ aircraft which was received
in October 1998.
Midway expects to arrange financing for two spare CRJ engines the Company
has agreed to acquire. To support its operation of F-100 aircraft, the Company
recently purchased a refurbished Rolls Royce Tay 650-15 Engine which was funded
from working capital plus certain bank debt and a new spare Rolls Royce Tay
650-15 engine which financed through a lease purchase obligation over seven
years with a nominal payment purchase option at the end of the term (See Note 6
of the financial statements).
The Company's fixed costs will increase significantly with the induction
of the CRJs. Based on the current interest rate environment, the Company
estimates that its fixed charges will increase by approximately $19.5 to $21
million per year as a result of its debt-financed purchase or leveraged lease
financing of the thirteen remaining CRJs. However, depending upon the financing
method ultimately chosen, the Company's balance sheet liabilities may or may not
increase.
Other Financing
The Company has significant lease obligations for aircraft that are
classified as operating leases and therefore not reflected as liabilities on the
Company's balance sheet. The remaining terms of such leases range from less than
one month to approximately seventeen years. The Company's total rent expense for
the nine months ended September 30, 1998 and 1997 under all non-cancelable
aircraft operating leases was approximately $21.4 million and $21.8 million,
respectively.
<PAGE>
Year 2000
State of Readiness:
The Company's Year 2000 Project is designed to ensure that the Company's
computer systems and embedded operating systems will function properly beyond
1999. The Project which the Company has developed involves five phases:
Inventory, Assessment, Remediation, Contingency Planning and Testing. The
Awareness phase is ongoing thoughout the project. The Inventory phase is largely
completed and the Assessment phase has begun. The Company intends to complete
the Assessment phase in a manner which will allow it to timely modify or replace
non-compliant systems. To date, the Company has identified four critical systems
that will require modification or replacement and a review of those systems and
available remediation alternatives has commenced. One system was replaced in
July 1998, one will be remedied by the end of 1998, one will be replaced by the
end of the second quarter of 1999, and the other will be replaced as a part of
the Company's planned relocation to a new headquarters facility by the end of
the first quarter of 1999. These replacements have not been accelerated due to
Year 2000 non-compliance.
Because the Company utilizes a number of critical computer systems operated and
maintained by American Airlines, Inc. and its affiliates (including The SABRE
Group), the Company has been closely monitoring the progress of Year 2000
projects implemented by these companies. Statements and disclosures made by
these key vendors estimate the substantial completion of their Year 2000
projects in the first quarter of 1999. In the case of The SABRE Group, it has
stated that substantially all of its core systems are either completed or in the
final testing phases of its Year 2000 Project. Importantly, The SABRE Group has
stated that its computer reservations system, which the Company uses, is now
Year 2000 compliant, with only testing of minor sub-systems remaining to be
completed.
The Company also has begun evaluating non-information technology systems that
include embedded technology such as aircraft parts, airport equipment and
facility infrastructures. In that regard, as part of the relocation of the
Company's headquarters now scheduled for first quarter 1999, the Company is
taking steps to ensure that all new technology installed in that facility is
Year 2000 compliant. The Company has also received assurances from both
operating manufacturers of aircraft in its fleet, as well as from nearly all
suppliers and manufacturers of aircraft parts installed in its aircraft, that
the embedded technology in the subject aircraft and parts is Year 2000
compliant. The Company continues to receive updates and clarifications on these
statements from the suppliers and manufacturers on a regular basis, as their
Year 2000 projects mature. Because the Company has no material facilities at any
location other than RDU, the Company believes that the airport facilities in the
cities it serves will be or are already part of the Year 2000 program of the
contract vendors providing services to the Company in those cities or of the
airport authorities in those cities. The Company's business is also dependent
upon certain governmental organizations or entities such as the Federal Aviation
Administration ("FAA") that provide essential aviation industry infrastructure
and the computer systems operated by those entities. The Company is reviewing
and will continue to review the Year 2000 information and readiness reports
issued by these entities.
Costs of Compliance:
The total costs of the Company's Year 2000 Project are expected to be immaterial
and will be funded through cash from operations. To date, the Company has
incurred less than $100,000 in connection with the Project all of which has been
expensed as incurred. The cost of the Company's Year 2000 Project is limited by
the substantial outsourcing of its systems and the relative youth of the Company
and its operating systems. The costs of the Company's Year 2000 Project and the
date on which the Company believes it will be completed are based on
management's best estimates and include assumptions regarding third-party
modification plans. Accordingly, there can be no assurance that these estimates
will be achieved and actual results could differ materially from those
anticipated.
Risks of Non-Compliance:
The Company believes that its Year 2000 Project will be completed prior to there
being any material impact on the operations of the Company, and that, with
modifications to its existing software and systems and/or conversions to new
software, the Year 2000 issue will not pose significant operational problems for
its computer systems. However, there can be no assurance that the systems of
third parties on which the Company's business relies (including those of its
customers, its suppliers or the FAA) will be modified on a timely basis. The
Company's
<PAGE>
business, financial condition or results of operations could be materially
adversely affected by the failure of its systems or those operated by other
parties to operate properly beyond 1999. To the extent possible, the Company
will be developing and executing contingency plans designed to allow continued
operation in the event of failure of the Company's or third parties' systems.
These contingency plans have not yet been established and the Company has not
yet determined the reasonably estimated worst case scenario. The Company intends
to analyze these issues as part of its ongoing Year 2000 Project.
Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 (the Act) provides a
safe harbor for forward-looking statements made by or on behalf of the Company.
The Company and its representatives may from time to time make written or verbal
forward-looking statements, including statements contained in the Company's
filings with the Securities and Exchange Commission and in reports to share
owners. All statements which address operational performance, events or
developments which are anticipated to occur in the future, including statements
relating to revenue growth, cost reductions and earnings growth or statements
expressing general optimism about future operating results, are forward-looking
statements within the meaning of the Act. The forward-looking statements are and
will be based on management's then current views and assumptions regarding
future events and operating performance.
The following are some of the factors that could cause actual results to
differ materially from estimates contained in the Company's forward-looking
statements:
o The ability to generate sufficient cash flows to support capital expansion
plans and general operating activities.
o Competitive product and pricing pressures and the ability to gain or
maintain market share as a result of actions by competitors.
o Change in laws and regulations, including changes in accounting standards,
taxation requirements (including tax rate changes, new tax laws and
revised tax law interpretations) and environmental laws.
o Fluctuations in the cost and availability of materials, fuel and labor,
including the continued availability of landing slots at New York's
LaGuardia Airport and Washington, D.C.'s National Airport.
o The ability to achieve earnings forecasts, which are based on projected
traffic and fares in the different markets the Company serves, some of
which are more profitable than others.
o Interest rate fluctuations and other capital market conditions.
o The ability to enter and develop new markets.
o The effectiveness of advertising, marketing and promotional programs.
o The uncertainties of litigation, as well as other risks and uncertainties
detailed from time to time in the Company's Securities and Exchange
Commission filings.
o Adverse weather conditions, which could effect the Company's ability to
operate.
PART II. Other Information
Item 1. Legal Proceedings.
The Company is a party to routine litigation incidental to its business.
Management believes that none of this litigation is likely to have a material
adverse effect on the Company's financial position or results of operations.
Item 2. Changes in Securities and Use of Proceeds.
During the three months ended September 30, 1998, 33,100 shares were
issued as a result of the exercise of purchase options. Stock options for the
purchase of 10,605 shares were forfeited due to the resignation or termination
of employment of certain employees.
Through September 30, 1998, net proceeds from the Company's initial public
offering were used as follows:
1. $1.2 million paid in settlement of the Treasury Lock,
2. $7.0 million to secure the Company's performance of its obligations
under a credit card processing agreement,
<PAGE>
3. $1.0 million for aircraft purchase deposits,
4. $17.9 million for down payments and other costs on debt-financed
aircraft, and
5. $10.6 million was invested in cash equivalents and marketable
securities pending future use.
Item 3. Defaults Upon Senior Securities.
None to report.
Item 4. Submission of Matters to a Vote of Security Holders.
None to report.
Item 5. Other Information.
The Company's sublease for a hangar facility in Orlando, Florida expired in
April 1998. The Company continues to occupy a portion of an adjacent facility
with the lessor's consent and other temporary facilities while a new lease is
being negotiated for a portion of the originally subleased space.
On November 2, 1998, the Company was notified that the National Mediation Board
had authorized a rerun election in the matter of the application of the
Association of Flight Attendants to represent the Company's flight attendants.
The ballots for this rerun election were sent out on November 9, 1998, and will
be counted on December 18, 1998.
Item 6. Exhibits and Reports on Form 8-K.
<PAGE>
(a.) EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- - ------- -----------
4.1 Pass Through Trust Agreement, (1A-S), dated as of August 13, 1998, between
Midway Airlines Corporation and The First National Bank of Maryland, as
Trustee, made with respect to the formation of Midway Airlines Pass
Through Trust, Series 1998-1 (1A-S) and the issuance of 7.14% Midway
Airlines Corporation Pass Through Trust, Series 1998-1 (1A-S) Pass Through
Certificate representing fractional undivided interests in the Trust
(including form of Class A Certificate).
4.2 Pass Through Trust Agreement, (1A-O), dated as of August 13, 1998, between
Midway Airlines Corporation and The First National Bank of Maryland, as
Trustee, made with respect to the formation of Midway Airlines Pass
Through Trust, Series 1998-1 (1A-O) and the issuance of 7.14% Midway
Airlines Corporation Pass Through Trust, Series 1998-1 (1A-O) Pass Through
Certificate representing fractional undivided interests in the Trust
(including form of Class A Certificate).
4.3 Pass Through Trust Agreement, (1B-S), dated as of August 13, 1998, between
Midway Airlines Corporation and The First National Bank of Maryland, as
Trustee, made with respect to the formation of Midway Airlines Pass
Through Trust, Series 1998-1 (1B-S) and the issuance of 8.14% Midway
Airlines Corporation Pass Through Trust, Series 1998-1 (1B-S) Pass Through
Certificate representing fractional undivided interests in the Trust
(including form of Class B Certificate).
4.4 Pass Through Trust Agreement, (1B-O), dated as of August 13, 1998, between
Midway Airlines Corporation and The First National Bank of Maryland, as
Trustee, made with respect to the formation of Midway Airlines Pass
Through Trust, Series 1998-1 (1B-O) and the issuance of 8.14% Midway
Airlines Corporation Pass Through Trust, Series 1998-1 (1B-O) Pass Through
Certificate representing fractional undivided interests in the Trust
(including form of Class B Certificate).
<PAGE>
4.5 Pass Through Trust Agreement, (1C-S), dated as of August 13, 1998, between
Midway Airlines Corporation and The First National Bank of Maryland, as
Trustee, made with respect to the formation of Midway Airlines Pass
Through Trust, Series 1998-1 (1C-S) and the issuance of 8.92% Midway
Airlines Corporation Pass Through Trust, Series 1998-1 (1C-S) Pass Through
Certificate representing fractional undivided interest in the Trust
(including form of Class C Certificate).
4.6 Intentionally omitted
4.7 Pass Through Trust Agreement, (1C-O), dated as of August 13, 1998, between
Midway Airlines Corporation and The First National Bank of Maryland, as
Trustee, made with respect to the formation of Midway Airlines Pass
Through Trust, Series 1998-1 (1C-O) and the issuance of 8.92% Midway
Airlines Corporation Pass Through Trust, Series 1998-1 (1C-O) Pass Through
Certificate representing fractional undivided interest in the Trust
(including form of Class C Certificate).
4.8 Pass Through Trust Agreement, (1D-S), dated as of August 13, 1998, between
Midway Airlines Corporation and The First National Bank of Maryland, as
Trustee, made with respect to the formation of Midway Airlines Pass
Through Trust, Series 1998-1 (1D-S) and the issuance of 8.86% Midway
Airlines Corporation Pass Through Trust, Series 1998-1 (1D-S) Pass Through
Certificate representing fractional undivided interest in the Trust
(including form of Class D Certificate).
4.9 Pass Through Trust Agreement, (1D-O), dated as of August 13, 1998, between
Midway Airlines Corporation and The First National Bank of Maryland, as
Trustee, made with respect to the formation of Midway Airlines Pass
Through Trust, Series 1998-1 (1D-O) and the issuance of 8.86% Midway
Airlines Corporation Pass Through Trust, Series 1998-1 (1D-O) Pass Through
Certificate representing fractional undivided interest in the Trust
(including form of Class D Certificate).
4.10 Note Purchase Agreement, dated as of August 13, 1998, between Midway
Airlines Corporation and The First Bank of Maryland, as Trustee, The First
National Bank of Maryland, as Pass Through Trustee under each of the Pass
Through Trust Agreements, The First National Bank of Maryland, as
Subordination Agent, First Union Trust Company, National Association, as
Escrow Agent and The First National Bank of Maryland, as Paying Agent.
2
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4.11 Deposit Agreement, (Class A), dated as of August 13,1998, between First
Union Trust Company, National Association as Escrow Agent and First Union
National Bank as Depositary.
4.12 Deposit Agreement, (Class B), dated as of August 13,1998, between First
Union Trust Company, National Association as Escrow Agent and First Union
National Bank as Depositary.
4.13 Deposit Agreement, (Class C), dated as of August 13,1998, between First
Union Trust Company, National Association as Escrow Agent and First Union
National Bank as Depositary.
4.14 Deposit Agreement, (Class D), dated as of August 13,1998, between First
Union Trust Company, National Association as Escrow Agent and First Union
National Bank as Depositary.
4.15 Irrevocable Revolving Credit Agreement, (Class-A Certificates), dated as
of August 13,1998, between The First National Bank of Maryland, not in its
individuality capacity but solely as Subordination Agent, as agent and
trustee for the Midway Airlines 1998-1A Pass Through Trust, as Borrower
and ABN AMRO Bank N.V., Chicago Branch as Liquidity Provider.
4.16 Irrevocable Revolving Credit Agreement, (Class-B Certificates), dated as
of August 13,1998, between The First National Bank of Maryland, not in its
individuality capacity but solely as Subordination Agent, as agent and
trustee for the Midway Airlines 1998-1B Pass Through Trust, as Borrower
and ABN AMRO Bank N.V., Chicago Branch as Liquidity Provider
4.17 Irrevocable Revolving Credit Agreement, (Class-C Certificates), dated as
of August 13,1998, between The First National Bank of Maryland, not in its
individuality capacity but solely as Subordination Agent, as agent and
trustee for the Midway Airlines 1998-1C Pass Through Trust, as Borrower
and ABN AMRO Bank N.V., Chicago Branch as Liquidity Provider.
3
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4.18 Intercreditor Agreement, dated as of August 13, 1998 among The First
National Bank of Maryland, not in its individual capacity but solely as
Trustee under the Midway Airlines Pass Through Trust 1998-1A, Midway
Airlines Pass Through Trust 1998-1B, Midway Airlines Pass Through 1998-1C
and Midway Airlines Pass Through Trust 1998-1D, ABN AMRO BANK, N.V.
Chicago Branch as Class A Liquidity Provider, Class B Liquidity Provider
and Class C Liquidity Provider and The First National Bank of Maryland not
in its individual capacity except as expressly set forth herein but solely
as Subordination Agent and trustee hereunder.
4.19 Escrow and Paying Agent Agreement, (Class A), dated as of August 13, 1998
among First Union Trust Company, National Association as Escrow Agent,
Morgan Stanley & Co. Incorporated and Credit Suisse First Boston
Corporation as Initial Purchasers, The First National Bank of Maryland not
in its individual capacity, but solely as Pass Through Trustee for and on
behalf of Midway Airlines Pass Through Trust 1998-1A-O as Pass Through
Trustee and The First National Bank of Maryland as Paying Agent.
4.20 Escrow and Paying Agent Agreement, (Class B), dated as of August 13, 1998
among First Union Trust Company, National Association as Escrow Agent,
Morgan Stanley & Co. Incorporated and Credit Suisse First Boston
Corporation as Initial Purchasers, The First National Bank of Maryland not
in its individual capacity, but solely as Pass Through Trustee for and on
behalf of Midway Airlines Pass Through Trust 1998-1B-O as Pass Through
Trustee and The First National Bank of Maryland as Paying Agent.
4.21 Escrow and Paying Agent Agreement, (Class C), dated as of August 13, 1998
among First Union Trust Company, National Association as Escrow Agent,
Morgan Stanley & Co. Incorporated and Credit Suisse First Boston
Corporation as Initial Purchasers, The First National Bank of Maryland not
in its individual capacity, but solely as Pass Through Trustee for and on
behalf of Midway Airlines Pass Through Trust 1998-1C-O as Pass Through
Trustee and The First National Bank of Maryland as Paying Agent.
4
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4.22 Escrow and Paying Agent Agreement, (Class D), dated as of August 13, 1998
among First Union Trust Company, National Association as Escrow Agent,
Morgan Stanley & Co. Incorporated and Credit Suisse First Boston
Corporation as Initial Purchasers, The First National Bank of Maryland not
in its individual capacity, but solely as Pass Through Trustee for and on
behalf of Midway Airlines Pass Through Trust 1998-1D-O as Pass Through
Trustee and The First National Bank of Maryland as Paying Agent.
4.23 Registration Rights Agreement, dated as of August 13, 1998, among Midway
Airlines Corporation, a Delaware Corporation (the "Company"), The First
National Bank of Maryland, as Trustee under each of the Trust Agreements,
Morgan Stanley & Co. Incorporated and Credit Suisse First Boston
Corporation (the "Placement Agents").
10.1 Purchase Agreement, dated as of August 6,1998, by and among Midway
Airlines Corporation, Morgan Stanley & Co. Incorporated and Credit Suisse
First Boston.
10.2 Participation Agreement dated as of September 10, 1998 among Midway
Airlines Corporation as Lessee, NCC Charlie Company as Owner Participant,
First Union Trust Company, National Association not in its individual
capacity (except as otherwise expressly set forth herein) but solely as
Owner Trustee, The First National Bank of Maryland as Indenture Trustee,
The First National Bank of Maryland as Pass-Through Trustee and The First
National Bank of Maryland as Subordination Agent. Midway Airlines
Corporation is a party to two additional Participation Agreements which
are substantially identical in all material respects except as indicated
on the exhibit.
10.3 Trust Agreement dated as of September 10, 1998 between NCC Charlie Company
as Owner Participant and First Union Trust Company, National Association
as Owner Trustee. There are two additional Trust Agreements which are
substantially identical in all material respects except as indicated on
the exhibit.
10.4 Trust Indenture and Security Agreement dated as of September10, 1998
between First Union Trust Company, National Association not in its
individual capacity except as expressly provided herein but solely as
Owner Trustee and The First National Bank of Maryland as Indenture
Trustee. There are two additional Trust Indenture and Security Agreements
which are substantially identical in all material respects except as
indicated on the exhibit.
10.5 Indenture Supplement No. 1 dated as of September 30, 1998 of First Union
Trust Company, National Association, a national banking association, not
in its individual capacity but solely as Owner Trustee. There are two
additional Indenture Supplements No. 1 which are substantially identical
in all material respects except as indicated on the exhibit.
10.6 Lease Agreement dated as of September 10, 1998 between First Union Trust
Company, National Association as Owner Trustee and Lessor and Midway
Airlines Corporation as Lessee. Midway Airlines Corporation is a party to
two additional Leases which are substantially identical in all material
respects except as indicated on the exhibit.*
10.7 Lease Supplement No. 1 Dated as of September 10, 1998 between First Union
Trust Company, National Association not in its individual capacity but
solely as Owner Trustee except as otherwise provided herein, the Lessor
and Midway Airlines Corporation, as Lessee. Midway Airlines Corporation is
a party to two additional Lease Supplements No. 1 which are substantially
identical in all material respects except as indicated on the exhibit.
10.8 Purchase Agreement Assignment and Aircraft Manufacturer's Consent dated as
of September 10, 1998 between Midway Airlines Corporation as Assignor and
First Union Trust Company, National Association as Assignee. Midway
Airlines Corporation is a party to two additional Purchase Agreement
Assignment and Aircraft Manufacturer's Consents which are substantially
identical in all material respects except as indicated on the exhibit.
10.9 Engine Warranty Assignment and Engine Manufacturer's Consent dated as of
September 10, 1998 between Midway Airlines Corporation, First Union Trust
Company, National Association not in its individual capacity but solely as
Owner Trustee and General Electric Company. Midway Airlines Corporation is
a party to two additional Engine Warranty Assignment and Engine
Manufacturer's Consents which are substantially identical in all material
respects except as indicated on the exhibit.
10.10 General Terms Agreement between General Electric Company and Midway
Airlines Corporation.
10.11 Concourse Lakeside Lease Agreement by and between Concourse Lakeside I,
LLC, as Landlord, and Midway Airlines Corporation, as Tenant.
27 Financial Data Schedule
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* Confidential treatment requested for omitted portions of exhibit. Omitted
portion has been filed separately with the Commission.
5
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(b.) Reports on Form 8-K
On September 11, 1998, the Company filed a Form 8-K reporting that on September
3, 1998, the Company exercised options to purchase seven new Canadair Regional
Jet Aircraft with scheduled delivery dates in 1999. In a related flight
equipment matter, the Company suspended lease extension negotiations with the
lessor regarding four Fokker 100 aircraft leases expiring during the October
1998 through May 1999 timeframe.
On August 20, 1998, the Company filed a Form 8-K reporting that on August 14,
1998, the Company completed the placement of $109.7 million aggregate principal
amount of enhanced equipment pass through certificates under Rule 144A of the
Securities Act of 1933. The proceeds from the placement of these certificates
will be used to finance the Company's purchase or leveraged lease of eight new
Canadair Regional Jet Aircraft.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities and
Exchange Act of 1934, the registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Midway Airlines Corporation
Registrant
November 12, 1998 By /s/ STEVEN WESTBERG
Steven Westberg
Sr. Vice President and CFO
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PASS THROUGH TRUST AGREEMENT
Dated as of August 13, 1998
among
MIDWAY AIRLINES CORPORATION
and
THE FIRST NATIONAL BANK OF MARYLAND
as Trustee
Midway Airlines 1998-1A-S Pass Through Trust
7.14% 1998-1A-S Initial Pass Through Certificates
7.14% 1998-1A-S Exchange Pass Through Certificates
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<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS................................................ 2
Section 1.01 Definitions....................................... 2
Section 1.02 Compliance Certificates and Opinions.............. 14
Section 1.03 Form of Documents Delivered to
Trustee........................................... 15
Section 1.04 Acts of Certificateholders........................ 15
ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES.......................... 17
Section 2.01 Acquisition of Trust Property..................... 17
Section 2.02 [Reserved]........................................ 18
Section 2.03 The Trustee....................................... 18
Section 2.04 Acceptance by Trustee............................. 18
Section 2.05 Limitation of Powers.............................. 18
ARTICLE III THE CERTIFICATES........................................... 19
Section 3.01 Title, Form, Denomination and
Execution of Certificates......................... 19
Section 3.02 Restrictive Legends............................... 21
Section 3.03 Authentication of Certificates.................... 23
Section 3.04 Transfer and Exchange............................. 23
Section 3.05 Book-Entry Provisions for U.S. Global
Certificate and Offshore Global
Certificates...................................... 24
Section 3.06 Special Transfer Provisions....................... 25
Section 3.07 Mutilated, Destroyed, Lost or Stolen
Certificates...................................... 28
Section 3.08 Persons Deemed Owners............................. 28
Section 3.09 Cancellation...................................... 29
Section 3.10 Limitation of Liability for Payments.............. 29
Section 3.11 Temporary Certificates............................ 29
Section 3.12 ERISA Restrictive Legend.......................... 29
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ARTICLE IV DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS......................................... 30
Section 4.01 Certificate Account and Special
Payments Account.................................. 30
Section 4.02 Distributions from Certificate Account
and Special Payments Account...................... 30
Section 4.03 Statements to Certificateholders.................. 32
Section 4.04 Investment of Special Payment
Moneys............................................ 33
ARTICLE V THE COMPANY................................................ 34
Section 5.01 Maintenance of Corporate Existence................ 34
Section 5.02 Consolidation, Merger, Etc........................ 34
ARTICLE VI DEFAULT.................................................... 35
Section 6.01 Events of Default................................. 35
Section 6.02 Incidents of Sale of Equipment Notes.............. 38
Section 6.03 Judicial Proceedings Instituted by
Trustee; Trustee May Bring Suit................... 38
Section 6.04 Control by Certificateholders..................... 39
Section 6.05 Waiver of Past Defaults........................... 39
Section 6.06 Right of Certificateholders to Receive
Payments Not to Be Impaired....................... 40
Section 6.07 Certificateholders May Not Bring Suit
Except Under Certain Conditions................... 40
Section 6.08 Remedies Cumulative............................... 41
Section 6.09 Undertaking for Costs............................. 41
ARTICLE VII THE TRUSTEE................................................ 41
Section 7.01 Certain Duties and Responsibilities............... 41
Section 7.02 Notice of Defaults................................ 41
Section 7.03 Certain Rights of Trustee......................... 42
Section 7.04 Not Responsible for Recitals or
Issuance of Certificates.......................... 43
Section 7.05 May Hold Certificates............................. 43
Section 7.06 Money Held in Trust............................... 44
Section 7.07 Compensation and Reimbursement.................... 44
Section 7.08 Corporate Trustee Required;
Eligibility....................................... 45
Section 7.09 Resignation and Removal;
Appointment of Successor.......................... 45
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Section 7.10 Acceptance of Appointment by
Successor......................................... 47
Section 7.11 Merger, Conversion, Consolidation or
Succession to Business............................ 47
Section 7.12 Maintenance of Agencies........................... 48
Section 7.13 Money for Certificate Payments to Be
Held in Trust..................................... 49
Section 7.14 Registration of Equipment Notes in
Name of Subordination Agent....................... 49
Section 7.15 Representations and Warranties of
Trustee........................................... 49
Section 7.16 Withholding Taxes; Information
Reporting......................................... 50
Section 7.17 Trustee's Liens................................... 51
Section 7.18 Preferential Collection of Claims................. 51
ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS
BY TRUSTEE................................................. 51
Section 8.01 The Company to Furnish Trustee
with Names and Addresses of
Certificateholders................................ 51
Section 8.02 Preservation of Information;
Communications to Certificateholders.............. 52
Section 8.03 Reports by Trustee................................ 52
Section 8.04 Reports by the Company............................ 52
ARTICLE IX SUPPLEMENTAL AGREEMENTS.................................... 53
Section 9.01 Supplemental Agreements Without
Consent of Certificateholders..................... 53
Section 9.02 Supplemental Agreements with
Consent of Certificateholders..................... 54
Section 9.03 Documents Affecting Immunity or
Indemnity......................................... 55
Section 9.04 Execution of Supplemental
Agreements........................................ 55
Section 9.05 Effect of Supplemental Agreements................. 56
Section 9.06 Conformity with Trust Indenture Act............... 56
Section 9.07 Reference in Certificates to
Supplemental Agreements........................... 56
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ARTICLE X AMENDMENTS TO INDENTURES AND
FINANCING DOCUMENTS........................................ 56
Section 10.01 Amendments and Supplement to
Indentures and Other Note
Documents......................................... 56
ARTICLE XI TERMINATION OF TRUST....................................... 57
Section 11.01 Termination of the Trust.......................... 57
ARTICLE XII MISCELLANEOUS PROVISIONS................................... 58
Section 12.01 Limitation on Rights of
Certificateholders................................ 58
Section 12.02 Certificates Nonassessable and Fully
Paid.............................................. 58
Section 12.03 Notices........................................... 58
Section 12.04 Governing Law..................................... 60
Section 12.05 Severability of Provisions........................ 60
Section 12.06 Effect of Headings and Table of
Contents.......................................... 60
Section 12.07 Successors and Assigns............................ 60
Section 12.08 Benefits of Agreement............................. 60
Section 12.09 Legal Holidays.................................... 60
Section 12.10 Counterparts...................................... 60
Section 12.11 Communication by Certificateholders
with Other Certificateholders..................... 60
Section 12.12 Intention of Parties.............................. 61
Section 12.13 Trust Indenture Act Controls...................... 61
EXHIBIT LIST
Exhibit A Form of Certificate
Exhibit B Form of Certificate for Unlegended Certificates
Exhibit C Form of Certificate to be Delivered in connection with
Transfers Pursuant to Regulation S
Exhibit D Form of Certificate to be Delivered in connection with
Transfers to Non-QIB Accredited Investors
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PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of August 13, 1998,
among MIDWAY AIRLINES CORPORATION, a Delaware corporation (the "Company"), and
THE FIRST NATIONAL BANK OF MARYLAND, a national banking association, as Trustee,
is made with respect to the formation of Midway Airlines 1998-1A-S Pass Through
Trust and the issuance of 7.14% Midway Airlines 1998-1A-S Pass Through
Certificates representing fractional undivided interests in the Trust.
WITNESSETH:
WHEREAS, the Company has obtained commitments from Bombardier for
the delivery of certain Aircraft;
WHEREAS, as of the Transfer Date (as defined below), the Company
will have financed the acquisition of all or a portion of such Aircraft either
(i) through separate leveraged lease transactions, in which case the Company
leases such Aircraft (collectively, the "Leased Aircraft") or (ii) through
separate secured loan transactions, in which case the Company owns such Aircraft
(collectively, the "Owned Aircraft");
WHEREAS, as of the Transfer Date in the case of each Leased
Aircraft, each Owner Trustee, acting on behalf of the corresponding Owner
Participant, will have issued pursuant to an Indenture, on a non-recourse basis,
Equipment Notes in order to finance a portion of its purchase price of such
Leased Aircraft;
WHEREAS, as of the Transfer Date, in the case of each Owned
Aircraft, the Company will have issued pursuant to an Indenture, on a resource
basis, Equipment Notes to finance a portion of the purchase price of such Owned
Aircraft;
WHEREAS, as of the Transfer Date, the Related Trustee will assign,
transfer and deliver all of such trustee's right, title and interest to the
trust property held by the Related Trustee to the Trustee pursuant to the
Assignment and Assumption Agreement (as defined below);
WHEREAS, the Trustee, effective only, but automatically, upon
execution and delivery of the Assignment and Assumption Agreement, will be
deemed to have declared the creation of the Midway Airlines Pass Through Trust
1998-1A-S (the "Trust") for the benefit of the Certificateholders, and each
Holder of Certificates outstanding as of the Transfer Date, as the grantors of
the Trust, by their respective acceptances of such Certificates, will join in
the creation of this Trust with the Trustee;
WHEREAS, all Certificates deemed issued by the Trust will evidence
fractional undivided interests in the Trust and will convey no rights, benefits
or
<PAGE>
interests in respect of any property other than the Trust Property except for
those Certificates to which an Escrow Receipt (as defined below) has been
affixed;
WHEREAS, upon execution and delivery of the Assignment and
Assumption Agreement, all of the conditions and requirements necessary to make
this Trust Agreement, 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 Agreement in the form and with the terms hereof have been
in all respects duly authorized; and
WHEREAS, upon issuance of the Exchange Certificates, if any, or the
effectiveness of the Shelf Registration Statement, this Agreement, as amended or
supplemented from time to time, will be subject to the provisions of the Trust
Indenture Act of 1939, and shall, to the extent applicable, be governed by such
provisions;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, 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 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 other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference herein have the meanings
assigned to them therein;
(3) all references in this Agreement to designated "Articles",
"Sections", "Subsections" and other subdivisions are to the designated
Articles, Sections, Subsections and other subdivisions of this Agreement;
(4) 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, Subsection or other subdivision; and
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(5) unless the context otherwise requires, whenever the words
"including", "include" or "includes" are used herein, it shall be deemed
to be followed by the phrase "without limitation".
Act: With respect to any Certificateholder has the meaning specified
in Section 1.04.
Affiliate: Means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person. For 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.
Agent Members: Has the meaning specified in Section 3.05(a).
Aircraft: Means each of the New Aircraft in respect of which a
Participation Agreement is entered into in accordance with the Note
Purchase Agreement.
Assignment and Assumption Agreement: Means the assignment and
assumption agreement substantially in the form of Exhibit E to the Related
Trust Agreement executed and delivered in accordance with Section 11.01 of
the Related Trust Agreement.
Authorized Agent: Means any Paying Agent or Registrar for the
Certificates.
Avoidable Tax: Means a state or local tax (i) upon (w) the Trust,
(x) the Trust Property, (y) Certificateholders or (z) the Trustee for
which the Trustee is entitled to seek reimbursement from the Trust
Property, 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 if the Company or any Owner Trustee
shall agree to pay, and shall pay, such tax.
Book-Entry Certificates: With respect to the Certificates, means a
beneficial interest in the Certificates, ownership and transfers of which
shall be made through book entries as described in Section 3.04.
Business Day: Means any day other than a Saturday, a Sunday or a day
on which commercial banks are required or authorized to close in
Baltimore, Maryland, New York, New York, Charlotte, North Carolina or, so
long as any Certificate is outstanding, the city and state in which the
Trustee or any Loan Trustee maintains its Corporate Trust Office or
receives and disburses funds.
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<PAGE>
Cedel: Means Cedel Bank societe anonyme.
Certificate: Means any of the Initial Certificates or Exchange
Certificates issued by the Related Trust and that are "Outstanding" (as
defined in the Related Pass Through Trust Agreement) as of the Transfer
Date (the "Transfer Date Certificates") and any Certificates issued in
exchange therefor or replacement thereof pursuant to this Agreement.
Certificate Account: Means the account or accounts created and
maintained pursuant to Section 4.01(a).
Certificateholder or Holder: Means the Person in whose name a
Certificate is registered in the Register.
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.
Code: Means the United States Internal Revenue Code of 1986, as
amended.
Company: Means Midway Airlines Corporation, a Delaware corporation,
or its successor in interest.
Controlling Party: Means the party entitled to act as such pursuant
to the terms of the Intercreditor Agreement.
Corporate Trust Office: With respect to the Trustee or any Loan
Trustee, means the office of such trustee in the city at which at any
particular time its corporate trust business shall be principally
administered.
Delivery Notice: Has the meaning specified in the Note Purchase
Agreement.
Delivery Period Termination Date: Has the meaning specified in the
Related Pass Through Trust Agreement.
Deposits: Has the meaning specified in the Deposit Agreement.
Deposit Agreement: Means the Deposit Agreement dated as of August
13, 1998 relating to the Certificates between the Depositary and the
Escrow Agent,
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<PAGE>
as the same may be amended, supplemented or otherwise modified from time
to time in accordance with its terms.
Depositary: Means First Union National Bank.
DTC: Means The Depository Trust Company, its nominees and their
respective successors.
Direction: Has the meaning specified in Section 1.04(c).
Distribution Date: Means each Regular Distribution Date or Special
Distribution Date.
Equipment Notes: Means the Equipment Notes issued pursuant to the
Indentures.
ERISA: Means the Employee Retirement Income Security Act of 1974, as
amended.
Escrow Agent: Means, initially, First Union Trust Company, National
Association, and any replacement or successor therefor appointed in
accordance with the Escrow Agreement.
Escrow Agreement: Means the Escrow and Paying Agent Agreement dated
as of August 13, 1998 relating to the Certificates, among the Escrow
Agent, the Escrow Paying Agent, the Trustee and the Initial Purchasers, as
the same may be amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Escrow Paying Agent: Means the Person acting as paying agent under
the Escrow Agreement.
Escrow Receipt: Means the receipt substantially in the form annexed
to the Escrow Agreement representing a fractional undivided interest in
the funds held in escrow thereunder.
Euroclear: Means the Euroclear System.
Exchange Certificates: Means the pass through certificates
substantially in the form of Exhibit A hereto issued in exchange for the
Initial Certificates pursuant to the Registration Rights Agreement and
authenticated hereunder.
Exchange Offer: Means the exchange offer which may be made pursuant
to the Registration Rights Agreement to exchange Initial Certificates for
Exchange Certificates.
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Exchange Offer Registration Statement: Means the registration
statement that, pursuant to the Registration Rights Agreement, is filed by
the Company with the SEC with respect to the exchange of Initial
Certificates for Exchange Certificates.
Event of Default: Means the occurrence of an Indenture Default under
any Indenture pursuant to which Equipment Notes held by the Trust were
issued.
Final Maturity Date: Means July, 2, 2016.
Final Withdrawal: Has the meaning specified in the Escrow Agreement.
Final Withdrawal Date: Has the meaning specified in the Escrow
Agreement.
Fractional Undivided Interest: Means the fractional undivided
interest in the Trust that is evidenced by a Certificate.
Global Certificates: Has the meaning assigned to such term in
Section 3.01.
Indenture: Means each of the separate trust indenture and security
agreements relating to the Aircraft, each as specified or described in a
Delivery Notice delivered pursuant to the Note Purchase Agreement or the
related Participation Agreement in each case as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
its terms.
Indenture Default: With respect to any Indenture, means any
Indenture Event of Default (as such term is defined in such Indenture)
thereunder.
Initial Certificates: Means the certificates issued and
authenticated hereunder substantially in the form of Exhibit A hereto
other than the Exchange Certificates.
Initial Purchasers: Means Morgan Stanley & Co. Incorporated and
Credit Suisse First Boston Corporation.
Initial Regular Distribution Date: Means the first Regular
Distribution Date on which a Scheduled Payment is to be made.
Institutional Accredited Investor: Means an institutional investor
that is an "accredited investor" within the meaning set forth in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act.
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Intercreditor Agreement: Means the Intercreditor Agreement dated
August 13, 1998 among the Trustee, the Other Trustees, the Liquidity
Provider, the liquidity providers, if any, relating to the Certificates
issued under (and as defined in) the Other Pass Through Trust Agreements,
and The First National Bank of Maryland, as Subordination Agent
thereunder, as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Issuance Date: Means the date of the issuance of the Initial
Certificates.
Lease: Means, with respect to each Leased Aircraft, the 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.
Leased Aircraft: Has the meaning given to such term in the recitals
hereto.
Letter of Representations: Means the agreement dated the Issuance
Date among the Company, the Trustee and the initial Clearing Agency.
Liquidity Facility: Means the Irrevocable Revolving Credit Agreement
dated August 13, 1998 relating to the Certificates, between the Liquidity
Provider and the Subordination Agent, as amended, replaced, supplemented
or otherwise modified from time to time in accordance with its terms and
the terms of the Intercreditor Agreement.
Liquidity Provider: Means, initially, ABN AMRO Bank N.V., acting
through its Chicago branch, and any replacement or successor therefor
appointed in accordance with the Liquidity Facility and the Intercreditor
Agreement.
Loan 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 Loan
Trustee as such trustee; and Loan Trustees means all of the Loan Trustees
under the Indentures.
New Aircraft: Has the meaning specified in the Note Purchase
Agreement.
Non-U.S. Person: Means a Person that is not a U.S. Person, as
defined in Regulation S.
Note Documents: With respect to any Equipment Note, means (i) the
Indenture and the Participation Agreement relating to such Equipment Note,
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and (ii) in the case of any Equipment Note related to a Leased Aircraft,
also includes the Lease relating to such Leased Aircraft.
Note Purchase Agreement. Means the Note Purchase Agreement dated as
of August 13, 1998 among the Trustee, the Other Trustees, the Company, the
Escrow Agent, the Escrow Paying Agent and the Subordination Agent,
providing for, among other things, the purchase of Equipment Notes by the
Trustee on behalf of the Trust, as the same may be amended, supplemented
or otherwise modified from time to time, in accordance with its terms.
Officer's Certificate: Means a certificate signed, (a) in the case
of the Company, by (i) 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 a Loan
Trustee, a Responsible Officer of the Trustee or such Owner Trustee or
such Loan Trustee, as the case may be.
Offshore Certificates Exchange Date: Has the meaning specified in
Section 3.01.
Offshore Global Certificates: Has the meaning assigned to such term
in Section 3.01.
Offshore Physical Certificates: Has the meaning assigned to such
term in Section 3.01.
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 or (ii) such other counsel
designated by the Company and reasonably acceptable to the Trustee and (b)
in the case of any Owner Trustee or any Loan Trustee may be such counsel
as may be designated by any of them whether or not such counsel is an
employee of any of them, and who shall be reasonably acceptable to the
Trustee.
Other Pass Through Trust Agreement: Means each of the three other
Midway Airlines 1998-1 Pass Through Trust Agreements relating to,
respectively, Midway Airlines 1998-1B-S Pass Through Trust, Midway
Airlines 1998-1C-S Pass Through Trust and Midway Airlines 1998-1D-S Pass
Through Trust, each dated the date hereof; and Other Pass Through Trust
Agreements means all such agreements.
Other Trust: Means each of the Midway Airlines Pass Through Trust
1998-1B-S, the Midway Airlines Pass Through Trust 1998-1C-S and the Midway
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Airlines Pass Through Trust 1998-1D-S, each created on the date hereof;
and Other Trusts means all such trusts.
Other Trustee: Means the trustee under each of the Other Pass
Through Trust Agreements, and any successor or other trustee appointed as
provided therein; and Other Trustees means all such trustees.
Outstanding: With respect to Certificates, means, as of the date of
determination, all Certificates theretofore authenticated and delivered
under this Agreement, except:
(i) Certificates theretofore cancelled by the Registrar or
delivered to the Trustee or the Registrar for cancellation;
(ii) All of the Certificates if money in the full amount
required to make the final distribution with respect thereto
pursuant to Section 11.01 hereof has been theretofore deposited with
the Trustee in trust for the Holders of such Certificates as
provided in Section 4.01 pending distribution of such money to such
Certificateholders pursuant to such final distribution payment; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been authenticated and delivered pursuant to this
Agreement.
Owned Aircraft: Has the meaning given to such term in the recitals
hereto.
Owner Participant: With respect to any Equipment Note relating to a
Leased Aircraft, means the "Owner Participant" 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 relating to a
Leased Aircraft, means the "Owner Trustee", 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 Indentures.
Participation Agreement: Means each Participation Agreement to be
entered into by the Trustee pursuant to the Note Purchase Agreement, as
the same may be amended, supplemented or otherwise modified in accordance
with its terms.
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Paying Agent: Means the paying agent maintained and appointed for
the Certificates pursuant to Section 7.12.
Permanent Offshore Global Certificates: Has the meaning specified in
Section 3.01.
Permitted Investments: Means obligations of the United States of
America or agencies or instrumentalities thereof for the payment of which
the full faith and credit of the United States of America is pledged,
maturing in not more than 60 days or such lesser time as is necessary for
payment of any Special Payments on a Special Distribution Date or any
mutual fund the portfolio of which is limited to such obligations,
including any proprietary mutual fund of The First National Bank of
Maryland for which such bank or an affiliate is investment advisor or to
which such bank provides other services and receives reasonable
compensation for such services.
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.
Physical Certificates: Has the meaning specified in Section 3.01.
Plan Transferee: Means any Plan or any entity that is using the
assets of any Plan to purchase or hold its interest in a 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.
Pool Balance: Means, as of any date, (i) the original aggregate face
amount of the Certificates less (ii) the aggregate amount of all payments
made in respect of such Certificates or in respect of Deposits 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 as of any Distribution Date shall be computed after giving effect
to any special distribution with respect to unused Deposits, payment of
principal, if any, on the Equipment Notes or other Trust Property held in
the Trust and the distribution thereof to be made on such Distribution
Date.
Pool Factor: Means, as of any date, the quotient (rounded to the
seventh decimal place) computed by dividing (i) the Pool Balance as at
such date by (ii) the original aggregate face amount of the Certificates.
The Pool Factor as of any Distribution Date shall be computed after giving
effect to any special distribution with respect to unused Deposits,
payment of principal, if any, on the Equipment Notes or other Trust
Property and the distribution thereof to be made on such Distribution
Date.
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Private Placement Legend: Has the meaning specified in Section 3.02.
Purchase Agreement: Means the Purchase Agreement dated August 6,
1998 between the Company and the Initial Purchasers.
QIB: Means a qualified institutional buyer as defined in Rule 144A.
Record Date: Means (i) for Scheduled Payments to be distributed on
any Regular Distribution Date, other than the final distribution, 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, the 15th day
(whether or not a Business Day) preceding such Special Distribution Date.
Register and Registrar: Mean the register maintained and the
registrar appointed pursuant to Sections 3.04 and 7.12.
Registration Rights Agreement: Means the Registration Rights
Agreement, dated as of August 13, 1998, among the Initial Purchasers, the
Trustee, the Other Trustees and the Company, as amended, supplemented or
otherwise modified from time to time in accordance with its terms.
Regular Distribution Date: With respect to distributions of
Scheduled Payments in respect of the Certificates, means each date
designated as a Regular Distribution Date in this Agreement, until payment
of all the Scheduled Payments to be made under the Equipment Notes held in
the Trust have been made; 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.
Regulation S: Means Regulation S under the Securities Act or any
successor regulation thereto.
Related Other Pass Through Trust Agreements: Means the "Other
Agreements" as defined in the Related Pass Through Trust Agreement.
Related Other Trustees: Means the "Other Trustees" as defined in the
Related Pass Through Trust Agreement.
Related Pass Through Trust Agreement: Means the Pass Through Trust
Agreement 1998-1A-O dated the date hereof relating to the Midway Airlines
Pass Through Trust 1998-1A-O and entered into by the Company and the
Trustee.
Related Trust: Means the Midway Pass Through Trust 1998-1A-O, to be
formed under the Related Pass Through Trust Agreement.
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Related Trustee: Means the trustee under the Related Pass Through
Trust Agreement.
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 Agreement.
Responsible Officer: With respect to the Trustee, any Loan Trustee
and any Owner Trustee, means any officer in the Corporate Trust Division
of the Trustee, Loan 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.
Rule 144A: Means Rule 144A under the Securities Act and any
successor regulation thereto.
Scheduled Payment: With respect to any Equipment Note, means any
payment of principal and interest on such Equipment Note (other than any
such payment which is not in fact received by the Trustee or any
Subordination Agent within five days of the date on which such payment is
scheduled to be made) or any payment of interest on the Certificates with
funds drawn under the Liquidity Facility 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, as
amended, 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.
Securities Act: Means the United States Securities Act of 1933, as
amended from time to time, or any successor thereto.
Shelf Registration Statement: Means the shelf registration statement
which may be required to be filed by the Company with the SEC pursuant to
any Registration Rights Agreement, other than an Exchange Offer
Registration Statement.
Special Distribution Date: Means each date on which a Special
Payment is to be distributed as specified in this Agreement; provided,
however, that, if any
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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) or Special Redemption Premium.
Special Payments Account: Means the account or accounts created and
maintained pursuant to Section 4.01(b).
Special Redemption Premium: Means the premium payable by the Company
in respect of the Final Withdrawal pursuant to the Note Purchase
Agreement.
Specified Investments: Means (i) obligations of, or guaranteed by,
the United States Government or agencies thereof, (ii) open market
commercial paper of any corporation incorporated under the laws of the
United States of America or any State thereof rated at least P-2 or its
equivalent by Moody's Investors Service, Inc. or at least A-2 or its
equivalent by Standard & Poor's Ratings Group, (iii) certificates of
deposit issued by commercial banks organized under the laws of the United
States or of any political subdivision thereof having a combined capital
and surplus in excess of $500,000,000 which banks or their holding
companies have a rating of A or its equivalent by Moody's Investors
Service, Inc. or Standard & Poor's Ratings Group; provided, however, that
the aggregate amount at any one time so invested in certificates of
deposit issued by any one bank shall not exceed 5% of such bank's capital
and surplus, (iv) U.S. dollar denominated offshore certificates of deposit
issued by, or offshore time deposits with, any commercial bank described
in (iii) or any subsidiary thereof, (v) repurchase agreements with any
financial institution having combined capital and surplus of at least
$500,000,000 with any of the obligations described in clauses (i) through
(iv) as collateral and (vi) any mutual fund the portfolio of which is
limited to investments of the types specified in the preceding clauses (i)
through (v), including any proprietary mutual fund of The First National
Bank of Maryland for which such bank or an affiliate is investment advisor
or to which such bank provides other services and receives reasonable
compensation for such services; 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.
Subordination Agent: Has the meaning specified in the Intercreditor
Agreement.
Temporary Offshore Global Certificates: Has the meaning specified in
Section 3.01.
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Transfer Date: Means the moment of execution and delivery of the
Assignment and Assumption Agreement by each of the parties thereto.
Transfer Date Certificate: Has the meaning specified in the
definition of "Certificates".
Triggering Event: Has the meaning assigned to such term in the
Intercreditor Agreement.
Trust: Means the trust created by this Agreement, the estate of
which consists of the Trust Property.
Trust Indenture Act: Except as otherwise provided in Section 9.06,
means the United States Trust Indenture Act of 1939 as in force at the
date hereof.
Trust Property: Means (i) subject to the Intercreditor Agreement,
the Equipment Notes held as the property of the Trust, 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, subject to the Intercreditor Agreement, any
proceeds from the sale by the Trustee pursuant to Section 6.02 of any
Equipment Note and (iii) all rights of the Trust and the Trustee, on
behalf of the Trust, under the Intercreditor Agreement, the Escrow
Agreement, the Note Purchase Agreement and the Liquidity Facilities,
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 Facilities,
provided that rights with respect to the Deposits or under the Escrow
Agreement, except for the right to direct withdrawals for the purchase of
Equipment Notes to be held herein, will not constitute Trust Property.
Trustee: Means The First National Bank of Maryland, or its successor
in interest, and any successor or other trustee appointed as provided
herein.
Trustee's Lien: Has the meaning specified in Section 7.17.
U.S. Global Certificate: Has the meaning specified in Section 3.01.
U.S. Physical Certificates: Has the meaning specified in Section
3.01.
Section 1.02. Compliance Certificates and Opinions. Upon any
application or request by the Company, any Owner Trustee or any Loan Trustee to
the Trustee to take any action under any provision of this Agreement, the
Company, such Owner Trustee or such Loan Trustee, as the case may be, shall
furnish to the Trustee (i) an Officer's Certificate stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in this Agreement
relating to the proposed action have been complied with and (ii) an Opinion of
Counsel stating that in the opinion of such counsel
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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 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 Agreement (other than a certificate
provided pursuant to Section 8.04(d)) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions in this
Agreement relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and 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 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 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,
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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 Loan 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 this
Agreement and conclusive in favor of the Trustee, the Company and any Loan
Trustee, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument acknowledged to him
the execution thereof, or by an affidavit of a witness to such execution sworn
to before any such notary or such other officer and where such execution is by
an officer of a corporation or association or a member of a partnership, on
behalf of such corporation, association or partnership, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other reasonable manner
which the Trustee deems sufficient.
(c) In determining whether the Certificateholders of the requisite
Fractional Undivided Interests of Certificates Outstanding have given any
direction, consent or waiver (a "Direction") under this Agreement, Certificates
owned by the Company, any Owner Trustee, any Owner Participant or any Affiliate
of any such Person thereof 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 the
Trustee in fact knows to be so owned shall be so disregarded. Notwithstanding
the foregoing, (i) if any such Person owns 100% of the Certificates Outstanding,
such Certificates shall not be so disregarded as aforesaid, and (ii) if any
amount of Certificates 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
Owner Trustee, any Owner Participant or any Affiliate of any such Person.
(d) For all purposes of this Agreement, all Initial Certificates and
all Exchange Certificates shall vote and take all other actions of
Certificateholders together as one series of Certificates.
(e) The Company may at its option, by delivery of an Officer's
Certificate to the Trustee, set a record date to determine the
Certificateholders entitled to give any consent, request, demand, authorization,
direction, notice, waiver or other 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,
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request, demand, authorization, direction, notice, waiver or other Act may be
given before or after such record date, but only the Certificateholders of
record 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 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 shall be
computed as of such record date; provided that no such consent, request, demand,
authorization, direction, notice, waiver or other Act by the Certificateholders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Agreement not later than one year after such
record date.
(f) 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.
(g) Except as otherwise provided in Section 1.04(c), Certificates
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.
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Acquisition of Trust Property. (a) The Trustee is
hereby irrevocably authorized and directed to execute and deliver the Assignment
and Assumption Agreement on the date specified in Section 11.01 of the Related
Trust Supplement, subject only to the satisfaction of the conditions set forth
in said Section 11.01. This Agreement (except only for the immediately preceding
sentence hereof, which is effective upon execution and delivery hereof) shall
become effective upon the execution and delivery of the Assignment and
Assumption Agreement by the Trustee and the Related Trustee, automatically and
without any further signature or action on the part of the Company and the
Trustee, and shall thereupon constitute the legal, valid and binding obligation
of the parties hereto enforceable against each of the parties hereto in
accordance with its terms. Upon such execution and delivery of the Assignment
and Assumption Agreement, the Related Trust shall be terminated, the
Certificateholders shall receive beneficial interests in the Trust in exchange
for their interests in the Related Trust equal to their respective beneficial
interests in the Related Trust and the "Outstanding" (as defined in the Related
Pass Through Trust Agreement) pass through certificates representing fractional
undivided interests in the Related Trust shall be deemed for all purposes of
this Agreement, without further signature or action of any party or
Certificateholder, to be Certificates representing the same Fractional Undivided
Interests in the Trust and Trust Property. By acceptance
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of its Certificate, each Certificateholder consents to and ratifies such
assignment, transfer and delivery of the trust property of the Related Trust to
the Trustee upon the execution and delivery of the Assignment and Assumption
Agreement. Except as provided in Sections 3.04, 3.05, 3.07 and 3.11, the Trustee
shall not execute, authenticate or deliver Certificates in excess of the
aggregate amount specified in this paragraph.
(b) The Trustee, upon the execution and delivery of the Assignment
and Assumption Agreement, acknowledges its acceptance of all right, title and
interest in and to the Trust Property and declares that the Trustee holds and
will hold such right, title and interest for the benefit of all then present and
future Certificateholders, upon the trusts herein set forth. By the acceptance
of each Certificate issued to it under the Related Pass Through Trust Agreement
and deemed issued under this Agreement, each Holder of any such Certificate as
grantor of the Trust thereby joins in the creation and declaration of the Trust.
Section 2.02. [Reserved]
Section 2.03. The Trustee. Subject to Section 7.15, the Trustee
shall not be responsible in any manner whatsoever for or in respect of the
validity or sufficiency of this Agreement, the Deposit Agreement or the Escrow
Agreement or the due execution hereof or thereof by the Company or the other
parties thereto (other than the Trustee), or for or in respect of the recitals
and statements contained herein or therein, all of which recitals and statements
are made solely by the Company.
Section 2.04. Acceptance by Trustee. The Trustee, upon the execution
and delivery of this Agreement, acknowledges its acceptance of all right, title
and interest in and to the Trust Property acquired pursuant to Section 2.01
hereof and the Note Purchase Agreement and declares that the Trustee holds and
will hold such right, title and interest, together with all other property
constituting the Trust Property, for the benefit of all then present and future
Certificateholders, upon the trusts herein set forth. Subject to Section 7.14,
the Trustee shall take all actions reasonably necessary to effect the
registration of all such Equipment Notes in the name of the Subordination Agent.
By its payment for and acceptance of each Certificate issued to it under this
Agreement, each initial Certificateholder as grantor of the Trust thereby joins
in the creation and declaration of the Trust.
Section 2.05. Limitation of Powers. The Trust is constituted solely
for the purpose of making the investment in the Equipment Notes, and, except as
set forth herein, 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 any Aircraft (as
defined in the respective Indentures) by bidding such Equipment Notes or
otherwise, or taking any action with respect to any such Aircraft once
acquired).
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ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution of
Certificates. (a) The Initial Certificates shall be known as the "7.14%
1998-1A-S Initial Pass Through Certificates" and the Exchange Certificates shall
be known as the "7.14% 1998-1A-S Exchange Pass Through Certificates", in each
case, of the Trust. Each Certificate will represent a fractional undivided
interest in the Trust and shall be substantially in the form set forth as
Exhibit A hereto, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Agreement and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Certificates, as evidenced by their execution of 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. At the Escrow Agent's request under the Escrow Agreement, the
Trustee shall affix the corresponding Escrow Receipt to each Certificate. In any
event, any transfer or exchange of any Certificate shall also effect a transfer
or exchange of the related Escrow Receipt. Prior to the Final Withdrawal Date,
no transfer or exchange of any Certificate shall be permitted unless the
corresponding Escrow Receipt is attached thereto and also is so transferred or
exchanged. By acceptance of any Certificate to which an Escrow Receipt is
attached, each Holder of such a Certificate acknowledges and accepts the
restrictions on transfer of the Escrow Receipt set forth herein and in the
Escrow Agreement.
(b) The Initial Certificates shall be issued only in fully
registered form without coupons and only in denominations of $100,000 or
integral multiples of $1,000 in excess thereof, except that one Certificate may
be issued in a denomination of less than $100,000. The Exchange Certificates
will be issued in denominations of $1,000 or integral multiples thereof. Each
Certificate shall be dated the date of its authentication. The aggregate
Fractional Undivided Interest of Certificates shall not at any time exceed
$58,426,000.
(c) Initial Certificates offered and sold in reliance on Rule 144A
shall be issued initially in the form of a single permanent global Certificate
in registered form, substantially in the form set forth as Exhibit A hereto (the
"U.S. Global Certificate"), duly executed and authenticated by the Trustee as
hereinafter provided. The U.S. Global Certificate will be registered in the name
of a nominee for DTC and deposited with the Trustee, as custodian for DTC. The
aggregate principal amount of the U.S. Global Certificate may from time to time
be increased or decreased by adjustments made on the records of the Depositary
or its nominee, or of the Trustee, as custodian for DTC or its nominee, as
hereinafter provided.
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(d) Initial Certificates offered and sold in offshore transactions
in reliance on Regulation S shall be issued initially in the form of a single
temporary global Certificate in registered form, substantially in the form set
forth as Exhibit A hereto (the "Temporary Offshore Global Certificate") duly
executed and authenticated by the Trustee as hereinafter provided. The Temporary
Offshore Global Certificate will be registered in the name of a nominee of DTC
for credit to the account of the Agent Members acting as depositaries for
Euroclear and Cedel and deposited with the Trustee as custodian for DTC. At any
time on or after September 23, 1998 (the "Offshore Certificates Exchange Date"),
upon receipt by the Trustee of a certificate substantially in the form of
Exhibit B hereto, a single permanent global Certificate in registered form
substantially in the form set forth in Exhibit A (the "Permanent Offshore Global
Certificate"; and together with the Temporary Offshore Global Certificate, the
"Offshore Global Certificates"), duly executed and authenticated by the Trustee
as hereinafter provided, shall be registered in the name of a nominee for DTC
and deposited with the Trustee, as custodian for DTC, and the Registrar shall
reflect on its books and records the date of such transfer and a decrease in the
principal amount of any Temporary Offshore Global Certificate in an amount equal
to the principal amount of the beneficial interest in such Temporary Offshore
Global Certificate transferred. The U.S. Global Certificate and the Offshore
Global Certificates are sometimes referred to as the "Global Certificates".
(e) Initial Certificates offered and sold to Institutional
Accredited Investors shall be issued in the form of permanent certificated
Certificates in registered form in substantially the form set forth as Exhibit A
hereto (the "U.S. Physical Certificates"). Certificates issued pursuant to
Section 3.05(b) in exchange for interests in any Offshore Global Certificate
shall be in the form of permanent certificated Certificates in registered form
substantially in the form set forth in Exhibit A (the "Offshore Physical
Certificates"). The Offshore Physical Certificates and U.S. Physical
Certificates are sometimes collectively herein referred to as the "Physical
Certificates".
(f) The Exchange Certificates shall be issued in the form of one or
more global Certificates substantially in the form of Exhibit A hereto (each, a
"Global Exchange Certificate"), except that (i) the Private Placement Legend
(hereinafter defined) shall be omitted. Such Global Exchange Certificates shall
be in registered form and be registered in the name of DTC and deposited with
the Trustee, at its Corporate Trust Office, as custodian DTC. The aggregate
principal amount of any Global Exchange Certificate may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for DTC for such Global Exchange Certificate, which adjustments shall
be conclusive as to the aggregate principal amount of any such Global Exchange
Certificates. Subject to clause (i) of the first sentence of this Section
3.01(f), the terms hereof applicable to Global Certificates shall apply to the
Global Exchange Certificates, mutatis mutandis.
(g) The definitive Certificates shall be in registered form and
shall be typed, printed, lithographed or engraved or produced by any combination
of these
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methods or may be produced in any other manner, all as determined by the
officers executing such Certificates, as evidenced by their execution of such
Certificates.
Section 3.02. Restrictive Legends. (a) Subject to Section 3.06, each
Global Certificate (other than the Permanent Offshore Global Certificate) and
each U.S. Physical Certificate shall bear the following legend (the "Private
Placement Legend") on the face thereof:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY
MIDWAY AIRLINES CORPORATION ("MIDWAY") OR ANY AFFILIATE OF MIDWAY, RESELL
OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO MIDWAY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATES
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE
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ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
CERTIFICATE WAS HELD BY MIDWAY OR AN AFFILIATE OF MIDWAY, THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND MIDWAY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
(b) Each Global Certificate shall also bear the following legend on
the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE 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 HEREON 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.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST
AGREEMENT REFERRED TO HEREIN.
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Section 3.03. Authentication of Certificates. (a) The Trustee shall
duly execute, authenticate and deliver Certificates in authorized denominations
equalling in the aggregate the aggregate principal amount of the Equipment Notes
to be purchased by the Trustee pursuant to the Participation Agreements and
evidencing the entire ownership of the Trust.
(b) No Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose, unless there appears on
such Certificate a certificate of authentication substantially in the form
provided for herein executed by the Trustee by the manual signature of one of
its authorized signatories, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.
Section 3.04. Transfer and Exchange. The Trustee shall cause to be
kept at the office or agency to be maintained by it in accordance with the
provisions of Section 7.12 of this Agreement a register (the "Register") for the
Certificates in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of the Certificates
and of transfers and exchanges of the Certificates as herein provided. The
Trustee shall initially be the registrar (the "Registrar") for the purpose of
registering the Certificates and transfers and exchanges of the Certificates as
herein provided. A Certificateholder may transfer or exchange a Certificate by
written application to the Registrar stating the name of the proposed transferee
and otherwise complying with the terms of this Agreement, including providing a
written certificate or other evidence of compliance with any restrictions on
transfer; provided that no exchanges of Initial Certificates for Exchange
Certificates shall occur until an Exchange Offer Registration Statement shall
have been declared effective by the SEC (notice of which shall be provided to
the Trustee by the Company). No such transfer shall be effected until, and such
transferee shall succeed to the rights of a Certificateholder only upon, final
acceptance and registration of the transfer by the Registrar in the Register.
Prior to the registration of any transfer by a Certificateholder as provided
herein, the Trustee shall treat the person in whose name the Certificate is
registered as the owner thereof for all purposes, and the Trustee shall not be
affected by notice to the contrary. Furthermore, DTC shall, by acceptance of a
Global Certificate, agree that transfers of beneficial interests in such Global
Certificate may be effected only through a book-entry system maintained by the
Depositary (or its agent), and that ownership of a beneficial interest in the
Certificate shall be required to be reflected in a book entry. When Certificates
are presented to the Registrar with a request to register the transfer or to
exchange them for an equal face amount of Certificates of other authorized
denominations, the Registrar shall register the transfer or make the exchange as
requested if its requirements for such transactions are met. To permit
registrations of transfers and exchanges in accordance with the terms,
conditions and restrictions hereof, the Trustee shall execute and authenticate
Certificates at the Registrar's request. No service charge shall be made for any
registration of transfer or exchange of the Certificates, but the Trustee may
require payment by the transferor of a sum sufficient to cover any transfer tax
or similar governmental charge payable in connection therewith.
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Section 3.05. Book-Entry Provisions for U.S. Global Certificate and
Offshore Global Certificates. (a) Members of, or participants in, DTC ("Agent
Members") shall have no rights under this Agreement with respect to any Global
Certificate held on their behalf by DTC, or the Trustee as its custodian, and
DTC may be treated by the Trustee and any agent of the Trustee as the absolute
owner of such Global Certificate for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Trustee or any agent of the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by DTC or shall impair, as between DTC and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a holder of any Certificate. Upon the issuance of any Global
Certificate, the Registrar or its duly appointed agent shall record a nominee of
DTC as the registered holder of such Global Certificate.
(b) Transfers of any Global Certificate shall be limited to
transfers of such Global Certificate in whole, but not in part, to nominees of
DTC, its successor or such successor's nominees. Beneficial interests in the
U.S. Global Certificate and any Offshore Global Certificate may be transferred
in accordance with the rules and procedures of DTC and the provisions of Section
3.06. Beneficial interests in the U.S. Global Certificate or an Offshore Global
Certificate shall be delivered to all beneficial owners in the form of U.S.
Physical Certificates or Offshore Physical Certificates, as the case may be, if
(i) the Company notifies the Trustee in writing that DTC is unwilling or unable
to discharge properly its responsibilities as DTC for the U.S. Global
Certificate or such Offshore Global Certificate, as the case may be, and the
Company is unable to locate a qualified successor depositary within 90 days of
such notice or (ii) after the occurrence of an Event of Default, beneficial
owners of the U.S. Global Certificate or Offshore Global Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in the Trust, by Act of such Certificateholders delivered to the Company and the
Trustee, advise the Company, the Trustee and DTC through its Clearing Agency
Participants in writing that the continuation of a book-entry system through DTC
is no longer in the best interests of the Certificateholders, then the Trustee
shall notify all owners of beneficial interests in the U.S. Global Certificate
or an Offshore Global Certificate, through DTC, of the occurrence of any such
event and the availability of definitive Certificates.
(c) Any beneficial interest in one of the Global Certificates that
is transferred to a Person who takes delivery in the form of an interest in the
other Global Certificate will, upon such transfer, cease to be an interest in
such Global Certificate and become an interest in the other Global Certificate
and, accordingly, will thereafter be subject to all transfer restrictions, if
any, and other procedures applicable to beneficial interests in such other
Global Certificate for as long as it remains such an interest.
(d) [Intentionally omitted.]
(e) In connection with the transfer of the entire U.S. Global
Certificate or an entire Offshore Global Certificate to the beneficial owners
thereof pursuant to
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paragraph (b) of this Section 3.05, such U.S. Global Certificate or Offshore
Global Certificate, as the case may be, shall be deemed to be surrendered to the
Trustee for cancellation, and the Trustee shall execute, authenticate and
deliver, to each beneficial owner identified by DTC in exchange for its
beneficial interest in such U.S. Global Certificate or Offshore Global
Certificate, as the case may be, an equal aggregate principal amount of U.S.
Physical Certificates or Offshore Physical Certificates, as the case may be, of
authorized denominations.
(f) Any U.S. Physical Certificate delivered in exchange for an
interest in the U.S. Global Certificate pursuant to paragraph (b) of this
Section 3.05 shall, except as otherwise provided by paragraph (f) of Section
3.06, bear the Private Placement Legend.
(g) Any Offshore Physical Certificate delivered in exchange for an
interest in an Offshore Global Certificate pursuant to paragraph (b) of this
Section shall, except as otherwise provided by paragraph (f) of Section 3.06,
bear the applicable legend regarding transfer restrictions set forth in Section
3.02(a).
(h) The registered holder of the U.S. Global Certificate or any
Offshore Global Certificate may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Agreement or the Certificates.
Section 3.06. Special Transfer Provisions. Unless and until (i) an
Initial Certificate is sold under an effective Shelf Registration Statement or
(ii) an Initial Certificate is exchanged for an Exchange Certificate pursuant to
an effective Exchange Offer Registration Statement, in each case pursuant to the
terms of the Registration Rights Agreement, the following provisions shall apply
to the Certificates:
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Certificate to any Institutional Accredited Investor
which is not a QIB (excluding transfers to or by Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Certificate,
whether or not such Certificate bears the Private Placement Legend, if (x)
the requested transfer is at least two years after the later of the
original issue date of the Certificates and the last date on which such
Certificate was held by the Company or any affiliate thereof or (y) the
proposed transferee has delivered to the Registrar a letter substantially
in the form of Exhibit D hereto and the aggregate principal amount of the
Certificates being transferred is at least $100,000.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Certificate, upon receipt by the
Registrar of (x) the documents, if any, required by paragraph (i) and (y)
instructions given in accordance with DTC's and the Registrar's
procedures, the Registrar shall reflect
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on its books and records the date of the transfer and a decrease in the
principal amount of such U.S. Global Certificate in an amount equal to the
principal amount of the beneficial interest in such U.S. Global
Certificate to be transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver to the transferor or at its
direction, one or more U.S. Physical Certificates of like tenor and
amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of an Initial Certificate
to a QIB (excluding Non-U.S. Persons):
(i) If the Certificate to be transferred consists of U.S. Physical
Certificates or an interest in any Temporary Offshore Global Certificate,
the Registrar shall register the transfer if such transfer is being made
by a proposed transferor who has checked the box provided for on the form
of Initial Certificate stating, or has otherwise advised the Trustee and
the Registrar in writing, that the sale has been made in compliance with
the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Initial Certificate stating, or
has otherwise advised the Trustee and the Registrar in writing, that it is
purchasing the Initial Certificate for its own account or an account with
respect to which it exercises sole investment discretion and that it, or
the Person on whose behalf it is acting with respect to any such account,
is a QIB within the meaning of Rule 144A, and is aware that the sale to it
is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Trust and/or the Company as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
(ii) Upon receipt by the Registrar of the documents referred to in
clause (i) above and instructions given in accordance with DTC's and the
Registrar's procedures therefor, the Registrar shall reflect on its books
and records the date of such transfer and an increase in the principal
amount of the U.S. Global Certificate in an amount equal to the principal
amount of the U.S. Physical Certificates or interests in the Temporary
Offshore Global Certificate, as the case may be, being transferred, and
the Trustee shall cancel such Physical Certificates or decrease the amount
of such Temporary Offshore Global Certificate so transferred.
(c) [Intentionally omitted.]
(d) Transfers of Interests in the Permanent Offshore Global
Certificate or Offshore Physical Certificates. The Registrar shall register any
transfer of interests in the Permanent Offshore Global Certificate or Offshore
Physical Certificates without requiring any additional certification.
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(e) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any registration of any transfer of an
Initial Certificate to a Non-U.S. Person:
(i) Prior to the Offshore Certificates Exchange Date, the Registrar
shall register any proposed transfer of an Initial Certificate to a
Non-U.S. Person upon receipt of a certificate substantially in the form
set forth as Exhibit C hereto from the proposed transferor.
(ii) On and after the Offshore Certificates Exchange Date, the
Registrar shall register any proposed transfer to any Non-U.S. Person if
the Certificate to be transferred is a U.S. Physical Certificate or an
interest in the U.S. Global Certificate, upon receipt of a certificate
substantially in the form of Exhibit C from the proposed transferor. The
Registrar shall promptly send a copy of such certificate to the Company.
(iii) Upon receipt by the Registrar of (x) the documents, if any,
required by paragraph (ii) and (y) instructions in accordance with the
Depositary's and the Registrar's procedures, the Registrar shall reflect
on its books and records the date of such transfer and a decrease in the
principal amount of such U.S. Global Certificate in an amount equal to the
principal amount of the beneficial interest in such U.S. Global
Certificate to be transferred, and (B) upon receipt by the Registrar of
instructions given in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and an increase in the principal amount of the Offshore Global Certificate
in an amount equal to the principal amount of the U.S. Physical
Certificate or the U.S. Global Certificate, as the case may be, to be
transferred, and the Trustee shall cancel the Physical Certificate, if
any, so transferred or decrease the amount of such U.S. Global
Certificate.
(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Certificates not bearing the Private Placement Legend, the
Registrar shall deliver Certificates that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Certificates bearing the
Private Placement Legend, the Registrar shall deliver only Certificates that
bear the Private Placement Legend unless either (i) the circumstances
contemplated by paragraph (a)(i)(x) or (e)(ii) of this Section 3.06 exist or
(ii) there is delivered to the Registrar an Opinion of Counsel to the effect
that neither such legend nor the related restrictions on transfer are required
in order to maintain compliance with the provisions of the Securities Act.
(g) General. By its acceptance of any Certificate bearing the
Private Placement Legend, each Holder of such a Certificate acknowledges the
restrictions on transfer of such Certificate set forth in this Agreement and
agrees that it will transfer such Certificate only as provided in this
Agreement. The Registrar shall not register a transfer of any Certificate unless
such transfer complies with the restrictions on transfer of such Certificate set
forth in this Agreement. In connection with any
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transfer of Certificates, each Certificateholder agrees by its acceptance of the
Certificates to furnish the Registrar or the Trustee such certifications, legal
opinions or other information as either of them may reasonably require to
confirm that such transfer is being made pursuant to an exemption from, or a
transaction not subject to, the registration requirements of the Securities Act;
provided that neither the Trustee nor the Registrar shall be required to
determine the sufficiency of any such certifications, legal opinions or other
information.
Until such time as no Certificates remain Outstanding, the Registrar
shall retain copies of all letters, notices and other written communications
received pursuant to Section 3.05 or this Section 3.06. The Trustee, if not the
Registrar at such time, shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Registrar.
Section 3.07. 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, in authorized denominations and of like Fractional Undivided
Interest and bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Certificate under this
Section 3.07, 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 3.07 shall
constitute conclusive evidence of the appropriate Fractional Undivided Interest
in the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Trustee, the Registrar and any
Paying Agent 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 Article IV and for all
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other purposes whatsoever, and none of the Trustee, the Registrar or any Paying
Agent shall be affected by any notice to the contrary.
Section 3.09. Cancellation. All Certificates surrendered for payment
or transfer or exchange shall, if surrendered to the Trustee or any agent of the
Trustee other than the Registrar, be delivered to the Registrar for cancellation
and shall promptly be cancelled by it. No Certificates shall be authenticated in
lieu of or in exchange for any Certificates cancelled as provided in this
Section, except as expressly permitted by this Agreement. All cancelled
Certificates held by the Registrar shall be destroyed and a certification of
their destruction delivered to the Trustee.
Section 3.10. Limitation of Liability for Payments. All payments and
distributions made to Certificateholders 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 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 to the extent available for distribution to such
Certificateholder as provided in this Agreement.
Section 3.11. Temporary Certificates. Until definitive Certificates
are ready for delivery, the Trustee shall authenticate temporary Certificates.
Temporary Certificates shall be substantially in the form of definitive
Certificates but may have insertions, substitutions, omissions and other
variations determined to be appropriate by the officers executing the temporary
Certificates, as evidenced by their execution of such temporary Certificates. If
temporary Certificates are issued, the Trustee will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
office or agency of the Trustee designated for such purpose pursuant to Section
7.12, without charge to the Certificateholder. Upon surrender for cancellation
of any one or more temporary Certificates, the Trustee shall execute,
authenticate and deliver in exchange therefor a like face amount of definitive
Certificates of authorized denominations. Until so exchanged, the temporary
Certificates shall be entitled to the same benefits under this Agreement as
definitive Certificates.
Section 3.12. ERISA Restrictive Legend. All Certificates issued
pursuant to this Agreement shall bear a legend to the following effect (the
"ERISA Legend") unless the Company and the Trustee determine otherwise
consistent with applicable law:
"BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS FOR THE BENEFIT OF
THE COMPANY AND EACH OWNER PARTICIPANT THAT (A) IT IS NOT A PLAN TRANSFEREE (AS
DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR (B) ONE OR MORE PROHIBITED
TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS APPLIES SUCH THAT THE USE OF
PLAN ASSETS TO PURCHASE AND HOLD THIS PASS THROUGH CERTIFICATE WILL
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NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975
OF THE CODE. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF
THE FOREGOING RESTRICTIONS."
By acceptance of any Certificate bearing the ERISA Legend, each
Holder of such a Certificate acknowledges for the benefit of the Company and
each Owner Participant the restrictions on transfer of such Certificate set
forth in this Agreement and agrees that it will transfer such Certificate only
as provided in this Agreement. The Registrar shall not register a transfer of
any Certificate unless such transfer complies with the restrictions on transfer,
if any, of such Certificate set forth in this Agreement.
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 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, 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 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 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 Loan Trustee to which an
Equipment Note relates such Equipment Note on the date of its stated final
maturity or, in the case of any Equipment Note which is to be redeemed in whole
pursuant to the relevant Indenture, on the applicable redemption date under such
Indenture.
Section 4.02. Distributions from Certificate Account and Special
Payments Account. (a) On each Regular Distribution Date or as soon thereafter as
the Trustee has confirmed receipt of the payment of the Scheduled Payments due
on such date, the
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Trustee shall distribute out of the Certificate Account the entire amount
deposited therein pursuant to Section 4.01(a). There shall be so distributed to
each Certificateholder of record 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
Fractional Undivided Interest in the Trust held by such Certificateholder) of
the total amount in the Certificate Account, except that, with respect to
Certificates registered on the Record Date in the name of the nominee of the
Depositary (initially, such nominee to be Cede & Co.), such distribution shall
be made by wire transfer in immediately available funds to the account
designated by such nominee.
(b) On each Special Distribution Date with respect to any Special
Payment or as soon thereafter as the Trustee has confirmed receipt of any
Special Payments, the Trustee shall distribute out of the 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 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 Trust held by such Certificateholder) of the aggregate amount in
the Special Payments Account on account of such Special Payment, except that,
with respect to Certificates registered on the Record Date in the name of the
nominee of the Depositary (initially, such nominee to be Cede & Co.), such
distribution shall be made by wire transfer in immediately available funds to
the account designated by such nominee.
(c) The Trustee shall, at the expense of the Company, cause notice
of each Special Payment to be mailed to each Certificateholder at his address as
it appears in the Register. In the event of redemption, prepayment or purchase
of Equipment Notes held in the Trust, such notice shall be mailed not less than
15 days prior to the date any 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 (which notice, in the case of a Special Redemption Premium,
shall include a copy of the notice delivered by the Escrow Paying Agent under
Section 2.06 of the Escrow Agreement). Notices mailed by the Trustee shall set
forth:
(i) the Special Distribution Date and the Record Date therefor
(except as otherwise provided in Section 11.01),
(ii) the amount of the Special Payment for each $1,000 face amount
Certificate (taking into account any payment to be made by the Company
pursuant to Section 2.02) and the amount thereof constituting principal,
premium, if any, and interest,
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(iii) the reason for the Special Payment, and
(iv) if the Special Distribution Date is the same date as a Regular
Distribution Date, the total amount to be received on such date for each
$1,000 face amount Certificate.
If the amount of (x) premium, if any, payable upon the redemption,
prepayment or purchase of an Equipment Note or (y) Special Redemption Premium
has not been calculated at the time 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 such premium or Special Redemption Premium, as
the case may be, received will also be distributed.
If any redemption of the Equipment Notes held in the Trust is
cancelled, the Trustee, as soon as possible after learning thereof, shall cause
notice thereof to be mailed to each Certificateholder at its address as it
appears on the Register.
Section 4.03. Statements to Certificateholders. (a) On each
Distribution Date, the Trustee will include with each distribution to
Certificateholders of a Scheduled Payment or Special Payment, as the case may
be, a statement setting forth the information provided below (in the case of a
Special Payment, including any Special Redemption Premium, reflecting in part
the information provided by the Escrow Paying Agent under the Escrow Agreement).
Such statement shall set forth (per $1,000 face amount Certificate as to (ii),
(iii), (iv) and (v) below) the following information:
(i) the aggregate amount of funds distributed on such Distribution
Date under the Agreement and under the Escrow Agreement, indicating the
amount allocable to each source;
(ii) the amount of such distribution under the Agreement allocable
to principal and the amount allocable to premium (including the Special
Redemption Premium), if any;
(iii) the amount of such distribution under the Agreement allocable
to interest;
(iv) the amount of such distribution under the Escrow Agreement
allocable to interest;
(v) the amount of such distribution under the Escrow Agreement
allocable to Deposits; and
(vi) the Pool Balance and the Pool Factor.
With respect to the Certificates registered in the name of a
Clearing Agency or its nominee, on the record date prior to each Distribution
Date, the Trustee
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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 Trustee will mail to each such Clearing
Agency Participant the statement described above and will make available
additional copies as requested by such Clearing Agency Participant for
forwarding to holders of Certificates.
(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), (a)(ii), (a)(iii), (a)(iv) and (a)(v)
above with respect to the 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 a Clearing Agency or its nominee, such report and such other items shall be
prepared on the basis of information supplied to the Trustee 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.
(c) Utilizing information provided by Midway, promptly following (i)
the Delivery Period Termination Date, if there has been any change in the
information set forth in clauses (x), (y) and (z) below from that set forth in
page 65 of the Offering Memorandum, and (ii) any early redemption or purchase
of, or any default in the prepayment of principal or interest in respect of, any
of the Equipment Notes held in the Trust, or any Final Withdrawal, the Trustee
shall furnish to Certificateholders of record on such date a statement setting
forth (x) the expected Pool Balances for each subsequent Regular Distribution
Date following the Delivery Period Termination Date, (y) the related Pool
Factors for such Regular Distribution Dates and (z) the expected principal
distribution schedule of the Equipment Notes, in the aggregate, held as Trust
Property at the date of such notice. With respect to the Certificates registered
in the name of a Clearing Agency, on the Delivery Period Termination Date, the
Trustee will request from such Clearing Agency a securities position listing
setting forth the names of all Clearing Agency Participants reflected on such
Clearing Agency's books as holding interests in the Certificates on such date.
The Trust 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.
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
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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 gross negligence (or simple negligence in the handling of
funds) 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 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 (i) organized and validly existing under the laws of the United States
of America or any state thereof or the District of Columbia, (ii) a
"citizen of the United States" (as defined in Section 40102(a)(15) of
Title 49 of the United States Code) and (iii) a United States certificated
air carrier, if and so long as such status is a condition of entitlement
to the benefits of Section 1110 of the Bankruptcy Reform Act of 1978, as
amended (11 U.S.C. ss. 1110), with respect to the Aircraft;
(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 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 this Agreement, the Other Pass Through Trust Agreements, the
Participation Agreements, and each other Note Document to be performed or
observed by the Company;
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(c) immediately after giving effect to such transaction, no Event of
Default (as defined in any Lease or any Indenture relating to an Owned
Aircraft), shall have occurred and be continuing; and
(d) the Company shall have delivered to the Trustee an Officer's
Certificate of the Company and an Opinion of Counsel of the Company
reasonably satisfactory to the Trustee, each stating that such
consolidation, merger, conveyance, transfer or lease and the assumption
agreement mentioned in clause (b) above comply with this Section 5.02 and
that all conditions precedent herein provided for relating to such
transaction have been complied with.
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 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 this Agreement or any Financing Document 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 the Intercreditor
Agreement.
(b) Purchase Rights of Certificateholders. By its 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 Class A Certificates upon ten (10)
days' written notice to the Class A 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 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 Certificates pro rata based
on the
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Fractional Undivided Interest in the Class B Trust held by each such Class
B Certificateholder and (B) if prior to the end of such ten-day period any
other Class B Certificateholder fails to notify the purchasing Class B
Certificateholder of such other Class B Certificateholder's desire to
participate in such a purchase, then such other Class B Certificateholder
shall lose its right to purchase the Certificates pursuant to this Section
6.01(b)(i).
(ii) each Class C Certificateholder shall have the right (which
shall not expire upon any purchase of the Certificates pursuant to clause
(i) above) to purchase all, but not less than all, of the 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 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 Certificates and
the Class B Certificates pursuant to this Section 6.01(b).
(iii) each Class D Certificateholder shall have the right (which
shall not expire upon any purchase of the Certificates pursuant to clause
(i) above and the Certificates and the Class B Certificates pursuant to
clause (ii) above) to purchase all, but not less than all, of the
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 Class D Certificateholder to purchase all, but not less than
all, of the Certificates, the Class B Certificates and the Class C
Certificates pro rata based on the Fractional Undivided Interest in the
Class D Trust held by each such Class D Certificateholder and (B) if prior
to the end of such ten day period any other Class D Certificateholder
fails to notify the purchasing Class D Certificateholder of such other
Class D Certificateholder's desire to participate in such a purchase, then
such other Class D Certificateholder shall lose its right to purchase the
Certificates, the Class B Certificates and the Class C Certificates
pursuant to this Section 6.01(b).
The purchase price with respect to the Certificates shall be equal
to the Pool Balance of the Certificates, together with accrued and unpaid
interest thereon to
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the date of such purchase, without premium, but including any other amounts then
due and payable to the Certificateholders under this Agreement, the
Intercreditor Agreement, the Escrow Agreement or any Note Document or on or in
respect of the Certificates; provided, however, that (i) if such purchase occurs
after the record date specified in Section 2.03(b) of the Escrow Agreement
relating to the distribution of unused Deposits and accrued and unpaid interest
thereunder, such purchase price shall be reduced by the aggregate amount of
unused Deposits and interest to be distributed under the Escrow Agreement (which
deducted amounts shall remain distributable to, and may be retained by the
Certificateholder as of such record date) and (ii) if such purchase occurs after
a Record Date, such purchase price shall be reduced by the amount to be
distributed hereunder on the related Distribution date (which deducted amounts
shall remain distributable to, and may be retained by, the Certificateholder as
of such Record Date); provided further that no such purchase of Certificates
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 Pass Through Trust Agreements, the
Certificates, the Class B Certificates and the Class C Certificates which are
senior to the Class of Certificates (as defined in the Intercreditor Agreement)
held by such purchaser. Each payment of the purchase price of the Certificates
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
agrees by its acceptance of its Certificate that it will, subject to Section
3.04 hereof, upon payment from such Class B Certificateholder(s), Class C
Certificateholder(s) or Class D Certificateholder(s) of the purchase price set
forth in the first sentence of this paragraph, 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, the Escrow
Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity
Facility, the Note Documents and all Certificates and Escrow Receipts 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, the Escrow Agreement,
the Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility and
the Note Documents. The Certificates 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 (whether in the form of Physical
Certificates or beneficial interests in Global Certificates) 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 the
Certificates and (ii) if the purchaser shall so request, such Certificateholder
will comply with all the provisions of Section 3.04 hereof to enable new
Certificates 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.
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As used in this Section 6.01(b), the terms "Certificateholder",
"Class", "Class B Certificate", "Class B Certificateholder", "Class B Trust",
"Class B Trustee", "Class C Certificate", "Class C Certificateholder", "Class C
Trust", "Class C Trustee", "Class D Certificate", "Class D Certificateholder",
"Class D Trust" and "Class D Trustee", shall have the respective meanings
assigned to such terms in the Intercreditor Agreement.
Section 6.02. Incidents of Sale of Equipment Notes. Upon any sale of
all or any part of the Equipment Notes made either under the power of sale given
under this Agreement or otherwise for the enforcement of this Agreement, the
following shall be applicable:
(1) Certificateholders and Trustee May Purchase Equipment Notes. Any
Certificateholder, the Trustee in its individual or any other capacity or
any other Person may bid for and purchase any of the Equipment Notes, and
upon compliance with the terms of sale, may hold, retain, possess and
dispose of such Equipment Notes in their own absolute right without
further accountability.
(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 received by
the Trustee from the Subordination Agent pursuant to the Intercreditor
Agreement upon any sale made either under the power of sale given by this
Agreement or otherwise for the enforcement of this Agreement shall 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 of the principal of,
premium, if any, or interest on any Equipment Note, or if there shall be any
failure to pay Rent (as defined in the relevant Lease) under any Lease when due
and payable, then the Trustee, in its own name and as trustee of an express
trust, as holder of such Equipment Notes, to the extent permitted by and in
accordance with the terms of the Intercreditor Agreement and the Financing
Documents (subject to the rights of the applicable Owner Trustee or Owner
Participant to cure any such failure in accordance with Section 8.03 of any
applicable Indenture relating to a Leased Aircraft), shall be entitled and
empowered to institute any suits, actions or proceedings at law, in equity or
otherwise, for the collection of the sums so due and unpaid on such Equipment
Notes or under such Lease and may prosecute any such claim or proceeding to
judgment or final decree with respect to the whole amount of any such sums so
due and unpaid.
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Section 6.04. Control by Certificateholders. Subject to Section 6.03
and the Intercreditor Agreement, the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the 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 the Trust or pursuant to the terms of the Intercreditor Agreement, or
exercising any trust or power conferred on the Trustee under this Agreement or
the Intercreditor Agreement, including any right of the Trustee as Controlling
Party under the Intercreditor Agreement or as holder of the Equipment Notes,
provided that
(1) such Direction shall not 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 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 the Intercreditor
Agreement, the Certificateholders holding Certificates 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 Loan 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 Loan
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, 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 or X cannot be modified or amended without the consent of each
Certificateholder holding an Outstanding Certificate affected thereby.
Upon any such waiver, such default shall cease to exist with respect
to the Certificates 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 to the relevant Loan Trustee shall be annulled
with respect thereto;
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but no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon. Upon any such waiver, the
Trustee shall vote the Equipment Notes issued under the relevant Indenture to
waive the corresponding Indenture Default.
Section 6.06. Right of Certificateholders to Receive Payments Not to
Be Impaired. Anything in this Agreement to the contrary notwithstanding,
including, without limitation, Section 6.07 hereof, but subject to the
Intercreditor Agreement, the right of any Certificateholder to receive
distributions of payments required pursuant to Section 4.02 hereof on the
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 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) Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than 25% of the 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 7.03(e);
(3) the Trustee shall have refused or neglected to institute such an
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 shall have
been given to the Trustee during such 60-day period by Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating
not less than a majority in interest in the Trust.
It is understood and intended that no one or more of the
Certificateholders shall have any right in any manner whatsoever hereunder or
under the Certificates to (i) surrender, impair, waive, affect, disturb or
prejudice any property in the Trust Property or the lien of any Indenture on any
property subject thereto, or the rights of the Certificateholders or the holders
of the Equipment Notes, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Certificateholder 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 subject to the
provisions of this Agreement.
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Section 6.08. Remedies Cumulative. Every remedy given hereunder to
the Trustee or to any of the Certificateholders 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. Certain Duties and Responsibilities. (a) Except during
the continuance of an Event of Default, the Trustee undertakes to perform only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Trustee.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of its
own affairs.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own gross negligence (or simple negligence in the
handling of funds) or wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section; and
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts.
(d) Whether or not herein expressly so provided, every provision of
this Trust Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
Section 7.02. 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
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below) hereunder known to the Trustee, the Trustee shall transmit by mail to the
Company, the Owner Trustees, the Owner Participants, the Loan Trustees and the
Certificateholders 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, premium, if any, or interest on any
Equipment Note or any other Trust Property, 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. For the purpose of this Section, the term
"default" means any event that is, or after notice or lapse of time or both
would become, an Event of Default.
Section 7.03. 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 the
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
Officer's Certificate of the Company, any Owner Trustee or any Loan
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 the Intercreditor
Agreement at the request or direction of any of the Certificateholders
pursuant to this Agreement or the 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;
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(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, 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 the Intercreditor Agreement or perform any duties under this
Agreement or the 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 the Intercreditor Agreement;
(h) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction of the Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in
interest in the 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 the
Intercreditor Agreement; and
(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.
Section 7.04. Not Responsible for Recitals or Issuance of
Certificates. The recitals contained herein and in the Certificates, 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 7.15, the Trustee makes no representations as to the validity
or sufficiency of this Agreement, any Participation Agreement, the Escrow
Agreement, the Deposit Agreement, any Equipment Notes, the Certificates or any
other Note Document, except that the Trustee hereby represents and warrants that
this Agreement has been, and the Intercreditor Agreement, each Note Document and
each Certificate will be, executed, authenticated and delivered by one of its
officers who is duly authorized to execute, authenticate and deliver such
document on its behalf.
Section 7.05. 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, if
applicable, may otherwise deal with the Company, the Owner Trustees or the Loan
Trustees with the same rights it would have if it were not Trustee, Paying
Agent, Registrar or such other agent.
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Section 7.06. Money Held in Trust. Money held by the Trustee or the
Paying Agent in trust hereunder need not be segregated from other funds except
to the extent required herein or by law and neither the Trustee nor the Paying
Agent shall have any liability for interest upon any such moneys except as
provided for herein.
Section 7.07. Compensation and Reimbursement. The Company agrees:
(1) to pay, or cause to be paid, to the Trustee from time to time
compensation (as set out in a separate fee agreement between the Trustee
and the Company) 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 herein, 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 Agreement or the
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 own
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 7.15;
(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 gross negligence (or
simple negligence in the handling of funds), 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 7.15. 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 (which consent shall not be
unreasonably withheld) and the Company will pay the reasonable fees and
expenses of such counsel. The Company need not pay for any settlement made
without its consent; and
(4) to indemnify, or cause to be indemnified, the Trustee, solely in
its individual capacity, for, and to hold it harmless against, any tax
(except to the extent the Trustee is reimbursed therefor pursuant to the
next paragraph, provided that no indemnification shall be available with
respect to any tax attributable to the Trustee's compensation for serving
as such) incurred without negligence, willful misconduct or bad faith, on
its part, arising out of or in connection with the acceptance or
administration of this Trust, including any
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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 cooperate in the defense. The
Trustee, in its individual capacity, may have separate counsel with the
consent of the Company (which consent shall not be unreasonably withheld)
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 upon, the Trust Property for any tax incurred
without gross negligence (or simple negligence in the handling of funds), 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. If the Trustee
reimburses itself from the Trust Property of such Trust for any such tax, it
will mail a brief report within 30 days setting forth the circumstances thereof
to all Certificateholders as their names and addresses appear in the Register.
Section 7.08. Corporate Trustee Required; Eligibility. There shall
at all times be a Trustee hereunder 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 $75,000,000 (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 and having a combined capital
and surplus of at least $75,000,000). If such corporation publishes reports of
conditions at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section 7.08, 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 7.08 to act as Trustee, the
Trustee shall resign immediately as Trustee in the manner and with the effect
specified in Section 7.09.
Section 7.09. Resignation and Removal; Appointment of Successor. (a)
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 7.10.
(b) The Trustee may resign at any time as trustee by giving prior
written notice thereof to the Company, the Authorized Agents, the Owner Trustees
and
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the Loan Trustees. In addition, upon the occurrence of an Event of Default, in
the event the Trustee shall not have received instructions from the
Certificateholders or the Certificateholders with respect to any Other Trust,
the Trustee shall resign. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Company, the Authorized Agents, the Owner
Trustees, the Loan 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 by Act of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Trustee, the Company, the Owner Trustees and the Loan Trustees.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 310 of the Trust
Indenture Act, if applicable, after written request therefor by the
Company or by any Certificateholder who has been a bona fide
Certificateholder for at least six months; or
(2) the Trustee shall cease to be eligible under Section 7.08 and
shall fail to resign after written request therefor by the Company or by
any such Certificateholder; or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any case, (i) the Company may remove the Trustee or (ii) any
Certificateholder who has been a bona fide Certificateholder for at least six
months may, on behalf of itself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
(e) If a Responsible Officer of the Trustee shall obtain actual
knowledge of an Avoidable Tax 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 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 in a jurisdiction where there
are no Avoidable Taxes.
(f) If the Trustee shall resign, be removed or become incapable of
acting as trustee or if a vacancy shall occur in the office of the Trustee for
any cause, the Company shall promptly appoint a successor Trustee. If, within 90
days after such
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resignation, removal or incapability, or other occurrence of such vacancy, a
successor Trustee shall be appointed by Act of the Certificateholders holding
Certificates evidencing Fractional Undivided Interests aggregating not less than
a majority in interest in the Trust delivered to the Company, the Owner
Trustees, the Loan Trustees and the retiring Trustee, and the Company approves
such appointment, which approval shall not be unreasonably withheld, then the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee and supersede the successor Trustee
appointed as provided above. If no successor Trustee shall have been so
appointed as provided above and accepted appointment in the manner hereinafter
provided, any Certificateholder 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 appointment of a successor
Trustee.
(g) The successor Trustee 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 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 7.10. Acceptance of Appointment by Successor. Every
successor Trustee appointed hereunder shall execute and deliver to the Company,
the Authorized Agents, the Owner Trustees and the Loan Trustees and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee 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 Trust Property held
by such retiring Trustee hereunder, subject nevertheless to its lien, if any,
provided for in Section 7.07 and the retiring Trustee shall thereupon be
released from further liability hereunder. 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.
No institution shall accept its appointment as a Trustee hereunder
unless at the time of such acceptance such institution shall be qualified and
eligible under this Article VII.
Section 7.11. 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
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to all or substantially all of the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided such corporation shall
be otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties hereto.
In case any Certificates shall have been executed or authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such execution or
authentication and deliver the Certificates so executed or authenticated with
the same effect as if such successor Trustee had itself executed or
authenticated such Certificates.
Section 7.12. Maintenance of Agencies. (a) There shall at all times
be maintained an office or agency where Certificates 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 may be served. 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. Each such Authorized Agent shall be
a bank or trust company, shall be a corporation organized and doing business
under the laws of the United States or any state, with a combined capital and
surplus of at least $75,000,000, or a corporation having a combined capital and
surplus in excess of $5,000,000, the obligations of which are guaranteed by a
corporation organized and doing business under the laws of the United States or
any state, with a combined capital and surplus of at least $75,000,000, and
shall be authorized under such laws to exercise corporate trust powers, subject
to supervision by federal or state authorities. The Trustee shall initially be
the Paying Agent and, as provided in Section 3.04, Registrar hereunder with
respect to the Certificates. 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, the Owner Trustees and the
Loan 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
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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, the Owner Trustees and the Loan Trustees; and in each case the Trustee
shall mail notice of such appointment to all Certificateholders as their names
and addresses appear on the Register.
(e) The Company agrees to pay, or cause to be paid, from time to
time to each Authorized Agent reasonable compensation for its services and to
reimburse it for its reasonable expenses.
Section 7.13. 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 7.14. Registration of Equipment Notes in Name of
Subordination Agent. The Trustee agrees that all Equipment Notes to be purchased
by the Trust shall be issued in the name of the Subordination Agent or its
nominee and held by the Subordination Agent in trust for the benefit of the
Certificateholders, or, if not so held, the 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 7.15. Representations and Warranties of Trustee. The Trustee
hereby represents and warrants that:
(a) the Trustee has full power, authority and legal right to receive
the Trust Property assigned by the Related Trustee, assume the obligations
under, and perform, the Assignment and Assumption Agreement, this
Agreement, the Intercreditor Agreement, the Escrow Agreement and the Note
Documents and has taken all necessary action to authorize such receipt,
assumption and performance by it of this Agreement, the Intercreditor
Agreement, the Escrow Agreement and the Note Documents to which it is a
party;
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(b) the receipt of the Trust Property under the Assignment and
Assumption Agreement and the performance by the Trustee of the Assignment
and Assumption Agreement, this Agreement, the Intercreditor Agreement, the
Escrow Agreement and the Note Documents (i) will not violate any provision
of any United States law or Maryland law or any order, writ, judgement, or
decree of any court, arbitrator or governmental authority of the United
States or the State of Maryland applicable to the Trustee or any of its
assets, (ii) will not violate any provision of the articles or by-laws of
the Trustee, or (iii) will not violate any provision of, or constitute,
with or without notice or lapse of time, a default under, or result in the
creation or imposition of any lien on any properties included in the Trust
Property pursuant to the provisions of any mortgage, indenture, contract,
agreement or other undertaking to which it is a party, which violation,
default or lien could reasonably be expected to have an adverse effect on
the Trustee's performance or ability to perform its duties hereunder or
thereunder or on the transactions contemplated herein or therein;
(c) the receipt of the Trust Property under the Assignment and
Assumption Agreement and the performance by the Trustee of the Assignment
and Assumption Agreement, this Agreement, the Intercreditor Agreement, the
Escrow Agreement and the Note Documents 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 the United Sates where it is located regulating the banking and
corporate trust activities of the Trustee; and
(d) the Assignment and Assumption Agreement has been duly executed
and delivered by the Trustee and this Agreement, the Intercreditor
Agreement, the Escrow Agreement and the Note Documents have been, or will
be, as applicable, duly executed and delivered by the Trustee and
constitute, or will constitute, as applicable, the legal, valid and
binding agreements of the Trustee, enforceable against it in accordance
with their respective terms; provided, however, 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 7.16. Withholding Taxes; Information Reporting. (a) The
Trustee, as trustee of the 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
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 present or future taxes or similar charges are required to be withheld with
respect to any amounts payable in respect of the Certificates, to withhold such
amounts and timely pay the same to the appropriate authority in the name of and
on behalf of the Certificateholders, 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
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Certificateholder appropriate documentation showing the payment thereof,
together with such additional documentary evidence as such Certificateholders
may reasonably request from time to time. The Trustee agrees to file any other
information reports as may be required to be filed by it under United States
law.
(b) The Trustee may satisfy certain of its obligations with respect
to this Agreement by retaining, at the expense of the Company, a firm of
independent public accountants (the "Accountants") which shall (i) be
responsible for all tax filing requirements and (ii) perform the obligations of
the Trustee in respect of tax filing requirements. The Trustee shall be deemed
to have discharged its tax filing obligations under this Agreement upon its
retention of the Accountants, and, if the Trustee shall have selected in the
Accountants in good faith and without gross negligence, the Trustee shall not
have any liability with respect to the default or misconduct of the Accountants.
(c) The Trustee, at the request (and expense) of the Company, will
make such United States federal income tax elections as may be necessary to
prevent the Trust from being classified for federal income tax purposes as an
association taxable as a corporation.
Section 7.17. Trustee's Liens. The Trustee in its individual
capacity agrees that it will 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 which is attributable to the
Trustee either (i) in its individual capacity and which is unrelated to the
transactions contemplated by this Agreement, the Intercreditor Agreement, the
Note Purchase Agreement or the Note Documents, or (ii) as Trustee hereunder or
in its individual capacity and which arises out of acts or omissions which are
not contemplated by this Agreement.
Section 7.18. 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 or cause to be
furnished 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
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may reasonably require, of all information in the possession or control of the
Company as to the names and addresses of the Certificateholders, 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, 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 7.12.
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 contained
in the most recent list furnished to the Trustee as provided in Section 7.12 or
Section 8.01, as the case may be, and the names and addresses of
Certificateholders 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
7.12 or Section 8.01, as the case may be, upon receipt of a new list so
furnished.
Section 8.03. Reports by Trustee. Within 60 days after May 15 of
each year commencing with the first full year following the issuance of the
Certificates, the Trustee shall transmit to the Certificateholders, 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;
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(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; and
(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 regard to any period of grace
or requirement of notice provided under this Agreement).
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 (and at the sole cost and expense of the Company), enter into one or
more agreements supplemental hereto or, if applicable, to the Escrow Agreement,
the Deposit Agreement, the Note Purchase Agreement, the Intercreditor Agreement
or the Liquidity Facility in form and substance satisfactory to the Trustee, for
any of the following purposes:
(1) 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 in the Note Purchase Agreement; or
(2) to add to the covenants of the Company for the benefit of the
Certificateholders, or to surrender any right or power in this Agreement
or in the Note Purchase Agreement conferred upon the Company; or
(3) to correct or supplement any provision in this Agreement, the
Escrow Agreement, the Deposit Agreement, the Note Purchase Agreement, the
Intercreditor Agreement or the Liquidity Facility which may be defective
or inconsistent with any other provision of this Agreement, the Deposit
Agreement, the Escrow Agreement, the Note Purchase Agreement, the
Intercreditor Agreement or any Liquidity Facility, as applicable, or to
cure any ambiguity or to modify any other provisions with respect to
matters or questions arising under this Agreement, the Escrow Agreement,
the Note Purchase Agreement, the Deposit Agreement, the Intercreditor
Agreement or the Liquidity Facility, provided that any such action shall
not materially adversely affect the interests of the Certificateholders;
or
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(4) as provided in the Intercreditor Agreement, to give effect to or
provide for a Replacement Liquidity Facility or to comply with any
requirement of the Commission, any applicable law, rules or regulations of
any exchange or quotation system on which the Certificates are listed, or
any regulatory body;
(5) to modify, eliminate or add to the provisions of this Agreement,
the Deposit Agreement, the Escrow Agreement, the Intercreditor Agreement,
the Note Purchase Agreement or the Liquidity Facility to such extent as
shall be necessary to qualify or continue the qualification of this
Agreement under the Trust Indenture Act, or any similar federal statute
enacted after the execution of this Agreement, and to add to this
Agreement, the Deposit Agreement, the Escrow Agreement, the Intercreditor
Agreement, the Note Purchase Agreement or the Liquidity Facility such
provisions as may be expressly permitted by the Trust Indenture Act; and
(6) to evidence and provide for the acceptance of appointment under
this Agreement, the Deposit Agreement, the Escrow Agreement, the
Intercreditor Agreement, the Note Purchase Agreement or the Liquidity
Facility of a successor Trustee and to add or change any of the provisions
of this Agreement, the Deposit Agreement, the Escrow Agreement, the
Intercreditor Agreement, the Note Purchase Agreement or the Liquidity
Facility as shall be necessary to provide for or facilitate the
administration of the Trust under this Agreement by more than one Trustee,
provided that in each case, such modification or supplement 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 9.02. Supplemental Agreements with Consent of
Certificateholders. With the consent of the Certificateholders holding
Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust, by Act of said
Certificateholders delivered to the Company and the Trustee, the Company
may, and the Trustee (subject to Section 9.03) shall, at the sole cost and
expense of the Company, 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, the Deposit
Agreement, the Escrow Agreement, the Intercreditor Agreement, the
Liquidity Facility or the Note Purchase Agreement to the extent applicable
to such Certificateholders or of modifying in any manner the rights and
obligations of such Certificateholders under this Agreement, the Deposit
Agreement, the Escrow Agreement, the Intercreditor Agreement, the
Liquidity Facility or the Note Purchase 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 (or, with respect to the Deposits, the
Receiptholders) of
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payments on the Deposits or Equipment Notes held in the Trust or
distributions that are required to be made herein on any Certificate, or
change any date of payment of any Certificate, or change the place of
payment where, or the coin or currency in which, any Certificate is
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 included in the
Trust Property except as permitted by this Agreement, or otherwise deprive
such Certificateholder of the benefit of the ownership of the Equipment
Notes in the Trust; or
(3) alter the priority of distributions specified in the
Intercreditor Agreement in a manner materially adverse to the interests of
the Certificateholders;
(4) modify any of the provisions of this Section 9.02 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 affected thereby;
(5) modify any of the provisions relating to the rights of the
Certificateholders in respect of the waiver of Events of Default or
receipt of payment; or
(6) adversely affect the status of this 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.
It shall not be necessary for any Act of 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 Agreement, the Trustee may in its
discretion decline to execute such document.
Section 9.04. Execution of Supplemental Agreements. In executing, or
accepting the additional trusts created by, any supplemental agreement permitted
by this Article or the modifications thereby of the trusts created by this
Agreement, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental agreement is authorized or permitted by this Agreement.
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Section 9.05. Effect of Supplemental Agreements. Upon the execution
of any agreement supplemental to this Agreement under this Article, this
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every
Certificateholder theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
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 authenticated and delivered after the execution of any supplemental
agreement 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 after
proper presentation and demand.
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01 Amendments and Supplement to Indentures and Other Note
Documents. In the event that the Trustee, as holder (or beneficial owner through
the Subordination Agent) of any Equipment Note in trust for the benefit of the
Certificateholders or as Controlling Party, receives a request for a consent to
any amendment, modification, waiver or supplement under any Indenture or other
Note Document or other related document, the Trustee shall forthwith send a
notice of such proposed amendment, modification, waiver or supplement to each
Certificateholder registered on the Register as of the date of such notice. The
Trustee shall request from the Certificateholders a Direction as to (a) whether
or not to take or refrain from taking (or to direct the Subordination Agent to
take or refrain from taking) any action which a holder of such Equipment Note or
the Controlling Party has the option to direct, (b) whether or not to give or
execute (or to direct the Subordination Agent to give or execute) any waivers,
consents, amendments, modifications or supplements as a holder of such Equipment
Note or as Controlling Party and (c) how to vote or direct the Subordination
Agent 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 (or in directing the Subordination Agent in any of
the foregoing), (i) other than as Controlling Party, 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 (x) the aggregate face amount of all Certificates
actually voted in favor of or for giving consent to such action by such
direction of Certificateholders to (y) the aggregate face amount of all
outstanding Certificates of the Trust and (ii) as the Controlling Party, the
Trustee shall vote as directed in such Certificateholder direction
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<PAGE>
by the Certificateholders evidencing fractional undivided interests aggregating
not less than a majority in interest in the Trust. 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 prior to two Business Days
before the Trustee directs such action or casts such vote or gives such consent.
Notwithstanding the foregoing, but subject to Section 6.04 and the Intercreditor
Agreement, the Trustee may, in its own discretion and at its own direction,
consent and notify the relevant Loan Trustee of such consent (or direct the
Subordination Agent to consent and notify the relevant Loan Trustee of such
consent) to any amendment, modification, waiver or supplement under the relevant
Indenture or any other Note Document or other related document, if an Event of
Default hereunder shall have occurred and be continuing, or if such amendment,
modification or waiver will not materially adversely affect the interests of the
Certificateholders.
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust. The respective obligations
and responsibilities of the Company and the Trustee with respect to the Trust
shall terminate upon distribution to all Certificateholders 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; provided,
however, that in no event shall the Trust continue beyond one hundred ten (110)
years following the date of the execution of this Agreement.
Notice of any termination, specifying the Distribution Date upon
which the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be mailed promptly by
the Trustee to Certificateholders not earlier than the 60th day and not later
than the 15th day next preceding such final Distribution Date specifying (A) the
Distribution Date upon which the proposed final payment of the Certificates will
be made upon presentation and surrender of Certificates at the office or agency
of the Trustee therein specified, (B) the amount of any such proposed final
payment, and (c) that the Record Date otherwise applicable to such Distribution
Date is not applicable, payments being made only upon presentation and surrender
of the Certificates at the office or agency of the Trustee therein specified,
(B) the amount of any such proposed final payment, and (c) that the Record Date
otherwise applicable to such Distribution Date is not applicable, payments being
made only upon presentation and surrender of the Certificates 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. Upon
presentation and surrender of the Certificates in accordance with such notice,
the Trustee shall cause to be distributed to Certificateholders such final
payments.
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In the event that all of the Certificateholders 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 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 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 Loan Trustee the appropriate amount of money relating
to such Loan Trustee and shall give written notice thereof to the related Owner
Trustees, the Owner Participants and the Company.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the 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. Certificates Nonassessable and Fully Paid. Except as
set forth in the last sentence of this Section 12.02, Certificateholders shall
not be personally liable for obligations of the Trust, the Fractional Undivided
Interests represented by the Certificates shall be nonassessable for any losses
or expenses of the Trust or for any reason whatsoever, and Certificates, upon
authentication thereof by the Trustee pursuant to Section 3.03, are and shall be
deemed fully paid. No Certificateholder shall have any right (except as
expressly provided herein) to vote or in any manner otherwise control the
operation and management of the Trust Property, the Trust, or the obligations of
the parties hereto, nor shall anything set forth herein, or contained in the
terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association.
Neither the existence of the Trust nor any provision herein is intended to or
shall limit the liability the Certificateholders would otherwise incur if the
Certificateholders owned Trust Property as co-owners, or incurred any
obligations of the Trust, directly rather than through the Trust.
Section 12.03. Notices. (a) Unless otherwise specifically provided
herein, all notices required under the terms and provisions of this Agreement
shall be in English and in writing, and any such notice may be given by United
States mail, courier
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service or telecopy, and any such notice shall be effective when delivered or
received or, if mailed, three days after deposit in the United States mail with
proper postage for ordinary mail prepaid,
if to the Company, to:
Midway Airlines Corporation
300 W. Morgan Street, Suite 1200
Durham, North Carolina 27701
Attention: General Counsel
Facsimile: (919) 956-7568
Telephone: (919) 956-4810
if to the Trustee, to:
The First National Bank of Maryland
25 South Charles Street
Mail Code 101-591
Baltimore, Maryland 21201
Attention: Corporate Trust Department
Facsimile: (410) 244-4236
Telephone: (410) 244-4626
(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 shall be
mailed by first-class mail to the addresses for Certificateholders shown on the
Register kept by the Registrar. 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.
(d) If a notice or communication is mailed in the manner provided
above within the time prescribed, it is conclusively presumed to have been duly
given, whether or not the addressee receives it.
(e) If the Company mails a notice or communication to the
Certificateholders, it shall mail a copy to the Trustee and to the Paying Agent
at the same time.
(f) 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.
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(g) 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 Loan Trustee.
Section 12.04. Governing Law. THIS AGREEMENT AND THE CERTIFICATES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
Section 12.05. 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 the Trust, or of the
Certificates or the rights of the Certificateholders thereof.
Section 12.06. 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 12.07. 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 assigns, whether so
expressed or not.
Section 12.08. Benefits of Agreement. Nothing in this Agreement or
in the Certificates, express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder, and the Certificateholders,
any benefit or any legal or equitable right, remedy or claim under this
Agreement.
Section 12.09. Legal Holidays. In any case where any Regular
Distribution Date or Special Distribution Date relating to any Certificate shall
not be a Business Day, 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 12.10. 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 12.11. Communication by Certificateholders with Other
Certificateholders. Certificateholders may communicate with other
Certificateholders with respect to their rights under this Agreement or the
Certificates pursuant to
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Section 312(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 12.12. Intention of Parties. The parties hereto intend that
the Trust be classified for U.S. federal income tax purposes as a grantor trust
under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as
amended, and not as a trust or association taxable as a corporation or as a
partnership. Each Certificateholder, by its acceptance of its Certificate or a
beneficial interest therein, agrees to treat the Trust as a grantor trust for
all U.S. federal, state and local income tax purposes. The powers granted and
obligations undertaken pursuant to this Agreement shall be so construed so as to
further such intent.
Section 12.13. Trust Indenture Act Controls. Upon the qualification
of this Agreement under the Trust Indenture Act, this Agreement shall be subject
to the provisions of the Trust Indenture Act and shall, to the extent
applicable, be governed by such provisions. If any provision of this Agreement
limits, qualifies or conflicts with another provision which is required to be
included in this Agreement by the Trust Indenture Act, the required provision
shall control.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first written above.
MIDWAY AIRLINES CORPORATION
By: /s/ Jonathan S. Waller
--------------------------------
Name: Jonathan S. Waller
Title: Senior Vice President
General Counsel
THE FIRST NATIONAL BANK OF
MARYLAND, as Trustee
By: /s/ Robert D. Brown
--------------------------------
Name: Robert D. Brown
Title: Assistant Vice President
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Exhibit A
FORM OF CERTIFICATE
REGISTERED
No. ______________
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY
MIDWAY AIRLINES CORPORATION ("MIDWAY") OR ANY AFFILIATE OF MIDWAY, RESELL
OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO MIDWAY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
A-1
<PAGE>
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
CERTIFICATE WAS HELD BY MIDWAY OR ANY AFFILIATE OF MIDWAY, THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND MIDWAY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.]*
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS FOR THE BENEFIT OF MIDWAY
AIRLINES CORPORATION AND EACH OWNER PARTICIPANT THAT (A) IT IS NOT A PLAN
TRANSFEREE (AS DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR (B) ONE OR
MORE PROHIBITED TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS APPLIES
SUCH THAT THE USE OF PLAN ASSETS TO PURCHASE AND HOLD THIS PASS THROUGH
CERTIFICATE WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER
ERISA OR SECTION 4975 OF THE CODE. THE PASS THROUGH TRUST AGREEMENT
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
- - ----------
* Not to be included on the face of the Permanent Offshore Global Certificate.
A-2
<PAGE>
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE 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 HEREON 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.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST
AGREEMENT REFERRED TO HEREIN.]*
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* To be included on the face of each Global Certificate.
A-3
<PAGE>
[GLOBAL CERTIFICATE]*
MIDWAY AIRLINES 1998-1A-S PASS THROUGH TRUST
7.14% Midway Airlines [Initial/Exchange] Pass Through Certificate
Series 1998-1A-S
Final Expected Distribution Date: January 2, 2015
evidencing a fractional undivided interest in a trust, the property of which
includes certain equipment notes each secured by an Aircraft leased to or owned
by Midway Airlines Corporation.
$_____________Fractional Undivided Interest
representing .__________ % of the Trust per $1,000 face amount
THIS CERTIFIES THAT ___________________, for value received, is the
registered owner of a $________ (_________ dollars) Fractional Undivided
Interest in Midway Airlines 1998-1A-S Pass Through Trust (the "Trust") created
pursuant to a Pass Through Trust Agreement, dated as of August 13, 1998 (the
"Agreement"), between The First National Bank of Maryland (the "Trustee") and
Midway Airlines Corporation, a corporation incorporated under Delaware law (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 "7.14%
Midway Airlines [Initial/Exchange] Pass Through Certificates Series 1998-1A-S"
(herein called the "Certificates"). This Certificate is issued under and is
subject to the terms, provisions, and conditions of the Agreement. By virtue of
its acceptance hereof the Certificateholder of this Certificate assents to and
agrees to be bound by the provisions of the Agreement and the Intercreditor
Agreement. 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, among other things, a security interest in the 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 assets or property other than the Trust Property.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from and to the extent of funds then available to the
Trustee,
- - ----------
* To be included on the face of each Global Certificate.
A-4
<PAGE>
there will be distributed on each January 2 and July 2 (a "Regular Distribution
Date"), commencing on January 2, 1999, 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 and the Intercreditor Agreement, in the event that Special Payments on
the Equipment Notes are received by the Trustee, from funds then available to
the Trustee, there shall be distributed on the applicable Special Distribution
Date, to the Person in whose name this Certificate is registered at the close of
business on the 15th day preceding the Special Distribution Date, an amount in
respect of such Special Payments on the Equipment Notes, the receipt of which
has been confirmed by the Trustee, equal to the product of the percentage
interest in the Trust evidenced by this Certificate and an amount equal to the
sum of such Special Payments so received. If a Regular Distribution Date or
Special Distribution Date is not a Business Day, distribution shall be made on
the immediately following Business Day with the same force and effect as if made
on such Regular Distribution Date or Special Distribution Date and no interest
shall accrue during the intervening period. The Trustee shall mail notice of
each Special Payment and the Special Distribution Date therefor to the
Certificateholder of this Certificate.
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 AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND
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.
Reference is hereby made to the further provisions of this
Certificate set forth in the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
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.
A-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: ____________ __, 1998 MIDWAY AIRLINES
1998-1A-S PASS THROUGH TRUST
By: The First National Bank of
Maryland, as Trustee
By:_______________________________
Name:
Title:
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<PAGE>
[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred
to in the within-mentioned Agreement.
The First National Bank of Maryland,
as Trustee
By:_______________________________
Authorized Officer
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<PAGE>
[REVERSE OF CERTIFICATE]
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
of their affiliates. 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 Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein 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, in the Borough of Manhattan, the City of New York,
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.
A-8
<PAGE>
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $100,000 Fractional Undivided
Interest and integral multiples of $1,000 in excess thereof. 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 by the Holder 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.
A-9
<PAGE>
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
__________________________
__________________________
please print or typewrite name and address including zip code of assignee
__________________________
the within Certificate and all rights thereunder, hereby irrevocably
constituting and appointing
__________________________
attorney to transfer said Certificate on the books of the Trustee with full
power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT PERMANENT OFFSHORE GLOBAL AND
OFFSHORE PHYSICAL CERTIFICATES]
In connection with any transfer of this Certificate occurring prior
to __________, the undersigned confirms that without utilizing any general
solicitation or general advertising that:
[Check One]
[ ] (a) this Certificate is being transferred in compliance with the
exemption from registration under the Securities Act of 1933, as
amended, provided by Rule 144A thereunder.
or
[ ] (b) this Certificate is being transferred other than in accordance
with (a) above and documents are being furnished that comply with
the conditions of transfer set forth in this Certificate and the
Agreement.
A-10
<PAGE>
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Certificate in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 3.06 of the Agreement
shall have been satisfied.
Date:_______________ [Name of Transferor]
________________________________________
NOTE: The signature must correspond with
the name as written upon the face of the
within-mentioned instrument in every
particular, without alteration or any
change whatsoever.
Signature Guarantee:_________________
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Certificate for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated: ________________
______________________________________
NOTE: To be executed by an executive
officer.
A-11
<PAGE>
Exhibit B
FORM OF CERTIFICATE FOR UNLEGENDED CERTIFICATES
[Date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1A-O Pass Through Trust (the "Trust"),
7.14% Midway Airlines Pass Through Certificates Series
1998-1A-S (the "Certificates")
Dear Sirs:
This letter relates to U.S. $__________ Fractional Undivided
Interest of Certificates represented by a Certificate (the "Legended
Certificate") which bears a legend outlining restrictions upon transfer of such
Legended Certificate. Pursuant to Section 3.01 of the Pass Through Trust
Agreement relating to the Certificates dated as of August 13, 1998 (the "Trust
Agreement"), between Midway Airlines Corporation ("Midway") and you, we hereby
certify that we are (or we will hold such securities on behalf of) a person
outside the United States to whom the Certificates could be transferred in
accordance with Rule 904 of Regulation S promulgated under the U.S. Securities
Act of 1933, as amended. Accordingly, you are hereby requested to exchange the
legended certificate for an unlegended certificate representing an identical
principal amount of Certificates, all in the manner provided for in the Trust
Agreement.
You and Midway are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Certificateholder]
By:__________________________
Authorized Signature
B-1
<PAGE>
Exhibit C
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
[date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1A-S Pass Through Trust (the "Trust"),
7.14% Midway Airlines Pass Through Certificates Series
1998-1A-S (the "Certificates")
Sirs:
In connection with our proposed sale of $_______ Fractional Undivided Interest
of the Certificates, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the Securities Act of 1933, as amended,
and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a person in the
United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
C-1
<PAGE>
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You, Midway Airlines Corporation are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof to
any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:_______________________________
Authorized Signature
C-2
<PAGE>
Exhibit D
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
[date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1A-S Pass Through Trust (the "Trust"),
7.14% Midway Airlines Pass Through Certificates Series
1998-1A-S (the "Certificates")
Dear Sirs:
In connection with our proposed purchase of $_______________
aggregate principal amount of the Certificates, we confirm that:
1. We understand that any subsequent transfer of the Certificates is
subject to certain restrictions and conditions set forth in the Pass
Through Trust Agreement dated as of August 13, 1998 relating to the
Certificates (the "Pass Through Trust Agreement") and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the
Certificates except in compliance with, such restrictions and conditions
and the Securities Act of 1933, as amended (the "Securities Act").
2. We are purchasing Certificates having an aggregate principal
amount of not less than $100,000 and each account (if any) for which we
are purchasing Certificates is purchasing Certificates having an aggregate
principal amount of not less than $100,000.
3. We understand that the Certificates have not been registered
under the Securities Act, and that the Certificates may not be offered or
sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Certificate, we will do so
only (A) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (B) to an
institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes to you and Midway Airlines Corporation a signed letter
substantially in the form of this letter, (C) outside the United States in
D-1
<PAGE>
accordance with Rule 904 of Regulation S under the Securities Act, (D)
pursuant to the exemption from registration provided by Rule 144 under the
Securities Act, or (E) pursuant to an effective registration statement
under the Securities Act, and we further agree to provide to any person
purchasing any of the Certificates from us a notice advising such
purchaser that resales of the Notes are restricted as stated herein. We
further understand that the Certificates purchased by us will bear a
legend to the foregoing effect.
4. We understand that, on any proposed resale of any Certificates,
we will be required to furnish to you, Midway Airlines Corporation
("Midway") such certifications, legal opinions and other information as
you, Midway may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that the
Certificates purchased by us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Certificates and we and any accounts for which we are acting are each able
to bear the economic risk of our or its investment.
6. We are acquiring the Certificates purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You and Midway are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By:______________________________
Authorized Signature
D-2
- - --------------------------------------------------------------------------------
PASS THROUGH TRUST AGREEMENT
Dated as of August 13, 1998
among
MIDWAY AIRLINES CORPORATION
and
THE FIRST NATIONAL BANK OF MARYLAND
as Trustee
Midway Airlines 1998-1A-O Pass Through Trust
7.14% 1998-1A-O Initial Pass Through Certificates
7.14% 1998-1A-O Exchange Pass Through Certificates
- - --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS................................................... 3
Section 1.01. Definitions........................................... 3
Section 1.02. Compliance Certificates and Opinions.................. 15
Section 1.03. Form of Documents Delivered to Trustee................ 16
Section 1.04. Acts of Certificateholders............................ 16
ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES............................. 18
Section 2.01. Delivery of Documents; Delivery Date.................. 18
Section 2.02. Withdrawal of Deposits................................ 19
Section 2.03. The Trustee........................................... 19
Section 2.04. Acceptance by Trustee................................. 19
Section 2.05. Limitation of Powers.................................. 20
ARTICLE III THE CERTIFICATES.............................................. 20
Section 3.01. Title, Form, Denomination and Execution
of Certificates ................................... 20
Section 3.02. Restrictive Legends................................... 22
Section 3.03. Authentication of Certificates........................ 24
Section 3.04. Transfer and Exchange................................. 24
Section 3.05. Book-Entry Provisions for U.S. Global Certificate
and Offshore Global Certificates................... 25
Section 3.06. Special Transfer Provisions........................... 26
Section 3.07. Mutilated, Destroyed, Lost or Stolen Certificates..... 29
Section 3.08. Persons Deemed Owners................................. 30
Section 3.09. Cancellation.......................................... 30
Section 3.10. Limitation of Liability for Payments.................. 30
Section 3.11. Temporary Certificates................................ 30
Section 3.12. ERISA Restrictive Legend.............................. 30
ARTICLE IV DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS............................................ 31
Section 4.01. Certificate Account and Special Payments Account...... 31
Section 4.02. Distributions from Certificate Account and Special
Payments Account................................... 32
Section 4.03. Statements to Certificateholders...................... 33
Section 4.04. Investment of Special Payment Moneys.................. 35
ARTICLE V THE COMPANY................................................... 35
Section 5.01. Maintenance of Corporate Existence.................... 35
Section 5.02. Consolidation, Merger, Etc............................ 35
ARTICLE VI DEFAULT....................................................... 36
Section 6.01. Events of Default..................................... 36
Section 6.02. Incidents of Sale of Equipment Notes.................. 39
i
<PAGE>
Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee
May Bring Suit..................................... 39
Section 6.04. Control by Certificateholders......................... 40
Section 6.05. Waiver of Past Defaults............................... 40
Section 6.06. Right of Certificateholders to Receive Payments Not
to Be Impaired...................................... 41
Section 6.07. Certificateholders May Not Bring Suit Except Under
Certain Conditions................................. 41
Section 6.08. Remedies Cumulative................................... 42
Section 6.09. Undertaking for Costs................................. 42
ARTICLE VII THE TRUSTEE................................................ 42
Section 7.01. Certain Duties and Responsibilities................... 42
Section 7.02. Notice of Defaults.................................... 43
Section 7.03. Certain Rights of Trustee............................. 43
Section 7.04. Not Responsible for Recitals or Issuance
of Certificates ................................... 44
Section 7.05. May Hold Certificates................................. 45
Section 7.06. Money Held in Trust................................... 45
Section 7.07. Compensation and Reimbursement........................ 45
Section 7.08. Corporate Trustee Required; Eligibility............... 46
Section 7.09. Resignation and Removal; Appointment of Successor..... 47
Section 7.10. Acceptance of Appointment by Successor................ 48
Section 7.11. Merger, Conversion, Consolidation or Succession to
Business........................................... 49
Section 7.12. Maintenance of Agencies............................... 49
Section 7.13. Money for Certificate Payments to Be Held in Trust.... 50
Section 7.14. Registration of Equipment Notes in Name of
Subordination Agent................................ 50
Section 7.15. Representations and Warranties of Trustee............. 51
Section 7.16. Withholding Taxes; Information Reporting.............. 51
Section 7.17. Trustee's Liens....................................... 52
Section 7.18. Preferential Collection of Claims..................... 52
ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND
REPORTS BY TRUSTEE......................................... 53
Section 8.01. The Company to Furnish Trustee with Names and
Addresses of Certificateholders.................... 53
Section 8.02. Preservation of Information; Communications to
Certificateholders................................. 53
Section 8.03. Reports by Trustee.................................... 53
Section 8.04. Reports by the Company................................ 53
ii
<PAGE>
ARTICLE IX SUPPLEMENTAL AGREEMENTS....................................... 54
Section 9.01. Supplemental Agreements Without Consent of
Certificateholders................................. 54
Section 9.02. Supplemental Agreements with Consent of
Certificateholders................................. 55
Section 9.03. Documents Affecting Immunity or Indemnity............. 56
Section 9.04. Execution of Supplemental Agreements.................. 57
Section 9.05. Effect of Supplemental Agreements..................... 57
Section 9.06. Conformity with Trust Indenture Act................... 57
Section 9.07. Reference in Certificates to Supplemental Agreements.. 57
ARTICLE X AMENDMENTS TO INDENTURES AND
FINANCING DOCUMENTS........................................... 57
Section 10.01 Amendments and Supplement to Indentures and Other
Note Documents..................................... 57
ARTICLE XI TERMINATION OF TRUST.......................................... 58
Section 11.01. Termination of the Trust............................. 58
ARTICLE XII MISCELLANEOUS PROVISIONS................................... 61
Section 12.01. Limitation on Rights of Certificateholders........... 61
Section 12.02. Certificates Nonassessable and Fully Paid............ 61
Section 12.03. Notices.............................................. 61
Section 12.04. Governing Law........................................ 63
Section 12.05. Severability of Provisions........................... 63
Section 12.06. Effect of Headings and Table of Contents............. 63
Section 12.07. Successors and Assigns............................... 63
Section 12.08. Benefits of Agreement................................ 63
Section 12.09. Legal Holidays....................................... 63
Section 12.10. Counterparts......................................... 63
Section 12.11. Communication by Certificateholders with Other
Certificateholders................................. 63
Section 12.12. Intention of Parties................................. 64
Section 12.13. Trust Indenture Act Controls......................... 64
iii
<PAGE>
EXHIBIT LIST
Exhibit A Form of Certificate
Exhibit B Form of Certificate for Unlegended Certificates
Exhibit C Form of Certificate to be Delivered in connection with Transfers
Pursuant to Regulation S
Exhibit D Form of Certificate to be Delivered in connection with Transfers
to Non-QIB Accredited Investors
Exhibit E Form of Assignment and Assumption Agreement
iv
<PAGE>
PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of August 13, 1998,
among MIDWAY AIRLINES CORPORATION, a Delaware corporation (the "Company"), and
THE FIRST NATIONAL BANK OF MARYLAND, a national banking association, as Trustee,
is made with respect to the formation of Midway Airlines 1998-1A-O Pass Through
Trust and the issuance of 7.14% Midway Airlines 1998-1A-O Pass Through
Certificates representing fractional undivided interests in the Trust.
WITNESSETH:
WHEREAS, the Company has obtained commitments from Bombardier for
the delivery of certain Aircraft;
WHEREAS, the Company intends to finance the acquisition of each such
Aircraft either (i) through separate leveraged lease transactions, in which case
the Company will lease such Aircraft (collectively, the "Leased Aircraft") or
(ii) through separate secured loan transactions, in which case the Company will
own such Aircraft (collectively, the "Owned Aircraft");
WHEREAS, in the case of each Leased Aircraft, each Owner Trustee,
acting on behalf of the corresponding Owner Participant, will issue pursuant to
an Indenture, on a non-recourse basis, Equipment Notes in order to finance a
portion of its purchase price of such Leased Aircraft;
WHEREAS, in the case of each Owned Aircraft, the Company will issue
pursuant to an Indenture, on a recourse basis, Equipment Notes to finance a
portion of the purchase price of such Owned Aircraft;
WHEREAS, the Trustee, upon execution and delivery of this Agreement,
hereby declares the creation of this Trust (the "1998-1A-O Trust") for the
benefit of the Certificateholders, and the initial Certificateholders, as the
grantors of the 1998-1A-O Trust, by their respective acceptances of the
Certificates, join in the creation of this 1998-1A-O Trust with the Trustee;
WHEREAS, all Certificates to be issued by the Trust will evidence
fractional undivided interests in the Trust and will convey no rights, benefits
or interests in respect of any property other than the Trust Property except for
those Certificates to which an Escrow Receipt has been affixed;
WHEREAS, the Escrow Agent and the Initial Purchasers have
contemporaneously herewith entered into an Escrow Agreement with the Escrow
Agent pursuant to which the Initial Purchasers have delivered to the Escrow
Agent the
<PAGE>
proceeds from the sale of the Certificates and have irrevocably instructed the
Escrow Agent to withdraw and pay funds from such proceeds upon request and
proper certification by the Trustee to purchase Equipment Notes as the Aircraft
are delivered by Bombardier from time to time prior to the Delivery Period
Termination Date;
WHEREAS, the Escrow Agent on behalf of the Certificateholders has
contemporaneously herewith entered into a Deposit Agreement with the Depositary
under which the Deposits referred to therein will be made and from which it will
withdraw funds to allow the Trustee to purchase Equipment Notes from time to
time prior to the Delivery Period Termination Date;
WHEREAS, pursuant to the terms and conditions of this Agreement and
the Note Purchase Agreement, upon or shortly following the delivery of an
Aircraft, the Trustee on behalf of the 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 Certificates issued
hereunder and shall hold such Equipment Notes in trust for the benefit of the
Certificateholders;
WHEREAS, all of the conditions and requirements necessary to make
this Agreement, when duly executed and delivered, a valid, binding and legal
instrument, enforceable in accordance with its terms and for the purposes herein
expressed, have been done, performed and fulfilled, and the execution and
delivery of this Agreement in the form and with the terms hereof have been in
all respects duly authorized;
WHEREAS, to facilitate the sale of Equipment Notes to, and the
purchase of Equipment Notes by, the Trustee on behalf of the 1998-1A-O Trust the
Company as the "issuer", as such term is defined in and solely for purposes of
the Securities Act of 1933, as amended, of the Certificates to be issued
pursuant hereto 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 Agreement 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;
and
WHEREAS, upon issuance of the Exchange Certificates, if any, or the
effectiveness of the Shelf Registration Statement, this Agreement, as amended or
supplemented from time to time, will be subject to the provisions of the Trust
Indenture Act of 1939, and shall, to the extent applicable, be governed by such
provisions;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and valuable consideration the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
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<PAGE>
ARTICLE I
DEFINITIONS
Section 1.01. 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 other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference herein have the meanings
assigned to them therein;
(3) all references in this Agreement to designated "Articles",
"Sections", "Subsections" and other subdivisions are to the designated
Articles, Sections, Subsections and other subdivisions of this Agreement;
(4) 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, Subsection or other subdivision; and
(5) unless the context otherwise requires, whenever the words
"including", "include" or "includes" are used herein, it shall be deemed
to be followed by the phrase "without limitation".
Act: With respect to any Certificateholder has the meaning specified
in Section 1.04.
Affiliate: Means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person. For 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.
Agent Members: Has the meaning specified in Section 3.05(a).
Aircraft: Means each of the New Aircraft in respect of which a
Participation Agreement is entered into in accordance with the Note
Purchase Agreement.
Applicable Delivery Date: Has the meaning specified in Section
2.01(b).
-3-
<PAGE>
Applicable Participation Agreement: Has the meaning specified in
Section 2.01(b).
Assignment and Assumption Agreement: Means the assignment and
assumption agreement substantially in the form of Exhibit E hereto
executed and delivered in accordance with Section 11.01.
Authorized Agent: Means any Paying Agent or Registrar for the
Certificates.
Avoidable Tax: Means a state or local tax (i) upon (w) the Trust,
(x) the Trust Property, (y) Certificateholders or (z) the Trustee for
which the Trustee is entitled to seek reimbursement from the Trust
Property, 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 if the Company or any Owner Trustee
shall agree to pay, and shall pay, such tax.
Book-Entry Certificates: With respect to the Certificates, means a
beneficial interest in the Certificates, ownership and transfers of which
shall be made through book entries as described in Section 3.04.
Business Day: Means any day other than a Saturday, a Sunday or a day
on which commercial banks are required or authorized to close in
Baltimore, Maryland, New York, New York, Charlotte, North Carolina or, so
long as any Certificate is outstanding, the city and state in which the
Trustee or any Loan Trustee maintains its Corporate Trust Office or
receives and disburses funds.
Cedel: Means Cedel Bank societe anonyme.
Certificate: Means any one of the Initial Certificates or Exchange
Certificates and any such Certificates issued in exchange therefor or
replacement thereof, executed and authenticated by the Trustee.
Certificate Account: Means the account or accounts created and
maintained pursuant to Section 4.01(a).
Certificateholder or Holder: Means the Person in whose name a
Certificate is registered in the Register.
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.
-4-
<PAGE>
Code: Means the United States Internal Revenue Code of 1986, as
amended.
Company: Means Midway Airlines Corporation, a Delaware corporation,
or its successor in interest.
Controlling Party: Means the party entitled to act as such pursuant
to the terms of the Intercreditor Agreement.
Corporate Trust Office: With respect to the Trustee or any Loan
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: Means the earlier of (a) the Delivery Period
Termination Date and (b) the date on which a Triggering Event occurs.
Delivery Date: Has the meaning specified in the Note Purchase
Agreement.
Delivery Notice: Has the meaning specified in the Note Purchase
Agreement.
Delivery Period Termination Date: Means the earlier of (a) September
30, 1999 (provided that, if a labor strike occurs at the Manufacturer
prior to such date, such date shall be extended by adding thereto the
number of days that such strike has continued in effect), and (b) the date
on which Equipment Notes issued have been purchased by the Trust and the
Other Trusts in accordance with the Note Purchase Agreement.
Deposits: Has the meaning specified in the Deposit Agreement.
Deposit Agreement: Means the Deposit Agreement dated as of August
13, 1998 relating to the Certificates between the Depositary and the
Escrow Agent, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
Depositary: Means First Union National Bank.
DTC: Means The Depository Trust Company, its nominees and their
respective successors.
Direction: Has the meaning specified in Section 1.04(c).
Distribution Date: Means each Regular Distribution Date or Special
Distribution Date.
-5-
<PAGE>
Equipment Notes: Means the Equipment Notes issued pursuant to the
Indentures.
ERISA: Means the Employee Retirement Income Security Act of 1974, as
amended.
Escrow Agent: Means, initially, First Union Trust Company, National
Association, and any replacement or successor therefor appointed in
accordance with the Escrow Agreement.
Escrow Agreement: Means the Escrow and Paying Agent Agreement dated
as of August 13, 1998 relating to the Certificates, among the Escrow
Agent, the Escrow Paying Agent, the Trustee and the Initial Purchasers, as
the same may be amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Escrow Paying Agent: Means the Person acting as paying agent under
the Escrow Agreement.
Escrow Receipt: Means the receipt substantially in the form annexed
to the Escrow Agreement representing a fractional undivided interest in
the funds held in escrow thereunder.
Euroclear: Means the Euroclear System.
Exchange Certificates: Means the pass through certificates
substantially in the form of Exhibit A hereto issued in exchange for the
Initial Certificates pursuant to the Registration Rights Agreement and
authenticated hereunder.
Exchange Offer: Means the exchange offer which may be made pursuant
to the Registration Rights Agreement to exchange Initial Certificates for
Exchange Certificates.
Exchange Offer Registration Statement: Means the registration
statement that, pursuant to the Registration Rights Agreement, is filed by
the Company with the SEC with respect to the exchange of Initial
Certificates for Exchange Certificates.
Event of Default: Means the occurrence of an Indenture Default under
any Indenture pursuant to which Equipment Notes held by the Trust were
issued.
Final Maturity Date: Means July 2, 2016.
Final Withdrawal: Has the meaning specified in the Escrow Agreement.
-6-
<PAGE>
Final Withdrawal Date: Has the meaning specified in the Escrow
Agreement.
Final Withdrawal Notice: Has the meaning specified in Section 2.02.
Fractional Undivided Interest: Means the fractional undivided
interest in the Trust that is evidenced by a Certificate.
Global Certificates: Has the meaning assigned to such term in
Section 3.01.
Indenture: Means each of the separate trust indenture and security
agreements relating to the Aircraft, each as specified or described in a
Delivery Notice delivered pursuant to the Note Purchase Agreement or the
related Participation Agreement in each case as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
its terms.
Indenture Default: With respect to any Indenture, means any
Indenture Event of Default (as such term is defined in such Indenture)
thereunder.
Initial Certificates: Means the certificates issued and
authenticated hereunder substantially in the form of Exhibit A hereto
other than the Exchange Certificates.
Initial Purchasers: Means Morgan Stanley & Co. Incorporated and
Credit Suisse First Boston Corporation.
Initial Regular Distribution Date: Means the first Regular
Distribution Date on which a Scheduled Payment is to be made.
Institutional Accredited Investor: Means an institutional investor
that is an "accredited investor" within the meaning set forth in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act.
Intercreditor Agreement: Means the Intercreditor Agreement dated
August 13, 1998 among the Trustee, the Other Trustees, the Liquidity
Provider, the liquidity providers, if any, relating to the Certificates
issued under (and as defined in) the Other Pass Through Trust Agreements,
and The First National Bank of Maryland, as Subordination Agent
thereunder, as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Issuance Date: Means the date of the issuance of the Initial
Certificates.
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Lease: Means, with respect to each Leased Aircraft, the 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.
Leased Aircraft: Has the meaning given to such term in the recitals
hereto.
Letter of Representations: Means the agreement dated the Issuance
Date among the Company, the Trustee and the initial Clearing Agency.
Liquidity Facility: Means the Irrevocable Revolving Credit Agreement
dated August 13, 1998 relating to the Certificates, between the Liquidity
Provider and the Subordination Agent, as amended, replaced, supplemented
or otherwise modified from time to time in accordance with its terms and
the terms of the Intercreditor Agreement.
Liquidity Provider: Means, initially, ABN AMRO Bank N.V., acting
through its Chicago branch, and any replacement or successor therefor
appointed in accordance with the Liquidity Facility and the Intercreditor
Agreement.
Loan 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 Loan
Trustee as such trustee; and Loan Trustees means all of the Loan Trustees
under the Indentures.
New Aircraft: Has the meaning specified in the Note Purchase
Agreement.
Non-U.S. Person: Means a Person that is not a U.S. Person, as
defined in Regulation S.
Note Documents: With respect to any Equipment Note, means (i) the
Indenture and the Participation Agreement relating to such Equipment Note,
and (ii) in the case of any Equipment Note related to a Leased Aircraft,
also includes the Lease relating to such Leased Aircraft.
Note Purchase Agreement. Means the Note Purchase Agreement dated as
of August 13, 1998 among the Trustee, the Other Trustees, the Company, the
Escrow Agent, the Escrow Paying Agent and the Subordination Agent,
providing for, among other things, the purchase of Equipment Notes by the
Trustee on behalf of the Trust, as the same may be amended, supplemented
or otherwise modified from time to time, in accordance with its terms.
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Notice of Purchase Withdrawal: Has the meaning specified in the
Deposit Agreement.
Officer's Certificate: Means a certificate signed, (a) in the case
of the Company, by (i) 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 a Loan
Trustee, a Responsible Officer of the Trustee or such Owner Trustee or
such Loan Trustee, as the case may be.
Offshore Certificates Exchange Date: Has the meaning specified in
Section 3.01.
Offshore Global Certificates: Has the meaning assigned to such term
in Section 3.01.
Offshore Physical Certificates: Has the meaning assigned to such
term in Section 3.01.
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 or (ii) such other counsel
designated by the Company and reasonably acceptable to the Trustee and (b)
in the case of any Owner Trustee or any Loan Trustee may be such counsel
as may be designated by any of them whether or not such counsel is an
employee of any of them, and who shall be reasonably acceptable to the
Trustee.
Other Pass Through Trust Agreement: Means each of the three other
Midway Airlines 1998-1 Pass Through Trust Agreements relating to,
respectively, Midway Airlines 1998-1B-O Pass Through Trust, Midway
Airlines 1998-1C-O Pass Through Trust and Midway Airlines 1998-1D-O Pass
Through Trust, each dated the date hereof; and Other Pass Through Trust
Agreements means all such agreements.
Other Trust: Means each of the Midway Airlines Pass Through Trust
1998-1B-O, the Midway Airlines Pass Through Trust 1998-1C-O and the Midway
Airlines Pass Through Trust 1998-1D-O, each created on the date hereof;
and Other Trusts means all such trusts.
Other Trustee: Means the trustee under each of the Other Pass
Through Trust Agreements, and any successor or other trustee appointed as
provided therein; and Other Trustees means all such trustees.
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Outstanding: With respect to Certificates, means, as of the date of
determination, all Certificates theretofore authenticated and delivered
under this Agreement, except:
(i) Certificates theretofore cancelled by the Registrar or
delivered to the Trustee or the Registrar for cancellation;
(ii) All of the Certificates if money in the full amount
required to make the final distribution with respect thereto
pursuant to Section 11.01 hereof has been theretofore deposited with
the Trustee in trust for the Holders of such Certificates as
provided in Section 4.01 pending distribution of such money to such
Certificateholders pursuant to such final distribution payment; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been authenticated and delivered pursuant to this
Agreement.
Owned Aircraft: Has the meaning given to such term in the recitals
hereto.
Owner Participant: With respect to any Equipment Note relating to a
Leased Aircraft, means the "Owner Participant" 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 relating to a
Leased Aircraft, means the "Owner Trustee", 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 Indentures.
Participation Agreement: Means each Participation Agreement to be
entered into by the Trustee pursuant to the Note Purchase Agreement, as
the same may be amended, supplemented or otherwise modified in accordance
with its terms.
Paying Agent: Means the paying agent maintained and appointed for
the Certificates pursuant to Section 7.12.
Permanent Offshore Global Certificates: Has the meaning specified in
Section 3.01.
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Permitted Investments: Means obligations of the United States of
America or agencies or instrumentalities thereof for the payment of which
the full faith and credit of the United States of America is pledged,
maturing in not more than 60 days or such lesser time as is necessary for
payment of any Special Payments on a Special Distribution Date or any
mutual fund the portfolio of which is limited to such obligations,
including any proprietary mutual fund of The First National Bank of
Maryland for which such bank or an affiliate is investment advisor or to
which such bank provides other services and receives reasonable
compensation for such services.
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.
Physical Certificates: Has the meaning specified in Section 3.01.
Plan Transferee: Means any Plan or any entity that is using the
assets of any Plan to purchase or hold its interest in a 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.
Pool Balance: Means, as of any date, (i) the original aggregate face
amount of the Certificates less (ii) the aggregate amount of all payments
made in respect of such Certificates or in respect of Deposits 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 as of any Distribution Date shall be computed after giving effect
to any special distribution with respect to unused Deposits, payment of
principal, if any, on the Equipment Notes or other Trust Property held in
the Trust and the distribution thereof to be made on such Distribution
Date.
Pool Factor: Means, as of any date, the quotient (rounded to the
seventh decimal place) computed by dividing (i) the Pool Balance as at
such date by (ii) the original aggregate face amount of the Certificates.
The Pool Factor as of any Distribution Date shall be computed after giving
effect to any special distribution with respect to unused Deposits,
payment of principal, if any, on the Equipment Notes or other Trust
Property and the distribution thereof to be made on such Distribution
Date.
Private Placement Legend: Has the meaning specified in Section 3.02.
Purchase Agreement: Means the Purchase Agreement dated August 6,
1998 between the Company and the Initial Purchasers.
QIB: Means a qualified institutional buyer as defined in Rule 144A.
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Record Date: Means (i) for Scheduled Payments to be distributed on
any Regular Distribution Date, other than the final distribution, 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, the 15th day
(whether or not a Business Day) preceding such Special Distribution Date.
Register and Registrar: Mean the register maintained and the
registrar appointed pursuant to Sections 3.04 and 7.12.
Registration Rights Agreement: Means the Registration Rights
Agreement, dated as of August 13, 1998, among the Initial Purchasers, the
Trustee, the Other Trustees and the Company, as amended, supplemented or
otherwise modified from time to time in accordance with its terms.
Regular Distribution Date: With respect to distributions of
Scheduled Payments in respect of the Certificates, means each date
designated as a Regular Distribution Date in this Agreement, until payment
of all the Scheduled Payments to be made under the Equipment Notes held in
the Trust have been made; 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.
Regulation S: Means Regulation S under the Securities Act or any
successor regulation thereto.
Related Pass Through Trust Agreement: Means the Pass Through Trust
Agreement 1998-1A-S dated the date hereof relating to the Midway Airlines
Pass Through Trust 1998-1A-S and entered into by the Company and the
Trustee, which agreement becomes effective upon the execution and delivery
of the Assignment and Assumption Agreement pursuant to Section 7.01.
Related Trust: Means the Midway Pass Through Trust 1998-1A-S, to be
formed under the Related Pass Through Trust Agreement.
Related Trustee: Means the trustee under the Related Pass Through
Trust Agreement.
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 Agreement.
Responsible Officer: With respect to the Trustee, any Loan Trustee
and any Owner Trustee, means any officer in the Corporate Trust Division
of the Trustee, Loan Trustee or Owner Trustee or any other officer
customarily performing functions similar to those performed by the persons
who at the time
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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.
Rule 144A: Means Rule 144A under the Securities Act and any
successor regulation thereto.
Scheduled Payment: With respect to any Equipment Note, means any
payment of principal and interest on such Equipment Note (other than any
such payment which is not in fact received by the Trustee or any
Subordination Agent within five days of the date on which such payment is
scheduled to be made) or any payment of interest on the Certificates with
funds drawn under the Liquidity Facility 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, as
amended, 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.
Securities Act: Means the United States Securities Act of 1933, as
amended from time to time, or any successor thereto.
Shelf Registration Statement: Means the shelf registration statement
which may be required to be filed by the Company with the SEC pursuant to
any Registration Rights Agreement, other than an Exchange Offer
Registration Statement.
Special Distribution Date: Means each date on which a Special
Payment is to be distributed as specified in 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) or Special Redemption Premium.
Special Payments Account: Means the account or accounts created and
maintained pursuant to Section 4.01(b).
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Special Redemption Premium: Means the premium payable by the Company
in respect of the Final Withdrawal pursuant to the Note Purchase
Agreement.
Specified Investments: Means (i) obligations of, or guaranteed by,
the United States Government or agencies thereof, (ii) open market
commercial paper of any corporation incorporated under the laws of the
United States of America or any State thereof rated at least P-2 or its
equivalent by Moody's Investors Service, Inc. or at least A-2 or its
equivalent by Standard & Poor's Ratings Group, (iii) certificates of
deposit issued by commercial banks organized under the laws of the United
States or of any political subdivision thereof having a combined capital
and surplus in excess of $500,000,000 which banks or their holding
companies have a rating of A or its equivalent by Moody's Investors
Service, Inc. or Standard & Poor's Ratings Group; provided, however, that
the aggregate amount at any one time so invested in certificates of
deposit issued by any one bank shall not exceed 5% of such bank's capital
and surplus, (iv) U.S. dollar denominated offshore certificates of deposit
issued by, or offshore time deposits with, any commercial bank described
in (iii) or any subsidiary thereof, (v) repurchase agreements with any
financial institution having combined capital and surplus of at least
$500,000,000 with any of the obligations described in clauses (i) through
(iv) as collateral and (vi) any mutual fund the portfolio of which is
limited to investments of the types specified in the preceding clauses (i)
through (v), including any proprietary mutual fund of The First National
Bank of Maryland for which such bank or an affiliate is investment advisor
or to which such bank provides other services and receives reasonable
compensation for such services; 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.
Subordination Agent: Has the meaning specified in the Intercreditor
Agreement.
Temporary Offshore Global Certificates: Has the meaning specified in
Section 3.01.
Transfer Date: Has the meaning specified in Section 11.01.
Triggering Event: Has the meaning assigned to such term in the
Intercreditor Agreement.
Trust: Means the trust created by this Agreement, the estate of
which consists of the Trust Property.
Trust Indenture Act: Except as otherwise provided in Section 9.06,
means the United States Trust Indenture Act of 1939 as in force at the
date hereof.
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Trust Property: Means (i) subject to the Intercreditor Agreement,
the Equipment Notes held as the property of the Trust, 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, subject to the Intercreditor Agreement, any
proceeds from the sale by the Trustee pursuant to Section 6.02 of any
Equipment Note and (iii) all rights of the Trust and the Trustee, on
behalf of the Trust, under the Intercreditor Agreement, the Escrow
Agreement, the Note Purchase Agreement and the Liquidity Facilities,
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 Facilities,
provided that rights with respect to the Deposits or under the Escrow
Agreement, except for the right to direct withdrawals for the purchase of
Equipment Notes to be held herein, will not constitute Trust Property.
Trustee: Means The First National Bank of Maryland, or its successor
in interest, and any successor or other trustee appointed as provided
herein.
Trustee's Lien: Has the meaning specified in Section 7.17.
U.S. Global Certificate: Has the meaning specified in Section 3.01.
U.S. Physical Certificates: Has the meaning specified in Section
3.01.
Section 1.02. Compliance Certificates and Opinions. Upon any
application or request by the Company, any Owner Trustee or any Loan Trustee to
the Trustee to take any action under any provision of this Agreement, the
Company, such Owner Trustee or such Loan Trustee, as the case may be, shall
furnish to the Trustee (i) an Officer's Certificate stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in this Agreement
relating to the proposed action have been complied with and (ii) 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 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 Agreement (other than a certificate
provided pursuant to Section 8.04(d)) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions in this
Agreement relating thereto;
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(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and 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 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 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 Loan
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 this Agreement and conclusive in favor of the
Trustee, the Company and any Loan Trustee, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument acknowledged to him
the execution
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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 Outstanding have given any
direction, consent or waiver (a "Direction") under this Agreement, Certificates
owned by the Company, any Owner Trustee, any Owner Participant or any Affiliate
of any such Person thereof 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 the
Trustee in fact knows to be so owned shall be so disregarded. Notwithstanding
the foregoing, (i) if any such Person owns 100% of the Certificates Outstanding,
such Certificates shall not be so disregarded as aforesaid, and (ii) if any
amount of Certificates 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
Owner Trustee, any Owner Participant or any Affiliate of any such Person.
(d) For all purposes of this Agreement, all Initial Certificates and
all Exchange Certificates shall vote and take all other actions of
Certificateholders together as one series of Certificates.
(e) The Company may at its option, by delivery of an Officer's
Certificate to the Trustee, set a record date to determine the
Certificateholders entitled to give any consent, request, demand, authorization,
direction, notice, waiver or other 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 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 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 shall be computed as of such
record date; provided that no such consent, request, demand, authorization,
direction, notice, waiver or other Act by the Certificateholders on such record
date shall be deemed effective unless it shall become effective pursuant to the
provisions of this Agreement not later than one year after such record date.
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(f) 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.
(g) Except as otherwise provided in Section 1.04(c), Certificates
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.
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Delivery of Documents; Delivery Date. (a) The Trustee
is hereby directed (i) to execute and deliver the Intercreditor Agreement, the
Escrow Agreement and the Note Purchase Agreement on or prior to the Issuance
Date, each in the form delivered to the Trustee by the Company and (ii) subject
to the respective terms thereof, to perform its obligations thereunder. Upon
request of the Company and the satisfaction or waiver of the closing conditions
specified in the Purchase Agreement, the Trustee shall execute, deliver,
authenticate, issue and sell Certificates in authorized denominations equalling
in the aggregate the amount set forth, with respect to the Trust, in Schedule I
to the Purchase Agreement evidencing the entire ownership interest in the Trust,
which amount equals the maximum aggregate principal amount of Equipment Notes
which may be purchased by the Trustee pursuant to the Note Purchase Agreement.
Except as provided in Sections 3.04, 3.05, 3.07 and 3.11, the Trustee shall not
execute, authenticate or deliver Certificates in excess of the aggregate amount
specified in this paragraph.
(b) On or after the Issuance Date, the Company may deliver from time
to time to the Trustee a Delivery Notice relating to one or more Equipment
Notes. After receipt of a Delivery Notice and in any case no later than one
Business Day prior to a Delivery Date as to which such Delivery Notices relates
(the "Applicable Delivery Date"), the Trustee shall (as and when specified in
the Delivery Notice) instruct the Escrow Agent to provide a Notice of Purchase
Withdrawal to the Depositary requesting (A) the withdrawal of one or more
Deposits on the Applicable Delivery Date in accordance with and to the extent
permitted by the terms of the Escrow Agreement and the Deposit Agreement and (B)
the payment of all, or a portion, of such Deposit or Deposits in an amount equal
in the aggregate to the purchase price of such Equipment Notes to or on behalf
of the Owner Trustee or the Company, as the case may be, issuing such Equipment
Notes, all as shall be described in the Delivery Notice. The Trustee shall (as
and when specified in such Delivery Notice), subject to the conditions set forth
in Section 2 of the Note Purchase Agreement, enter into and perform its
obligations under the Participation Agreement specified in such Delivery Notice
(the
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"Applicable Participation Agreement") and cause such certificates, documents and
legal opinions relating to the Trustee to be duly delivered as required by the
Applicable Participation Agreement. If at any time prior to the Applicable
Delivery Date, the Trustee receives a notice of postponement pursuant to Section
1(e) or 1(f) of the Note Purchase Agreement, then the Trustee shall give the
Depositary (with a copy to the Escrow Agent) a notice of cancellation of such
Notice of Purchase Withdrawal relating to such Deposit or Deposits on such
Applicable Delivery Date. Upon satisfaction of the conditions specified in the
Note Purchase Agreement and the Applicable Participation Agreement, the Trustee
shall purchase the applicable Equipment Notes with the proceeds of the
withdrawals of one or more Deposits made on the Applicable Delivery Date in
accordance with the terms of the Deposit Agreement and the Escrow Agreement. The
purchase price of such Equipment Notes shall equal the principal amount of such
Equipment Notes. Amounts withdrawn from such Deposit or Deposits in excess of
the purchase price of the Equipment Notes or to the extent not applied on the
Applicable Delivery Date to the purchase price of the Equipment Notes, shall be
redeposited by the Trustee with the Depositary on the Applicable Delivery Date
in accordance with the terms of the Deposit Agreement.
Section 2.02. Withdrawal of Deposits. If any Deposits remain
outstanding on the Business Day next succeeding the Cut-off Date, (i)(A) the
Trustee shall give the Escrow Agent notice that the Trustee's obligation to
purchase Equipment Notes under the Note Purchase Agreement has terminated and
instruct the Escrow Agent to provide a notice of Final Withdrawal to the
Depositary substantially in the form of Exhibit B to the Deposit Agreement (the
"Final Withdrawal Notice") and (B) the Trustee will make a demand upon the
Company under the Note Purchase Agreement for an amount equal to the Special
Redemption Premium, such payment to be made on the Final Withdrawal Date.
Section 2.03. The Trustee. Subject to Section 7.15, the Trustee
shall not be responsible in any manner whatsoever for or in respect of the
validity or sufficiency of this Agreement, the Deposit Agreement or the Escrow
Agreement or the due execution hereof or thereof by the Company or the other
parties thereto (other than the Trustee), or for or in respect of the recitals
and statements contained herein or therein, all of which recitals and statements
are made solely by the Company.
Section 2.04. Acceptance by Trustee. The Trustee, upon the execution
and delivery of this Agreement, acknowledges its acceptance of all right, title
and interest in and to the Trust Property acquired pursuant to Section 2.01
hereof and the Note Purchase Agreement and declares that the Trustee holds and
will hold such right, title and interest, together with all other property
constituting the Trust Property, for the benefit of all then present and future
Certificateholders, upon the trusts herein set forth. Subject to Section 7.14,
the Trustee shall take all actions reasonably necessary to effect the
registration of all such Equipment Notes in the name of the Subordination Agent.
By its payment for and acceptance of each Certificate issued to it under this
Agreement, each initial Certificateholder as grantor of the Trust thereby joins
in the creation and declaration of the Trust.
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Section 2.05. Limitation of Powers. The Trust is constituted solely
for the purpose of making the investment in the Equipment Notes, and, except as
set forth herein, 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 any Aircraft (as
defined in the respective 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. Title, Form, Denomination and Execution of
Certificates. (a) The Initial Certificates shall be known as the "7.14%
1998-1A-O Initial Pass Through Certificates" and the Exchange Certificates shall
be known as the "7.14% 1998-1A-O Exchange Pass Through Certificates", in each
case, of the Trust. Each Certificate will represent a fractional undivided
interest in the Trust and shall be substantially in the form set forth as
Exhibit A hereto, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Agreement and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Certificates, as evidenced by their execution of 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. At the Escrow Agent's request under the Escrow Agreement, the
Trustee shall affix the corresponding Escrow Receipt to each Certificate. In any
event, any transfer or exchange of any Certificate shall also effect a transfer
or exchange of the related Escrow Receipt. Prior to the Final Withdrawal Date,
no transfer or exchange of any Certificate shall be permitted unless the
corresponding Escrow Receipt is attached thereto and also is so transferred or
exchanged. By acceptance of any Certificate to which an Escrow Receipt is
attached, each Holder of such a Certificate acknowledges and accepts the
restrictions on transfer of the Escrow Receipt set forth herein and in the
Escrow Agreement.
(b) The Initial Certificates shall be issued only in fully
registered form without coupons and only in denominations of $100,000 or
integral multiples of $1,000 in excess thereof, except that one Certificate may
be issued in a denomination of less than $100,000. The Exchange Certificates
will be issued in denominations of $1,000 or integral multiples thereof. Each
Certificate shall be dated the date of its authentication. The aggregate
Fractional Undivided Interest of Certificates shall not at any time exceed
$58,426,000.
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(c) Initial Certificates offered and sold in reliance on Rule 144A
shall be issued initially in the form of a single permanent global Certificate
in registered form, substantially in the form set forth as Exhibit A hereto (the
"U.S. Global Certificate"), duly executed and authenticated by the Trustee as
hereinafter provided. The U.S. Global Certificate will be registered in the name
of a nominee for DTC and deposited with the Trustee, as custodian for DTC. The
aggregate principal amount of the U.S. Global Certificate may from time to time
be increased or decreased by adjustments made on the records of the Depositary
or its nominee, or of the Trustee, as custodian for DTC or its nominee, as
hereinafter provided.
(d) Initial Certificates offered and sold in offshore transactions
in reliance on Regulation S shall be issued initially in the form of a single
temporary global Certificate in registered form, substantially in the form set
forth as Exhibit A hereto (the "Temporary Offshore Global Certificate") duly
executed and authenticated by the Trustee as hereinafter provided. The Temporary
Offshore Global Certificate will be registered in the name of a nominee of DTC
for credit to the account of the Agent Members acting as depositaries for
Euroclear and Cedel and deposited with the Trustee as custodian for DTC. At any
time on or after September 23, 1998 (the "Offshore Certificates Exchange Date"),
upon receipt by the Trustee of a certificate substantially in the form of
Exhibit B hereto, a single permanent global Certificate in registered form
substantially in the form set forth in Exhibit A (the "Permanent Offshore Global
Certificate"; and together with the Temporary Offshore Global Certificate, the
"Offshore Global Certificates"), duly executed and authenticated by the Trustee
as hereinafter provided, shall be registered in the name of a nominee for DTC
and deposited with the Trustee, as custodian for DTC, and the Registrar shall
reflect on its books and records the date of such transfer and a decrease in the
principal amount of any Temporary Offshore Global Certificate in an amount equal
to the principal amount of the beneficial interest in such Temporary Offshore
Global Certificate transferred. The U.S. Global Certificate and the Offshore
Global Certificates are sometimes referred to as the "Global Certificates".
(e) Initial Certificates offered and sold to Institutional
Accredited Investors shall be issued in the form of permanent certificated
Certificates in registered form in substantially the form set forth as Exhibit A
hereto (the "U.S. Physical Certificates"). Certificates issued pursuant to
Section 3.05(b) in exchange for interests in any Offshore Global Certificate
shall be in the form of permanent certificated Certificates in registered form
substantially in the form set forth in Exhibit A (the "Offshore Physical
Certificates"). The Offshore Physical Certificates and U.S. Physical
Certificates are sometimes collectively herein referred to as the "Physical
Certificates".
(f) The Exchange Certificates shall be issued in the form of one or
more global Certificates substantially in the form of Exhibit A hereto (each, a
"Global Exchange Certificate"), except that the Private Placement Legend
(hereinafter defined) shall be omitted. Such Global Exchange Certificates shall
be in registered form and be registered in the name of DTC and deposited with
the Trustee, at its Corporate Trust Office, as custodian DTC. The aggregate
principal amount of any Global Exchange
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Certificate may from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for DTC for such Global Exchange
Certificate, which adjustments shall be conclusive as to the aggregate principal
amount of any such Global Exchange Certificates. Subject to clause (i) of the
first sentence of this Section 3.01(f), the terms hereof applicable to Global
Certificates shall apply to the Global Exchange Certificates, mutatis mutandis.
(g) The definitive Certificates shall be in registered form and
shall be typed, printed, lithographed or engraved or produced by any combination
of these methods or may be produced in any other manner, all as determined by
the officers executing such Certificates, as evidenced by their execution of
such Certificates.
Section 3.02. Restrictive Legends. (a) Subject to Section 3.06, each
Global Certificate (other than the Permanent Offshore Global Certificate) and
each U.S. Physical Certificate shall bear the following legend (the "Private
Placement Legend") on the face thereof:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY
MIDWAY AIRLINES CORPORATION ("MIDWAY") OR ANY AFFILIATE OF MIDWAY, RESELL
OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO MIDWAY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATES
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE
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TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS
CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY
MIDWAY OR AN AFFILIATE OF MIDWAY, THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR
TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND MIDWAY SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
(b) Each Global Certificate shall also bear the following legend on
the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE 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 HEREON 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.
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TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST
AGREEMENT REFERRED TO HEREIN.
Section 3.03. Authentication of Certificates. (a) The Trustee shall
duly execute, authenticate and deliver Certificates in authorized denominations
equalling in the aggregate the aggregate principal amount of the Equipment Notes
to be purchased by the Trustee pursuant to the Participation Agreements and
evidencing the entire ownership of the Trust.
(b) No Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose, unless there appears on
such Certificate a certificate of authentication substantially in the form
provided for herein executed by the Trustee by the manual signature of one of
its authorized signatories, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.
Section 3.04. Transfer and Exchange. The Trustee shall cause to be
kept at the office or agency to be maintained by it in accordance with the
provisions of Section 7.12 of this Agreement a register (the "Register") for the
Certificates in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of the Certificates
and of transfers and exchanges of the Certificates as herein provided. The
Trustee shall initially be the registrar (the "Registrar") for the purpose of
registering the Certificates and transfers and exchanges of the Certificates as
herein provided. A Certificateholder may transfer or exchange a Certificate by
written application to the Registrar stating the name of the proposed transferee
and otherwise complying with the terms of this Agreement, including providing a
written certificate or other evidence of compliance with any restrictions on
transfer; provided that no exchanges of Initial Certificates for Exchange
Certificates shall occur until an Exchange Offer Registration Statement shall
have been declared effective by the SEC (notice of which shall be provided to
the Trustee by the Company). No such transfer shall be effected until, and such
transferee shall succeed to the rights of a Certificateholder only upon, final
acceptance and registration of the transfer by the Registrar in the Register.
Prior to the registration of any transfer by a Certificateholder as provided
herein, the Trustee shall treat the person in whose name the Certificate is
registered as the owner thereof for all purposes, and the Trustee shall not be
affected by notice to the contrary. Furthermore, DTC shall, by acceptance of a
Global Certificate, agree that transfers of beneficial interests in such Global
Certificate may be effected only through a book-entry system maintained by the
Depositary (or its agent), and that ownership of a beneficial interest in the
Certificate shall be required to be reflected in a book entry. When Certificates
are presented to the Registrar with a request to register the transfer or to
exchange them for an equal face amount of
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Certificates of other authorized denominations, the Registrar shall register the
transfer or make the exchange as requested if its requirements for such
transactions are met. To permit registrations of transfers and exchanges in
accordance with the terms, conditions and restrictions hereof, the Trustee shall
execute and authenticate Certificates at the Registrar's request. No service
charge shall be made for any registration of transfer or exchange of the
Certificates, but the Trustee may require payment by the transferor of a sum
sufficient to cover any transfer tax or similar governmental charge payable in
connection therewith.
Section 3.05. Book-Entry Provisions for U.S. Global Certificate and
Offshore Global Certificates. (a) Members of, or participants in, DTC ("Agent
Members") shall have no rights under this Agreement with respect to any Global
Certificate held on their behalf by DTC, or the Trustee as its custodian, and
DTC may be treated by the Trustee and any agent of the Trustee as the absolute
owner of such Global Certificate for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Trustee or any agent of the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by DTC or shall impair, as between DTC and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a holder of any Certificate. Upon the issuance of any Global
Certificate, the Registrar or its duly appointed agent shall record a nominee of
DTC as the registered holder of such Global Certificate.
(b) Transfers of any Global Certificate shall be limited to
transfers of such Global Certificate in whole, but not in part, to nominees of
DTC, its successor or such successor's nominees. Beneficial interests in the
U.S. Global Certificate and any Offshore Global Certificate may be transferred
in accordance with the rules and procedures of DTC and the provisions of Section
3.06. Beneficial interests in the U.S. Global Certificate or an Offshore Global
Certificate shall be delivered to all beneficial owners in the form of U.S.
Physical Certificates or Offshore Physical Certificates, as the case may be, if
(i) the Company notifies the Trustee in writing that DTC is unwilling or unable
to discharge properly its responsibilities as DTC for the U.S. Global
Certificate or such Offshore Global Certificate, as the case may be, and the
Company is unable to locate a qualified successor depositary within 90 days of
such notice or (ii) after the occurrence of an Event of Default, beneficial
owners of the U.S. Global Certificate or Offshore Global Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in the Trust, by Act of such Certificateholders delivered to the Company and the
Trustee, advise the Company, the Trustee and DTC through its Clearing Agency
Participants in writing that the continuation of a book-entry system through DTC
is no longer in the best interests of the Certificateholders, then the Trustee
shall notify all owners of beneficial interests in the U.S. Global Certificate
or an Offshore Global Certificate, through DTC, of the occurrence of any such
event and the availability of definitive Certificates.
(c) Any beneficial interest in one of the Global Certificates that
is transferred to a Person who takes delivery in the form of an interest in the
other Global Certificate will, upon such transfer, cease to be an interest in
such Global
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Certificate and become an interest in the other Global Certificate and,
accordingly, will thereafter be subject to all transfer restrictions, if any,
and other procedures applicable to beneficial interests in such other Global
Certificate for as long as it remains such an interest.
(d) [Intentionally omitted.]
(e) In connection with the transfer of the entire U.S. Global
Certificate or an entire Offshore Global Certificate to the beneficial owners
thereof pursuant to paragraph (b) of this Section 3.05, such U.S. Global
Certificate or Offshore Global Certificate, as the case may be, shall be deemed
to be surrendered to the Trustee for cancellation, and the Trustee shall
execute, authenticate and deliver, to each beneficial owner identified by DTC in
exchange for its beneficial interest in such U.S. Global Certificate or Offshore
Global Certificate, as the case may be, an equal aggregate principal amount of
U.S. Physical Certificates or Offshore Physical Certificates, as the case may
be, of authorized denominations.
(f) Any U.S. Physical Certificate delivered in exchange for an
interest in the U.S. Global Certificate pursuant to paragraph (b) of this
Section 3.05 shall, except as otherwise provided by paragraph (f) of Section
3.06, bear the Private Placement Legend.
(g) Any Offshore Physical Certificate delivered in exchange for an
interest in an Offshore Global Certificate pursuant to paragraph (b) of this
Section shall, except as otherwise provided by paragraph (f) of Section 3.06,
bear the applicable legend regarding transfer restrictions set forth in Section
3.02(a).
(h) The registered holder of the U.S. Global Certificate or any
Offshore Global Certificate may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Agreement or the Certificates.
Section 3.06. Special Transfer Provisions. Unless and until (i) an
Initial Certificate is sold under an effective Shelf Registration Statement or
(ii) an Initial Certificate is exchanged for an Exchange Certificate pursuant to
an effective Exchange Offer Registration Statement, in each case pursuant to the
terms of the Registration Rights Agreement, the following provisions shall apply
to the Certificates:
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Certificate to any Institutional Accredited Investor
which is not a QIB (excluding transfers to or by Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Certificate,
whether or not such Certificate bears the Private Placement Legend, if (x)
the requested transfer is at least two years after the later of the
original issue date of the
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Certificates and the last date on which such Certificate was held by the
Company or any affiliate thereof or (y) the proposed transferee has
delivered to the Registrar a letter substantially in the form of Exhibit D
hereto and the aggregate principal amount of the Certificates being
transferred is at least $100,000.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Certificate, upon receipt by the
Registrar of (x) the documents, if any, required by paragraph (i) and (y)
instructions given in accordance with DTC's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
of the transfer and a decrease in the principal amount of such U.S. Global
Certificate in an amount equal to the principal amount of the beneficial
interest in such U.S. Global Certificate to be transferred, and the
Company shall execute, and the Trustee shall authenticate and deliver to
the transferor or at its direction, one or more U.S. Physical Certificates
of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of an Initial Certificate
to a QIB (excluding Non-U.S. Persons):
(i) If the Certificate to be transferred consists of U.S. Physical
Certificates or an interest in any Temporary Offshore Global Certificate,
the Registrar shall register the transfer if such transfer is being made
by a proposed transferor who has checked the box provided for on the form
of Initial Certificate stating, or has otherwise advised the Trustee and
the Registrar in writing, that the sale has been made in compliance with
the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Initial Certificate stating, or
has otherwise advised the Trustee and the Registrar in writing, that it is
purchasing the Initial Certificate for its own account or an account with
respect to which it exercises sole investment discretion and that it, or
the Person on whose behalf it is acting with respect to any such account,
is a QIB within the meaning of Rule 144A, and is aware that the sale to it
is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Trust and/or the Company as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
(ii) Upon receipt by the Registrar of the documents referred to in
clause (i) above and instructions given in accordance with DTC's and the
Registrar's procedures therefor, the Registrar shall reflect on its books
and records the date of such transfer and an increase in the principal
amount of the U.S. Global Certificate in an amount equal to the principal
amount of the U.S. Physical Certificates or interests in the Temporary
Offshore Global Certificate, as the case may be, being transferred, and
the Trustee shall cancel such Physical Certificates
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or decrease the amount of such Temporary Offshore Global Certificate so
transferred.
(c) [Intentionally omitted.]
(d) Transfers of Interests in the Permanent Offshore Global
Certificate or Offshore Physical Certificates. The Registrar shall register any
transfer of interests in the Permanent Offshore Global Certificate or Offshore
Physical Certificates without requiring any additional certification.
(e) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any registration of any transfer of an
Initial Certificate to a Non-U.S. Person:
(i) Prior to the Offshore Certificates Exchange Date, the Registrar
shall register any proposed transfer of an Initial Certificate to a
Non-U.S. Person upon receipt of a certificate substantially in the form
set forth as Exhibit C hereto from the proposed transferor.
(ii) On and after the Offshore Certificates Exchange Date, the
Registrar shall register any proposed transfer to any Non-U.S. Person if
the Certificate to be transferred is a U.S. Physical Certificate or an
interest in the U.S. Global Certificate, upon receipt of a certificate
substantially in the form of Exhibit C from the proposed transferor. The
Registrar shall promptly send a copy of such certificate to the Company.
(iii) Upon receipt by the Registrar of (x) the documents, if any,
required by paragraph (ii) and (y) instructions in accordance with the
Depositary's and the Registrar's procedures, the Registrar shall reflect
on its books and records the date of such transfer and a decrease in the
principal amount of such U.S. Global Certificate in an amount equal to the
principal amount of the beneficial interest in such U.S. Global
Certificate to be transferred, and (B) upon receipt by the Registrar of
instructions given in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and an increase in the principal amount of the Offshore Global Certificate
in an amount equal to the principal amount of the U.S. Physical
Certificate or the U.S. Global Certificate, as the case may be, to be
transferred, and the Trustee shall cancel the Physical Certificate, if
any, so transferred or decrease the amount of such U.S. Global
Certificate.
(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Certificates not bearing the Private Placement Legend, the
Registrar shall deliver Certificates that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Certificates bearing the
Private Placement Legend, the Registrar shall deliver only Certificates that
bear the Private Placement Legend unless either (i) the circumstances
contemplated by paragraph (a)(i)(x) or (e)(ii) of this
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Section 3.06 exist or (ii) there is delivered to the Registrar an Opinion of
Counsel to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of the
Securities Act.
(g) General. By its acceptance of any Certificate bearing the
Private Placement Legend, each Holder of such a Certificate acknowledges the
restrictions on transfer of such Certificate set forth in this Agreement and
agrees that it will transfer such Certificate only as provided in this
Agreement. The Registrar shall not register a transfer of any Certificate unless
such transfer complies with the restrictions on transfer of such Certificate set
forth in this Agreement. In connection with any transfer of Certificates, each
Certificateholder agrees by its acceptance of the Certificates to furnish the
Registrar or the Trustee such certifications, legal opinions or other
information as either of them may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or a transaction not
subject to, the registration requirements of the Securities Act; provided that
neither the Trustee nor the Registrar shall be required to determine the
sufficiency of any such certifications, legal opinions or other information.
Until such time as no Certificates remain Outstanding, the Registrar
shall retain copies of all letters, notices and other written communications
received pursuant to Section 3.05 or this Section 3.06. The Trustee, if not the
Registrar at such time, shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Registrar.
Section 3.07. 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, in authorized denominations and of like Fractional Undivided
Interest and bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Certificate under this
Section 3.07, 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 3.07 shall
constitute conclusive evidence of the appropriate Fractional Undivided Interest
in the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
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The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Trustee, the Registrar and any
Paying Agent 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 Article IV and for all other purposes whatsoever, and none of the
Trustee, the Registrar or any Paying Agent shall be affected by any notice to
the contrary.
Section 3.09. Cancellation. All Certificates surrendered for payment
or transfer or exchange shall, if surrendered to the Trustee or any agent of the
Trustee other than the Registrar, be delivered to the Registrar for cancellation
and shall promptly be cancelled by it. No Certificates shall be authenticated in
lieu of or in exchange for any Certificates cancelled as provided in this
Section, except as expressly permitted by this Agreement. All cancelled
Certificates held by the Registrar shall be destroyed and a certification of
their destruction delivered to the Trustee.
Section 3.10. Limitation of Liability for Payments. All payments and
distributions made to Certificateholders 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 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 to the extent available for distribution to such
Certificateholder as provided in this Agreement.
Section 3.11. Temporary Certificates. Until definitive Certificates
are ready for delivery, the Trustee shall authenticate temporary Certificates.
Temporary Certificates shall be substantially in the form of definitive
Certificates but may have insertions, substitutions, omissions and other
variations determined to be appropriate by the officers executing the temporary
Certificates, as evidenced by their execution of such temporary Certificates. If
temporary Certificates are issued, the Trustee will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
office or agency of the Trustee designated for such purpose pursuant to Section
7.12, without charge to the Certificateholder. Upon surrender for cancellation
of any one or more temporary Certificates, the Trustee shall execute,
authenticate and deliver in exchange therefor a like face amount of definitive
Certificates of authorized denominations. Until so exchanged, the temporary
Certificates shall be entitled to the same benefits under this Agreement as
definitive Certificates.
Section 3.12. ERISA Restrictive Legend. All Certificates issued
pursuant to this Agreement shall bear a legend to the following effect (the
"ERISA Legend")
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unless the Company and the Trustee determine otherwise consistent with
applicable law:
"BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS FOR THE BENEFIT OF
THE COMPANY AND EACH OWNER PARTICIPANT THAT (A) IT IS NOT A PLAN TRANSFEREE (AS
DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR (B) ONE OR MORE PROHIBITED
TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS APPLIES SUCH THAT THE USE OF
PLAN ASSETS TO PURCHASE AND HOLD THIS PASS THROUGH CERTIFICATE WILL NOT
CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975 OF
THE CODE. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF
THE FOREGOING RESTRICTIONS."
By acceptance of any Certificate bearing the ERISA Legend, each
Holder of such a Certificate acknowledges for the benefit of the Company and
each Owner Participant the restrictions on transfer of such Certificate set
forth in this Agreement and agrees that it will transfer such Certificate only
as provided in this Agreement. The Registrar shall not register a transfer of
any Certificate unless such transfer complies with the restrictions on transfer,
if any, of such Certificate set forth in this Agreement.
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 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, 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 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 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.
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(c) The Trustee shall present to the Loan Trustee to which an
Equipment Note relates such Equipment Note on the date of its stated final
maturity or, in the case of any Equipment Note which is to be redeemed in whole
pursuant to the relevant Indenture, on the applicable redemption date under such
Indenture.
Section 4.02. Distributions from Certificate Account and Special
Payments Account. (a) On each Regular Distribution Date or as soon thereafter as
the Trustee has confirmed receipt of the payment of the Scheduled Payments due
on such date, the Trustee shall distribute out of the Certificate Account the
entire amount deposited therein pursuant to Section 4.01(a). There shall be so
distributed to each Certificateholder of record 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 Fractional Undivided Interest in the Trust held by such
Certificateholder) of the total amount in the Certificate Account, except that,
with respect to Certificates registered on the Record Date in the name of the
nominee of the Depositary (initially, such nominee to be Cede & Co.), such
distribution shall be made by wire transfer in immediately available funds to
the account designated by such nominee.
(b) On each Special Distribution Date with respect to any Special
Payment or as soon thereafter as the Trustee has confirmed receipt of any
Special Payments, the Trustee shall distribute out of the 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 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 Trust held by such Certificateholder) of the aggregate amount in
the Special Payments Account on account of such Special Payment, except that,
with respect to Certificates registered on the Record Date in the name of the
nominee of the Depositary (initially, such nominee to be Cede & Co.), such
distribution shall be made by wire transfer in immediately available funds to
the account designated by such nominee.
(c) The Trustee shall, at the expense of the Company, cause notice
of each Special Payment to be mailed to each Certificateholder at his address as
it appears in the Register. In the event of redemption, prepayment or purchase
of Equipment Notes held in the Trust, such notice shall be mailed not less than
15 days prior to the date any 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 (which notice, in the case of a Special Redemption Premium,
shall include a copy of the notice delivered by the Escrow Paying Agent under
Section 2.06 of the Escrow Agreement). Notices mailed by the Trustee shall set
forth:
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(i) the Special Distribution Date and the Record Date therefor
(except as otherwise provided in Section 11.01),
(ii) the amount of the Special Payment for each $1,000 face amount
Certificate (taking into account any payment to be made by the Company
pursuant to Section 2.02) 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, the total amount to be received on such date for each
$1,000 face amount Certificate.
If the amount of (x) premium, if any, payable upon the redemption, prepayment or
purchase of an Equipment Note or (y) Special Redemption Premium has not been
calculated at the time 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 such premium or Special Redemption Premium, as the case may
be, received will also be distributed.
If any redemption of the Equipment Notes held in the Trust is
cancelled, the Trustee, as soon as possible after learning thereof, shall cause
notice thereof to be mailed to each Certificateholder at its address as it
appears on the Register.
Section 4.03. Statements to Certificateholders. (a) On each
Distribution Date, the Trustee will include with each distribution to
Certificateholders of a Scheduled Payment or Special Payment, as the case may
be, a statement setting forth the information provided below (in the case of a
Special Payment, including any Special Redemption Premium, reflecting in part
the information provided by the Escrow Paying Agent under the Escrow Agreement).
Such statement shall set forth (per $1,000 face amount Certificate as to (ii),
(iii), (iv) and (v) below) the following information:
(i) the aggregate amount of funds distributed on such Distribution
Date under the Agreement and under the Escrow Agreement, indicating the
amount allocable to each source;
(ii) the amount of such distribution under the Agreement allocable
to principal and the amount allocable to premium (including the Special
Redemption Premium), if any;
(iii) the amount of such distribution under the Agreement allocable
to interest;
(iv) the amount of such distribution under the Escrow Agreement
allocable to interest;
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(v) the amount of such distribution under the Escrow Agreement
allocable to Deposits; and
(vi) the Pool Balance and the Pool Factor.
With respect to the Certificates registered in the name of a
Clearing Agency or its nominee, 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 Trustee will
mail to each such Clearing Agency Participant the statement described above and
will make available additional copies as requested by such Clearing Agency
Participant for forwarding to holders of Certificates.
(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), (a)(ii), (a)(iii), (a)(iv) and (a)(v)
above with respect to the 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 a Clearing Agency or its nominee, such report and such other items shall be
prepared on the basis of information supplied to the Trustee 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.
(c) Utilizing information provided by Midway, promptly following (i)
the Delivery Period Termination Date, if there has been any change in the
information set forth in clauses (x), (y) and (z) below from that set forth in
page 65 of the Offering Memorandum, and (ii) any early redemption or purchase
of, or any default in the prepayment of principal or interest in respect of, any
of the Equipment Notes held in the Trust, or any Final Withdrawal, the Trustee
shall furnish to Certificateholders of record on such date a statement setting
forth (x) the expected Pool Balances for each subsequent Regular Distribution
Date following the Delivery Period Termination Date, (y) the related Pool
Factors for such Regular Distribution Dates and (z) the expected principal
distribution schedule of the Equipment Notes, in the aggregate, held as Trust
Property at the date of such notice. With respect to the Certificates registered
in the name of a Clearing Agency, on the Delivery Period Termination Date, the
Trustee will request from such Clearing Agency a securities position listing
setting forth the names of all Clearing Agency Participants reflected on such
Clearing Agency's books as holding interests in the Certificates on such date.
The Trust will mail to each such Clearing Agency Participant the statement
described above and will make available
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additional copies as requested by such Clearing Agency Participant for
forwarding to holders of interests in the 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 gross negligence (or simple negligence in
the handling of funds) 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 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 (i) organized and validly existing under the laws of the United States
of America or any state thereof or the District of Columbia, (ii) a
"citizen of the United States" (as defined in Section 40102(a)(15) of
Title 49 of the United States Code) and (iii) a United States certificated
air carrier, if and so long as such status is a condition of entitlement
to the benefits of Section 1110 of the Bankruptcy Reform Act of 1978, as
amended (11 U.S.C. ss. 1110), with respect to the Aircraft;
(b) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance, transfer or
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lease substantially all of the assets of the Company as an entirety shall
execute and deliver to the Trustee 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 this Agreement, the Other Pass Through Trust Agreements, the
Participation Agreements, and each other Note Document to be performed or
observed by the Company;
(c) immediately after giving effect to such transaction, no Event of
Default (as defined in any Lease or any Indenture relating to an Owned
Aircraft), shall have occurred and be continuing; and
(d) the Company shall have delivered to the Trustee an Officer's
Certificate of the Company and an Opinion of Counsel of the Company
reasonably satisfactory to the Trustee, each stating that such
consolidation, merger, conveyance, transfer or lease and the assumption
agreement mentioned in clause (b) above comply with this Section 5.02 and
that all conditions precedent herein provided for relating to such
transaction have been complied with.
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 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 this Agreement or any Financing Document 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 the Intercreditor
Agreement.
(b) Purchase Rights of Certificateholders. By its acceptance of its
Certificate, each Certificateholder agrees that at any time after the occurrence
and during the continuation of a Triggering Event:
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(i) each Class B Certificateholder shall have the right to purchase
all, but not less than all, of the Class A Certificates upon ten (10)
days' written notice to the Class A 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 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 Certificates pro rata based
on the Fractional Undivided Interest in the Class B Trust held by each
such Class B Certificateholder and (B) if prior to the end of such ten-day
period any other Class B Certificateholder fails to notify the purchasing
Class B Certificateholder of such other Class B Certificateholder's desire
to participate in such a purchase, then such other Class B
Certificateholder shall lose its right to purchase the Certificates
pursuant to this Section 6.01(b)(i).
(ii) each Class C Certificateholder shall have the right (which
shall not expire upon any purchase of the Certificates pursuant to clause
(i) above) to purchase all, but not less than all, of the 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 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 Certificates and
the Class B Certificates pursuant to this Section 6.01(b).
(iii) each Class D Certificateholder shall have the right (which
shall not expire upon any purchase of the Certificates pursuant to clause
(i) above and the Certificates and the Class B Certificates pursuant to
clause (ii) above) to purchase all, but not less than all, of the
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 Class D Certificateholder to purchase all, but not less than
all, of the Certificates, the Class B Certificates and the Class C
Certificates pro rata based on the Fractional Undivided Interest in the
Class D Trust held by each such Class D Certificateholder and (B) if prior
to the end of such ten day period any other
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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 Certificates, the Class B
Certificates and the Class C Certificates pursuant to this Section
6.01(b).
The purchase price with respect to the Certificates shall be equal
to the Pool Balance of the Certificates, 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, the Intercreditor Agreement, the Escrow Agreement or any Note
Document or on or in respect of the Certificates; provided, however, that (i) if
such purchase occurs after the record date specified in Section 2.03(b) of the
Escrow Agreement relating to the distribution of unused Deposits and accrued and
unpaid interest thereunder, such purchase price shall be reduced by the
aggregate amount of unused Deposits and interest to be distributed under the
Escrow Agreement (which deducted amounts shall remain distributable to, and may
be retained by the Certificateholder as of such record date) and (ii) if such
purchase occurs after a Record Date, such purchase price shall be reduced by the
amount to be distributed hereunder on the related Distribution date (which
deducted amounts shall remain distributable to, and may be retained by, the
Certificateholder as of such Record Date); provided further that no such
purchase of Certificates 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 Pass Through
Trust Agreements, the Certificates, the Class B Certificates and the Class C
Certificates which are senior to the Class of Certificates (as defined in the
Intercreditor Agreement) held by such purchaser. Each payment of the purchase
price of the Certificates 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 agrees by its acceptance of its Certificate that
it will, subject to Section 3.04 hereof, upon payment from such Class B
Certificateholder(s), Class C Certificateholder(s) or Class D
Certificateholder(s) of the purchase price set forth in the first sentence of
this paragraph, 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, the Escrow Agreement, the Deposit
Agreement, the Intercreditor Agreement, the Liquidity Facility, the Note
Documents and all Certificates and Escrow Receipts 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, the Escrow Agreement,
the Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility and
the Note Documents. The Certificates 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 (whether in the form of Physical
Certificates or beneficial interests in Global Certificates) and, upon such a
purchase, (i) the only rights of the
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Certificateholders will be to deliver the Certificates to the purchaser and
receive the purchase price for the Certificates and (ii) if the purchaser shall
so request, such Certificateholder will comply with all the provisions of
Section 3.04 hereof to enable new Certificates 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.
As used in this Section 6.01(b), the terms "Certificateholder",
"Class", "Class B Certificate", "Class B Certificateholder", "Class B Trust",
"Class B Trustee", "Class C Certificate", "Class C Certificateholder", "Class C
Trust", "Class C Trustee", "Class D Certificate", "Class D Certificateholder",
"Class D Trust" and "Class D Trustee", shall have the respective meanings
assigned to such terms in the Intercreditor Agreement.
Section 6.02. Incidents of Sale of Equipment Notes. Upon any sale of
all or any part of the Equipment Notes made either under the power of sale given
under this Agreement or otherwise for the enforcement of this Agreement, the
following shall be applicable:
(1) Certificateholders and Trustee May Purchase Equipment Notes. Any
Certificateholder, the Trustee in its individual or any other capacity or
any other Person may bid for and purchase any of the Equipment Notes, and
upon compliance with the terms of sale, may hold, retain, possess and
dispose of such Equipment Notes in their own absolute right without
further accountability.
(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 received by
the Trustee from the Subordination Agent pursuant to the Intercreditor
Agreement upon any sale made either under the power of sale given by this
Agreement or otherwise for the enforcement of this Agreement shall 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 of the principal of,
premium, if any, or interest on any Equipment Note, or if there shall be any
failure to pay Rent (as defined in the relevant Lease) under any Lease when due
and payable, then the Trustee, in its own name and as trustee of an express
trust, as holder of such Equipment Notes, to the extent permitted by and in
accordance with the terms of the Intercreditor Agreement and the Financing
Documents (subject to the rights of the applicable Owner Trustee or Owner
Participant to cure any such failure in accordance
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with Section 8.03 of any applicable Indenture relating to a Leased Aircraft),
shall be entitled and empowered to institute any suits, actions or proceedings
at law, in equity or otherwise, for the collection of the sums so due and unpaid
on such Equipment Notes or under such Lease and may prosecute any such claim or
proceeding to judgment or final decree with respect to the whole amount of any
such sums so due and unpaid.
Section 6.04. Control by Certificateholders. Subject to Section 6.03
and the Intercreditor Agreement, the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the 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 the Trust or pursuant to the terms of the Intercreditor Agreement, or
exercising any trust or power conferred on the Trustee under this Agreement or
the Intercreditor Agreement, including any right of the Trustee as Controlling
Party under the Intercreditor Agreement or as holder of the Equipment Notes,
provided that
(1) such Direction shall not 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 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 the Intercreditor
Agreement, the Certificateholders holding Certificates 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 Loan 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 Loan
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, or
(2) in the payment of the principal of (premium, if any) or interest
on the Equipment Notes, or
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(3) in respect of a covenant or provision hereof which under Article
IX or X cannot be modified or amended without the consent of each
Certificateholder holding an Outstanding Certificate affected thereby.
Upon any such waiver, such default shall cease to exist with respect
to the Certificates 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 to the relevant Loan Trustee shall be annulled
with respect thereto; but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon. Upon any
such waiver, the Trustee shall vote the Equipment Notes issued under the
relevant Indenture to waive the corresponding Indenture Default.
Section 6.06. Right of Certificateholders to Receive Payments Not to
Be Impaired. Anything in this Agreement to the contrary notwithstanding,
including, without limitation, Section 6.07 hereof, but subject to the
Intercreditor Agreement, the right of any Certificateholder to receive
distributions of payments required pursuant to Section 4.02 hereof on the
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 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) Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than 25% of the 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 7.03(e);
(3) the Trustee shall have refused or neglected to institute such an
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 shall have
been given to the Trustee during such 60-day period by Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating
not less than a majority in interest in the Trust.
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It is understood and intended that no one or more of the
Certificateholders shall have any right in any manner whatsoever hereunder or
under the Certificates to (i) surrender, impair, waive, affect, disturb or
prejudice any property in the Trust Property or the lien of any Indenture on any
property subject thereto, or the rights of the Certificateholders or the holders
of the Equipment Notes, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Certificateholder 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 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 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. Certain Duties and Responsibilities. (a) Except during
the continuance of an Event of Default, the Trustee undertakes to perform only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Trustee.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of its
own affairs.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own gross negligence (or simple negligence in the
handling of funds) or wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section; and
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(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts.
(d) Whether or not herein expressly so provided, every provision of
this Trust Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
Section 7.02. 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, the Owner Trustees, the Owner Participants, the
Loan Trustees and the Certificateholders 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, premium, if
any, or interest on any Equipment Note or any other Trust Property, 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. For the purpose of
this Section, the term "default" means any event that is, or after notice or
lapse of time or both would become, an Event of Default.
Section 7.03. 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 the
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
Officer's Certificate of the Company, any Owner Trustee or any Loan
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;
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(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement or the Intercreditor
Agreement at the request or direction of any of the Certificateholders
pursuant to this Agreement or the 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, 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 the Intercreditor Agreement or perform any duties under this
Agreement or the 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 the Intercreditor Agreement;
(h) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction of the Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in
interest in the 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 the
Intercreditor Agreement; and
(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.
Section 7.04. Not Responsible for Recitals or Issuance of
Certificates. The recitals contained herein and in the Certificates, 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 7.15, the Trustee makes no representations as to the validity
or sufficiency of this Agreement, any Participation Agreement, the Escrow
Agreement, the Deposit Agreement, any Equipment Notes, the Certificates or any
other Note Document, except that the Trustee hereby represents and warrants that
this Agreement has been, and the Intercreditor Agreement, each Note Document and
each Certificate will be, executed, authenticated and delivered by one of its
officers who is duly authorized to execute, authenticate and deliver such
document on its behalf.
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Section 7.05. 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, if
applicable, may otherwise deal with the Company, the Owner Trustees or the Loan
Trustees with the same rights it would have if it were not Trustee, Paying
Agent, Registrar or such other agent.
Section 7.06. Money Held in Trust. Money held by the Trustee or the
Paying Agent in trust hereunder need not be segregated from other funds except
to the extent required herein or by law and neither the Trustee nor the Paying
Agent shall have any liability for interest upon any such moneys except as
provided for herein.
Section 7.07. Compensation and Reimbursement. The Company agrees:
(1) to pay, or cause to be paid, to the Trustee from time to time
compensation (as set out in a separate fee agreement between the Trustee
and the Company) 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 herein, 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 Agreement or the
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 own
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 7.15;
(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 gross negligence (or
simple negligence in the handling of funds), 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 7.15. 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 (which consent shall not be
unreasonably withheld) 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
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(4) to indemnify, or cause to be indemnified, the Trustee, solely in
its individual capacity, for, and to hold it harmless against, any tax
(except to the extent the Trustee is reimbursed therefor pursuant to the
next paragraph, provided that no indemnification shall be available with
respect to any tax attributable to the Trustee's compensation for serving
as such) incurred without negligence, willful misconduct or bad faith, on
its part, arising out of or in connection with the acceptance or
administration of this Trust, including any costs and expenses incurred in
contesting the imposition of any such tax. The Trustee, in its individual
capacity, shall notify the Company promptly of any claim for any tax for
which it may seek indemnity. The Trustee shall permit the Company to
contest the imposition of such tax and the Trustee, in its individual
capacity, shall cooperate in the defense. The Trustee, in its individual
capacity, may have separate counsel with the consent of the Company (which
consent shall not be unreasonably withheld) 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 upon, the Trust Property for any tax incurred
without gross negligence (or simple negligence in the handling of funds), 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. If the Trustee
reimburses itself from the Trust Property of such Trust for any such tax, it
will mail a brief report within 30 days setting forth the circumstances thereof
to all Certificateholders as their names and addresses appear in the Register.
Section 7.08. Corporate Trustee Required; Eligibility. There shall
at all times be a Trustee hereunder 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 $75,000,000 (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 and having a combined capital
and surplus of at least $75,000,000). If such corporation publishes reports of
conditions at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section 7.08, 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 7.08 to act as Trustee, the
Trustee shall resign immediately as Trustee in the manner and with the effect
specified in Section 7.09.
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Section 7.09. Resignation and Removal; Appointment of Successor. (a)
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 7.10.
(b) The Trustee may resign at any time as trustee by giving prior
written notice thereof to the Company, the Authorized Agents, the Owner Trustees
and the Loan Trustees. In addition, upon the occurrence of an Event of Default,
in the event the Trustee shall not have received instructions from the
Certificateholders or the Certificateholders with respect to any Other Trust,
the Trustee shall resign. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Company, the Authorized Agents, the Owner
Trustees, the Loan 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 by Act of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Trustee, the Company, the Owner Trustees and the Loan Trustees.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 310 of the Trust
Indenture Act, if applicable, after written request therefor by the
Company or by any Certificateholder who has been a bona fide
Certificateholder for at least six months; or
(2) the Trustee shall cease to be eligible under Section 7.08 and
shall fail to resign after written request therefor by the Company or by
any such Certificateholder; or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any case, (i) the Company may remove the Trustee or (ii) any
Certificateholder who has been a bona fide Certificateholder for at least six
months may, on behalf of itself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
(e) If a Responsible Officer of the Trustee shall obtain actual
knowledge of an Avoidable Tax 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
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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 in a jurisdiction where there are no Avoidable
Taxes.
(f) If the Trustee shall resign, be removed or become incapable of
acting as trustee or if a vacancy shall occur in the office of the Trustee for
any cause, the Company shall promptly appoint a successor Trustee. If, within 90
days after such resignation, removal or incapability, or other occurrence of
such vacancy, a successor Trustee shall be appointed by Act of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Company, the Owner Trustees, the Loan Trustees and the retiring
Trustee, and the Company approves such appointment, which approval shall not be
unreasonably withheld, then the successor Trustee so appointed shall, forthwith
upon its acceptance of such appointment, become the successor Trustee and
supersede the successor Trustee appointed as provided above. If no successor
Trustee shall have been so appointed as provided above and accepted appointment
in the manner hereinafter provided, any Certificateholder 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
appointment of a successor Trustee.
(g) The successor Trustee 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 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 7.10. Acceptance of Appointment by Successor. Every
successor Trustee appointed hereunder shall execute and deliver to the Company,
the Authorized Agents, the Owner Trustees and the Loan Trustees and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee 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 Trust Property held
by such retiring Trustee hereunder, subject nevertheless to its lien, if any,
provided for in Section 7.07 and the retiring Trustee shall thereupon be
released from further liability hereunder. 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.
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No institution shall accept its appointment as a Trustee hereunder
unless at the time of such acceptance such institution shall be qualified and
eligible under this Article VII.
Section 7.11. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Certificates shall have been
executed or authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such execution or authentication and deliver the Certificates so
executed or authenticated with the same effect as if such successor Trustee had
itself executed or authenticated such Certificates.
Section 7.12. Maintenance of Agencies. (a) There shall at all times
be maintained an office or agency where Certificates 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 may be served. 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. Each such Authorized Agent shall be
a bank or trust company, shall be a corporation organized and doing business
under the laws of the United States or any state, with a combined capital and
surplus of at least $75,000,000, or a corporation having a combined capital and
surplus in excess of $5,000,000, the obligations of which are guaranteed by a
corporation organized and doing business under the laws of the United States or
any state, with a combined capital and surplus of at least $75,000,000, and
shall be authorized under such laws to exercise corporate trust powers, subject
to supervision by federal or state authorities. The Trustee shall initially be
the Paying Agent and, as provided in Section 3.04, Registrar hereunder with
respect to the Certificates. 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
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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, the Owner Trustees and the
Loan 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, the Owner Trustees and the Loan Trustees; and in each case the Trustee
shall mail notice of such appointment to all Certificateholders as their names
and addresses appear on the Register.
(e) The Company agrees to pay, or cause to be paid, from time to
time to each Authorized Agent reasonable compensation for its services and to
reimburse it for its reasonable expenses.
Section 7.13. 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 7.14. Registration of Equipment Notes in Name of
Subordination Agent. The Trustee agrees that all Equipment Notes to be purchased
by the Trust shall be issued in the name of the Subordination Agent or its
nominee and held by the Subordination Agent in trust for the benefit of the
Certificateholders, or, if not so held, the 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 7.15. Representations and Warranties of Trustee. The Trustee
hereby represents and warrants that:
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(a) the Trustee is a national banking association organized and
validly existing 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, the Escrow Agreement, the
Intercreditor Agreement and the Note Purchase Agreement and has taken all
necessary action to authorize the execution, delivery, and performance by
it of this Agreement, the Escrow Agreement, the Intercreditor Agreement
and the Note Purchase Agreement;
(c) the execution, delivery and performance by the Trustee of this
Agreement, the Escrow Agreement, the Intercreditor Agreement and the Note
Purchase Agreement (i) will not violate any provision of United States
law, Maryland law or any order, writ, judgment, or decree of any court,
arbitrator or governmental authority of the United States or the State of
Maryland 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, or (iii) will not violate any provision of, or constitute, with
or without notice or lapse of time, a default under, or result in the
creation or imposition of any lien on any properties included in the Trust
Property pursuant to the provisions of any mortgage, indenture, contract,
agreement or other undertaking to which it is a party, which violation,
default or lien could reasonably be expected to have an adverse effect on
the Trustee's performance or ability to perform its duties hereunder or
thereunder or on the transactions contemplated herein or therein;
(d) the execution, delivery and performance by the Trustee of this
Agreement, the Escrow Agreement, the Intercreditor Agreement and the Note
Purchase Agreement 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 the United States where it
is located regulating the banking and corporate trust activities of the
Trustee; and
(e) this Agreement, the Escrow Agreement, the Intercreditor
Agreement and the Note Purchase Agreement 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 7.16. Withholding Taxes; Information Reporting. (a) The
Trustee, as trustee of the 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
any and all withholding taxes applicable thereto as required by law. The Trustee
agrees to act as such
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withholding agent and, in connection therewith, whenever any present or future
taxes or similar charges are required to be withheld with respect to any amounts
payable in respect of the Certificates, to withhold such amounts and timely pay
the same to the appropriate authority in the name of and on behalf of the
Certificateholders, 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 appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Certificateholders may reasonably request from time
to time. The Trustee agrees to file any other information reports as may be
required to be filed by it under United States law.
(b) The Trustee may satisfy certain of its obligations with respect
to this Agreement by retaining, at the expense of the Company, a firm of
independent public accountants (the "Accountants") which shall (i) be
responsible for all tax filing requirements and (ii) perform the obligations of
the Trustee in respect of tax filing requirements. The Trustee shall be deemed
to have discharged its tax filing obligations under this Agreement upon its
retention of the Accountants, and, if the Trustee shall have selected in the
Accountants in good faith and without gross negligence, the Trustee shall not
have any liability with respect to the default or misconduct of the Accountants.
(c) The Trustee, at the request (and expense) of the Company, will
make such United States federal income tax elections as may be necessary to
prevent the Trust from being classified for federal income tax purposes as an
association taxable as a corporation.
Section 7.17. Trustee's Liens. The Trustee in its individual
capacity agrees that it will 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 which is attributable to the
Trustee either (i) in its individual capacity and which is unrelated to the
transactions contemplated by this Agreement, the Intercreditor Agreement, the
Note Purchase Agreement or the Note Documents, or (ii) as Trustee hereunder or
in its individual capacity and which arises out of acts or omissions which are
not contemplated by this Agreement.
Section 7.18. 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.
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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 or cause to be
furnished 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, 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, 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 7.12.
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 contained
in the most recent list furnished to the Trustee as provided in Section 7.12 or
Section 8.01, as the case may be, and the names and addresses of
Certificateholders 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
7.12 or Section 8.01, as the case may be, upon receipt of a new list so
furnished.
Section 8.03. Reports by Trustee. Within 60 days after May 15 of
each year commencing with the first full year following the issuance of the
Certificates, the Trustee shall transmit to the Certificateholders, 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;
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(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;
(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; and
(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 regard to any period of grace
or requirement of notice provided under this Agreement).
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 (and at the sole cost and expense of the Company), enter into one or
more agreements supplemental hereto or, if applicable, to the Escrow Agreement,
the Deposit Agreement, the Note Purchase Agreement, the Intercreditor Agreement
or the Liquidity Facility in form and substance satisfactory to the Trustee, for
any of the following purposes:
(1) 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 in the Note Purchase Agreement; or
(2) to add to the covenants of the Company for the benefit of the
Certificateholders, or to surrender any right or power in this Agreement
or in the Note Purchase Agreement conferred upon the Company; or
(3) to correct or supplement any provision in this Agreement, the
Escrow Agreement, the Deposit Agreement, the Note Purchase Agreement, the
Intercreditor Agreement or the Liquidity Facility which may be defective
or
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inconsistent with any other provision of this Agreement, the Deposit
Agreement, the Escrow Agreement, the Note Purchase Agreement, the
Intercreditor Agreement or any Liquidity Facility, as applicable, or to
cure any ambiguity or to modify any other provisions with respect to
matters or questions arising under this Agreement, the Escrow Agreement,
the Note Purchase Agreement, the Deposit Agreement, the Intercreditor
Agreement or the Liquidity Facility, provided that any such action shall
not materially adversely affect the interests of the Certificateholders;
or
(4) as provided in the Intercreditor Agreement, to give effect to or
provide for a Replacement Liquidity Facility or to comply with any
requirement of the Commission, any applicable law, rules or regulations of
any exchange or quotation system on which the Certificates are listed, or
any regulatory body;
(5) to modify, eliminate or add to the provisions of this Agreement,
the Deposit Agreement, the Escrow Agreement, the Intercreditor Agreement,
the Note Purchase Agreement or the Liquidity Facility to such extent as
shall be necessary to qualify or continue the qualification of this
Agreement under the Trust Indenture Act, or any similar federal statute
enacted after the execution of this Agreement, and to add to this
Agreement, the Deposit Agreement, the Escrow Agreement, the Intercreditor
Agreement, the Note Purchase Agreement or the Liquidity Facility such
provisions as may be expressly permitted by the Trust Indenture Act; and
(6) to evidence and provide for the acceptance of appointment under
this Agreement, the Deposit Agreement, the Escrow Agreement, the
Intercreditor Agreement, the Note Purchase Agreement or the Liquidity
Facility of a successor Trustee and to add or change any of the provisions
of this Agreement, the Deposit Agreement, the Escrow Agreement, the
Intercreditor Agreement, the Note Purchase Agreement or the Liquidity
Facility as shall be necessary to provide for or facilitate the
administration of the Trust under this Agreement by more than one Trustee,
provided that in each case, such modification or supplement 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 9.02. Supplemental Agreements with Consent of
Certificateholders. With the consent of the Certificateholders holding
Certificates evidencing Fractional Undivided Interests aggregating not less than
a majority in interest in the Trust, by Act of said Certificateholders delivered
to the Company and the Trustee, the Company may, and the Trustee (subject to
Section 9.03) shall, at the sole cost and expense of the Company, 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, the Deposit Agreement, the Escrow Agreement, the Intercreditor
Agreement, the Liquidity Facility or the Note Purchase Agreement to the extent
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applicable to such Certificateholders or of modifying in any manner the
rights and obligations of such Certificateholders under this Agreement,
the Deposit Agreement, the Escrow Agreement, the Intercreditor Agreement,
the Liquidity Facility or the Note Purchase 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 (or, with respect to the Deposits, the
Receiptholders) of payments on the Deposits or the Equipment Notes held in
the Trust or distributions that are required to be made herein on any
Certificate, or change any date of payment of any Certificate, or change
the place of payment where, or the coin or currency in which, any
Certificate is 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 included in the
Trust Property except as permitted by this Agreement, or otherwise deprive
such Certificateholder of the benefit of the ownership of the Equipment
Notes in the Trust; or
(3) alter the priority of distributions specified in the
Intercreditor Agreement in a manner materially adverse to the interests of
the Certificateholders;
(4) modify any of the provisions of this Section 9.02 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 affected thereby;
(5) modify any of the provisions relating to the rights of the
Certificateholders in respect of the waiver of Events of Default or
receipt of payment; or
(6) adversely affect the status of this 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.
It shall not be necessary for any Act of 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
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in favor of the Trustee under this Agreement, the Trustee may in its discretion
decline to execute such document.
Section 9.04. Execution of Supplemental Agreements. In executing, or
accepting the additional trusts created by, any supplemental agreement permitted
by this Article or the modifications thereby of the trusts created by this
Agreement, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental agreement is authorized or permitted by this Agreement.
Section 9.05. Effect of Supplemental Agreements. Upon the execution
of any agreement supplemental to this Agreement under this Article, this
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every
Certificateholder theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
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 authenticated and delivered after the execution of any supplemental
agreement 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 after
proper presentation and demand.
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01 Amendments and Supplement to Indentures and Other Note
Documents. In the event that the Trustee, as holder (or beneficial owner through
the Subordination Agent) of any Equipment Note in trust for the benefit of the
Certificateholders or as Controlling Party, receives a request for a consent to
any amendment, modification, waiver or supplement under any Indenture or other
Note Document or other related document, the Trustee shall forthwith send a
notice of such proposed amendment, modification, waiver or supplement to each
Certificateholder registered on the Register as of the date of such notice. The
Trustee shall request from the Certificateholders a Direction as to (a) whether
or not to take or refrain from taking (or to direct the Subordination Agent to
take or refrain from taking) any action which a holder of such Equipment Note or
the Controlling Party has the option to direct, (b) whether or not to give or
execute (or to direct the Subordination Agent to give or execute) any waivers,
consents, amendments, modifications or supplements as a holder of such Equipment
Note or as Controlling Party and (c) how to vote or direct
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the Subordination Agent 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 (or in directing the Subordination
Agent in any of the foregoing), (i) other than as Controlling Party, 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 (x) the aggregate face amount of all
Certificates actually voted in favor of or for giving consent to such action by
such direction of Certificateholders to (y) the aggregate face amount of all
outstanding Certificates of the Trust and (ii) as the Controlling Party, the
Trustee shall vote as directed in such Certificateholder direction by the
Certificateholders evidencing fractional undivided interests aggregating not
less than a majority in interest in the Trust. 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 prior to two Business Days before the Trustee
directs such action or casts such vote or gives such consent. Notwithstanding
the foregoing, but subject to Section 6.04 and the Intercreditor Agreement, the
Trustee may, in its own discretion and at its own direction, consent and notify
the relevant Loan Trustee of such consent (or direct the Subordination Agent to
consent and notify the relevant Loan Trustee of such consent) to any amendment,
modification, waiver or supplement under the relevant Indenture or any other
Note Document or other related document, if an Event of Default hereunder shall
have occurred and be continuing, or if such amendment, modification or waiver
will not materially adversely affect the interests of the Certificateholders.
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust. The respective obligations
and responsibilities of the Company and the Trustee with respect to the Trust
shall terminate upon the earlier of (A) the completion of the assignment,
transfer and discharge described in the first sentence of the immediately
following paragraph and (B) distribution to all Certificateholders 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; provided, however, that in no event shall the Trust continue beyond
one hundred ten (110) years following the date of the execution of this
Agreement.
Not later than (but in the case of clause (i), following the
Delivery Period Termination Date) the earlier of (i) the first Business Day
following September 30, 1999, or, if later, the fifth Business Day following the
Delivery Period Termination Date and (ii) the fifth Business Day following the
date on which a Triggering Event occurs (such date, the "Transfer Date"), or, if
later, the date on which all of the conditions set forth in the immediately
following sentence have been satisfied, the Trustee is hereby
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directed (subject only to the immediately following sentence) to, and the
Company shall direct the institution that will serve as the Related Trustee
under the Related Pass Through Trust Agreement to, execute and deliver the
Assignment and Assumption Agreement, pursuant to which the Trustee shall assign,
transfer and deliver all of the Trustee's right, title and interest to the Trust
Property to the Related Trustee under the Related Pass Through Trust Agreement.
The Trustee and the Related Trustee shall execute and deliver the Assignment and
Assumption Agreement upon the satisfaction of the following conditions:
(i) The Trustee, the Related Trustee and each of the Rating Agencies
then rating the Certificates shall have received an Officer's Certificate
and an Opinion of Counsel dated the date of the Assignment and Assumption
Agreement and each satisfying the requirements of Section 1.02, which
Opinion of Counsel shall be substantially to the effect set forth below
and may be relied upon by the Beneficiaries (as defined in the Assignment
and Assumption Agreement):
(a) upon the execution and delivery thereof by the parties
thereto in accordance with the terms of this Agreement and the
Related Pass Through Trust Agreement, the Assignment and Assumption
Agreement will constitute the valid and binding obligation of each
of the parties thereto enforceable against each such party in
accordance with its terms;
(b) upon the execution and delivery of the Assignment and
Assumption Agreement in accordance with the terms of this Agreement
and the Related Pass Through Trust Agreement, each of the
Certificates then Outstanding will be entitled to the benefits of
the Related Pass Through Trust Agreement;
(c) the Related Trust is not required to be registered as an
investment company under the Investment Company Act of 1940, as
amended;
(d) the Related Pass Through Trust Agreement constitutes the
valid and binding obligation of the Company enforceable against the
Company in accordance with its terms; and
(e) neither the execution and delivery of the Assignment and
Assumption Agreement in accordance with the terms of this Agreement
and the Related Pass Through Trust Agreement, nor the consummation
by the parties thereto of the transactions contemplated to be
consummated thereunder on the date thereof, will violate any law or
governmental rule or regulation of the State of New York or the
United States of America known to such counsel to be applicable to
the transactions contemplated by the Assignment and Assumption
Agreement.
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(ii) The Trustee and the Company shall have received (x) a copy of
the articles of incorporation and bylaws of the Related Trustee certified
as of the Transfer Date by the Secretary or Assistant Secretary of such
institution and (y) a copy of the filing (including all attachments
thereto) made by the institution serving as the Related Trustee with the
Office of the Superintendent, State of New York Banking Department for the
qualification of the Related Trustee under Section 131(3) of the New York
Banking Law.
Upon the execution of the Assignment and Assumption Agreement by the
parties thereto, the Trust shall be terminated, the Certificateholders shall
receive beneficial interests in the Related Trust in exchange for their
interests in the Trust equal to their respective beneficial interests in the
Trust, and the Outstanding Certificates representing Fractional Undivided
Interests in the Trust shall be deemed for all purposes of this Agreement and
the Related Pass Through Trust Agreement, without further signature or action of
any party or Certificateholder, to be certificates representing the same
fractional undivided interests in the Related Trust and its trust property. By
acceptance of its Certificate, each Certificateholder consents to such
assignment, transfer and delivery of the Trust Property of the trustee of the
Related Trust upon the execution and delivery of the Assignment and Assumption
Agreement.
In connection with the occurrence of the event set forth in clause
(B) above, notice of any termination, specifying the Regular Distribution Date
(or Special Distribution Date, as the case may be) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be mailed promptly, upon
notice to the Trustee, by the Trustee to Certificateholders not earlier than the
60th day and not later than the 20th day next 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 will
be made upon presentation and surrender of Certificates at the office or agency
of the Trustee therein specified, (B) the amount of any such proposed final
payment, and (C) that the Record Date otherwise applicable to such Regular
Distribution Date (or Special Distribution Date, as the case may be) is not
applicable, payments being made only upon presentation and surrender of the
Certificates 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. Upon presentation and surrender of the Certificates in
accordance with such notice, the Trustee shall cause to be distributed to
Certificateholders such final distribution pursuant to Section 4.02.
In the event that all of the Certificateholders 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 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
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the Trustee for the payment of distributions on the Certificates 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 Loan Trustee the appropriate
amount of money relating to such Loan Trustee and shall give written notice
thereof to the related Owner Trustees, the Owner Participants and the Company.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the 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. Certificates Nonassessable and Fully Paid. Except as
set forth in the last sentence of this Section 12.02, Certificateholders shall
not be personally liable for obligations of the Trust, the Fractional Undivided
Interests represented by the Certificates shall be nonassessable for any losses
or expenses of the Trust or for any reason whatsoever, and Certificates, upon
authentication thereof by the Trustee pursuant to Section 3.03, are and shall be
deemed fully paid. No Certificateholder shall have any right (except as
expressly provided herein) to vote or in any manner otherwise control the
operation and management of the Trust Property, the Trust, or the obligations of
the parties hereto, nor shall anything set forth herein, or contained in the
terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association.
Neither the existence of the Trust nor any provision herein is intended to or
shall limit the liability the Certificateholders would otherwise incur if the
Certificateholders owned Trust Property as co-owners, or incurred any
obligations of the Trust, directly rather than through the Trust.
Section 12.03. Notices. (a) Unless otherwise specifically provided
herein, all notices required under the terms and provisions of this Agreement
shall be in English and in writing, and any such notice may be given by United
States mail, courier service or telecopy, and any such notice shall be effective
when delivered or received or,
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if mailed, three days after deposit in the United States mail with proper
postage for ordinary mail prepaid,
if to the Company, to:
Midway Airlines Corporation
300 W. Morgan Street, Suite 1200
Durham, North Carolina 27701
Attention: General Counsel
Facsimile: (919) 956-7568
Telephone: (919) 956-4810
if to the Trustee, to:
The First National Bank of Maryland
25 South Charles Street
Mail Code 101-591
Baltimore, Maryland 21201
Attention: Corporate Trust Department
Facsimile: (410) 244-4236
Telephone: (410) 244-4626
(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 shall be
mailed by first-class mail to the addresses for Certificateholders shown on the
Register kept by the Registrar. 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.
(d) If a notice or communication is mailed in the manner provided
above within the time prescribed, it is conclusively presumed to have been duly
given, whether or not the addressee receives it.
(e) If the Company mails a notice or communication to the
Certificateholders, it shall mail a copy to the Trustee and to the Paying Agent
at the same time.
(f) 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.
(g) 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 Loan Trustee.
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Section 12.04. Governing Law. THIS AGREEMENT AND THE CERTIFICATES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
MARYLAND.
Section 12.05. 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 the Trust, or of the
Certificates or the rights of the Certificateholders thereof.
Section 12.06. 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 12.07. 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 assigns, whether so
expressed or not.
Section 12.08. Benefits of Agreement. Nothing in this Agreement or
in the Certificates, express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder, and the Certificateholders,
any benefit or any legal or equitable right, remedy or claim under this
Agreement.
Section 12.09. Legal Holidays. In any case where any Regular
Distribution Date or Special Distribution Date relating to any Certificate shall
not be a Business Day, 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 12.10. 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 12.11. Communication by Certificateholders with Other
Certificateholders. Certificateholders may communicate with other
Certificateholders with respect to their rights under this Agreement or the
Certificates pursuant to Section 312(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.
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Section 12.12. Intention of Parties. The parties hereto intend that
the Trust be classified for U.S. federal income tax purposes as a grantor trust
under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as
amended, and not as a trust or association taxable as a corporation or as a
partnership. Each Certificateholder, by its acceptance of its Certificate or a
beneficial interest therein, agrees to treat the Trust as a grantor trust for
all U.S. federal, state and local income tax purposes. The powers granted and
obligations undertaken pursuant to this Agreement shall be so construed so as to
further such intent.
Section 12.13. Trust Indenture Act Controls. Upon the qualification
of this Agreement under the Trust Indenture Act, this Agreement shall be subject
to the provisions of the Trust Indenture Act and shall, to the extent
applicable, be governed by such provisions. If any provision of this Agreement
limits, qualifies or conflicts with another provision which is required to be
included in this Agreement by the Trust Indenture Act, the required provision
shall control.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first written above.
MIDWAY AIRLINES CORPORATION
By: /s/ Jonathan S. Waller
--------------------------------
Name: Jonathan S. Waller
Title: Senior Vice President
General Counsel
THE FIRST NATIONAL BANK OF
MARYLAND, as Trustee
By: /s/ Robert D. Brown
--------------------------------
Name: Robert D. Brown
Title: Assistant Vice President
<PAGE>
Exhibit A
FORM OF CERTIFICATE
REGISTERED
No. ______________
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY
MIDWAY AIRLINES CORPORATION ("MIDWAY") OR ANY AFFILIATE OF MIDWAY, RESELL
OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO MIDWAY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
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<PAGE>
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
CERTIFICATE WAS HELD BY MIDWAY OR ANY AFFILIATE OF MIDWAY, THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND MIDWAY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.]*
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS FOR THE BENEFIT OF MIDWAY
AIRLINES CORPORATION AND EACH OWNER PARTICIPANT THAT (A) IT IS NOT A PLAN
TRANSFEREE (AS DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR (B) ONE OR
MORE PROHIBITED TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS APPLIES
SUCH THAT THE USE OF PLAN ASSETS TO PURCHASE AND HOLD THIS PASS THROUGH
CERTIFICATE WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER
ERISA OR SECTION 4975 OF THE CODE. THE PASS THROUGH TRUST AGREEMENT
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
- - ----------
* Not to be included on the face of the Permanent Offshore Global Certificate.
A-2
<PAGE>
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE 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 HEREON 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.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST
AGREEMENT REFERRED TO HEREIN.]*
- - ----------
* To be included on the face of each Global Certificate.
A-3
<PAGE>
[GLOBAL CERTIFICATE]*
MIDWAY AIRLINES 1998-1A-O PASS THROUGH TRUST
7.14% Midway Airlines [Initial/Exchange] Pass Through Certificate
Series 1998-1A-O
Final Expected Distribution Date: January 2, 2015
evidencing a fractional undivided interest in a trust, the property of which
includes certain equipment notes each secured by an Aircraft leased to or owned
by Midway Airlines Corporation.
$_____________Fractional Undivided Interest
representing . ______% of the Trust per $1,000 face amount
THIS CERTIFIES THAT _______________, for value received, is the
registered owner of a $______ (___________ dollars) Fractional Undivided
Interest in Midway Airlines 1998-1A-O Pass Through Trust (the "Trust") created
pursuant to a Pass Through Trust Agreement, dated as of August 13, 1998 (the
"Agreement"), between The First National Bank of Maryland (the "Trustee") and
Midway Airlines Corporation, a corporation incorporated under Delaware law (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 "7.14%
Midway Airlines [Initial/Exchange] Pass Through Certificates Series 1998-1A-O"
(herein called the "Certificates"). This Certificate is issued under and is
subject to the terms, provisions, and conditions of the Agreement. By virtue of
its acceptance hereof the Certificateholder of this Certificate assents to and
agrees to be bound by the provisions of the Agreement and the Intercreditor
Agreement. 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, among other things, a security interest in the 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 assets or property other than the Trust Property.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from and to the extent of funds then available to the
Trustee,
- - ----------
* To be included on the face of each Global Certificate.
A-4
<PAGE>
there will be distributed on each January 2 and July 2 (a "Regular Distribution
Date"), commencing on January 2, 1999, 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 and the Intercreditor Agreement, in the event that Special Payments on
the Equipment Notes are received by the Trustee, from funds then available to
the Trustee, there shall be distributed on the applicable Special Distribution
Date, to the Person in whose name this Certificate is registered at the close of
business on the 15th day preceding the Special Distribution Date, an amount in
respect of such Special Payments on the Equipment Notes, the receipt of which
has been confirmed by the Trustee, equal to the product of the percentage
interest in the Trust evidenced by this Certificate and an amount equal to the
sum of such Special Payments so received. If a Regular Distribution Date or
Special Distribution Date is not a Business Day, distribution shall be made on
the immediately following Business Day with the same force and effect as if made
on such Regular Distribution Date or Special Distribution Date and no interest
shall accrue during the intervening period. The Trustee shall mail notice of
each Special Payment and the Special Distribution Date therefor to the
Certificateholder of this Certificate.
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 AGREEMENT AND, UNTIL THE TRANSFER, THIS CERTIFICATE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS. THE RELATED PASS THROUGH TRUST
AGREEMENT AND, FROM AND AFTER THE TRANSFER, THIS CERTIFICATE SHALL BE GOVERNED
AND 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.
Reference is hereby made to the further provisions of this
Certificate set forth in the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
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.
A-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: ____________ __, 1998 MIDWAY AIRLINES
1998-1A-O PASS THROUGH TRUST
By: The First National Bank of
Maryland, as Trustee
By:______________________________
Name:
Title:
A-6
<PAGE>
[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred
to in the within-mentioned Agreement.
The First National Bank of Maryland,
as Trustee
By:______________________________
Authorized Officer
A-7
<PAGE>
[REVERSE OF CERTIFICATE]
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
of their affiliates. 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 Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein 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, in the Borough of Manhattan, the City of New York,
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.
A-8
<PAGE>
Under certain circumstances set forth in Section 11.01 of the
Agreement, all of the Trustee's right, title and interest to the Trust Property
may be assigned, transferred and delivered to the Related Trustee of the Related
Trust pursuant to the Assignment and Assumption Agreement. Upon the
effectiveness of such assignment and Assumption Agreement (the "Transfer"), the
Trust shall be terminated, the Certificateholders shall receive beneficial
interests in the Related Trust in exchange for their interests in the Trust
equal to their respective beneficial interests in the Trust, the Certificates
representing Fractional Undivided Interests in the Trust shall be deemed for all
purposes of the Agreement and the Related Pass Through Trust Agreement to be
certificates representing the same fractional undivided interests in the Related
Trust and its trust property. Each Certificateholder, by its acceptance of this
Certificate or a beneficial interest herein, agrees to be bound by the
Assignment and Assumption Agreement and subject to the terms of the Related Pass
Through Trust Agreement as a certificateholder thereunder. From and after the
Transfer, unless and to the extent the context otherwise requires, references
herein to the Trust, the Agreement and the Trustee shall constitute references
to the Related Trust, the Related Pass Through Trust Agreement and trustee of
the Related Trust, respectively.
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $100,000 Fractional Undivided
Interest and integral multiples of $1,000 in excess thereof. 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 by the Holder 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.
A-9
<PAGE>
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
__________________________
__________________________
please print or typewrite name and address including zip code of assignee
__________________________
the within Certificate and all rights thereunder, hereby irrevocably
constituting and appointing
__________________________
attorney to transfer said Certificate on the books of the Trustee with full
power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT PERMANENT OFFSHORE GLOBAL AND
OFFSHORE PHYSICAL CERTIFICATES]
In connection with any transfer of this Certificate occurring prior
to __________, the undersigned confirms that without utilizing any general
solicitation or general advertising that:
[Check One]
[ ] (a) this Certificate is being transferred in compliance with the
exemption from registration under the Securities Act of 1933, as
amended, provided by Rule 144A thereunder.
or
[ ] (b) this Certificate is being transferred other than in accordance
with (a) above and documents are being furnished that comply with
the conditions of transfer set forth in this Certificate and the
Agreement.
A-10
<PAGE>
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Certificate in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 3.06 of the Agreement
shall have been satisfied.
Date:___________________ [Name of Transferor]
________________________________________
NOTE: The signature must correspond with
the name as written upon the face of the
within-mentioned instrument in every
particular, without alteration or any
change whatsoever.
Signature Guarantee:_________________
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Certificate for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:__________________ _______________________________________
NOTE: To be executed by an executive
officer.
A-11
<PAGE>
Exhibit B
FORM OF CERTIFICATE FOR UNLEGENDED CERTIFICATES
[Date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1A-O Pass Through Trust (the "Trust"),
7.14% Midway Airlines Pass Through Certificates Series
1998-1A-O (the "Certificates")
Dear Sirs:
This letter relates to U.S. $__________ Fractional Undivided
Interest of Certificates represented by a Certificate (the "Legended
Certificate") which bears a legend outlining restrictions upon transfer of such
Legended Certificate. Pursuant to Section 3.01 of the Pass Through Trust
Agreement relating to the Certificates dated as of August 13, 1998 (the "Trust
Agreement"), between Midway Airlines Corporation ("Midway") and you, we hereby
certify that we are (or we will hold such securities on behalf of) a person
outside the United States to whom the Certificates could be transferred in
accordance with Rule 904 of Regulation S promulgated under the U.S. Securities
Act of 1933, as amended. Accordingly, you are hereby requested to exchange the
legended certificate for an unlegended certificate representing an identical
principal amount of Certificates, all in the manner provided for in the Trust
Agreement.
You and Midway are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Certificateholder]
By:__________________________
Authorized Signature
B-1
<PAGE>
Exhibit C
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
[date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1A-O Pass Through Trust (the "Trust"),
7.14% Midway Airlines Pass Through Certificates Series
1998-1A-O (the "Certificates")
Sirs:
In connection with our proposed sale of $_______ Fractional Undivided Interest
of the Certificates, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the Securities Act of 1933, as amended,
and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a person in the
United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
C-1
<PAGE>
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You, Midway Airlines Corporation are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof to
any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:______________________________
Authorized Signature
C-2
<PAGE>
Exhibit D
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
[date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1A-O Pass Through Trust (the "Trust"),
7.14% Midway Airlines Pass Through Certificates Series
1998-1A-O (the "Certificates")
Dear Sirs:
In connection with our proposed purchase of $_______________
aggregate principal amount of the Certificates, we confirm that:
1. We understand that any subsequent transfer of the Certificates is
subject to certain restrictions and conditions set forth in the Pass
Through Trust Agreement dated as of August 13, 1998 relating to the
Certificates (the "Pass Through Trust Agreement") and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the
Certificates except in compliance with, such restrictions and conditions
and the Securities Act of 1933, as amended (the "Securities Act").
2. We are purchasing Certificates having an aggregate principal
amount of not less than $100,000 and each account (if any) for which we
are purchasing Certificates is purchasing Certificates having an aggregate
principal amount of not less than $100,000.
3. We understand that the Certificates have not been registered
under the Securities Act, and that the Certificates may not be offered or
sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Certificate, we will do so
only (A) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (B) to an
institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes to you and Midway Airlines Corporation a signed letter
substantially in the form of this letter, (C) outside the United States in
D-1
<PAGE>
accordance with Rule 904 of Regulation S under the Securities Act, (D)
pursuant to the exemption from registration provided by Rule 144 under the
Securities Act, or (E) pursuant to an effective registration statement
under the Securities Act, and we further agree to provide to any person
purchasing any of the Certificates from us a notice advising such
purchaser that resales of the Notes are restricted as stated herein. We
further understand that the Certificates purchased by us will bear a
legend to the foregoing effect.
4. We understand that, on any proposed resale of any Certificates,
we will be required to furnish to you, Midway Airlines Corporation
("Midway") such certifications, legal opinions and other information as
you, Midway may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that the
Certificates purchased by us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Certificates and we and any accounts for which we are acting are each able
to bear the economic risk of our or its investment.
6. We are acquiring the Certificates purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You and Midway are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By:______________________________
Authorized Signature
D-2
<PAGE>
Exhibit E
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
Midway Airlines Pass Through Trust 1998-1A
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated _________, 199_ (the
"Assignment Agreement"), between The First National Bank of Maryland, a national
banking association, not in its individual capacity except as expressly provided
herein, but solely as trustee under the Pass Through Trust Agreement dated as of
August 13, 1998 (as amended or modified from time to time, the "Agreement"), in
respect of the Midway Airlines Pass Through Trust 1998-1A-O (the "Assignor"),
and The First National Bank of Maryland, a national banking association, not in
its individual capacity except as expressly provided herein, but solely as
trustee under the Agreement (the "New Agreement") in respect of the Midway
Airlines Pass Through Trust 1998-1A-S (the "Assignee").
W I T N E S S E T H:
WHEREAS, the parties hereto desire to effect on the date hereof (the
"Transfer Date" (a) the transfer by the Assignor to the Assignee of all of the
right, title and interest of the Assignor in, under and with respect to, among
other things, the Trust Property and each of the documents listed in Schedule I
hereto (the "Scheduled Documents") and (b) the assumption by the Assignee of the
obligations of the Assignor (i) under the Scheduled Documents and (ii) in
respect of the Certificates issued under the Agreement; and
WHEREAS, the Scheduled Documents permit such transfer upon
satisfaction of certain conditions heretofore or concurrently herewith being
complied with;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto do hereby agree as
follows (capitalized terms used herein without definition having the meaning
ascribed thereto in the Agreement):
1. Assignment. The Assignor does hereby sell, assign, convey,
transfer and set over unto the Assignee as of the Transfer Date all of its
present and future right, title and interest in, under and with respect to the
Trust Property and the Scheduled Documents and each other contract, agreement,
document or instrument relating to the Trust Property or the Scheduled Documents
(such other contracts, agreements, documents or instruments, together with the
Scheduled Documents, to be referred to as the "Assigned Documents"), and any
proceeds therefrom, together with all documents and instruments evidencing any
of such right, title and interest.
1
<PAGE>
2. Assumption. The Assignee hereby assumes for the benefit of the
Assignor and each of the parties listed in Schedule II hereto (collectively, the
"Beneficiaries") all of the duties and obligations of the Assignor, whenever
accrued, pursuant to the Assigned Documents and hereby confirms that it shall be
deemed a party to each of the Assigned Documents to which the Assignor is a
party and shall be bound by all the terms thereof (including the agreements and
obligations of the Assignor set forth therein) as if therein named as the
Assignor. Further, the Assignee hereby assumes for the benefit of the Assignor
and the Beneficiaries all of the duties and obligations of the Assignor under
the Outstanding Certificates and hereby confirms that the Certificates
representing Fractional Undivided Interests under the Agreement shall be deemed
for all purposes of the Agreement and the New Agreement equal to their
respective beneficial interests in the trust created under the Agreement.
3. Effectiveness. This Assignment Agreement shall be effective upon
the execution and delivery hereof by the parties hereto, and each
Certificateholder, by its acceptance of its Applicable Certificate or a
beneficial interest therein, agrees to be bound by the terms of this Assignment
Agreement.
4. Payments. The Assignor hereby covenants and agrees to pay over to
the Assignee, if and when received following the Transfer Date, any amounts
(including any sums payable as interest in respect thereof) paid to or for the
benefit of the Assignor that, under Section 1 hereof, belong to the Assignee.
5. Further Assurances. The Assignor shall, at any time and from time
to time, upon the request of the Assignee, promptly and duly execute and deliver
any and all such further instruments and documents and take such further action
ad the Assignee may reasonably request to obtain the full benefits of this
Assignment Agreement and of the right and powers herein granted. The Assignor
agrees to deliver any Certificates, and all Trust Property, if any, then in the
physical possession of the Assignor, to the Assignee.
6. Representation and Warranties. (a) The Assignee represents and
warrants to the Assignor and each of the Beneficiaries that:
(i) 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 obligations of the "Pass Through Trustee" under the
Assigned Documents; and
(ii) on and as of the date hereof, the representations and
warranties of the Assignee set forth in Section 7.15 of the New Agreement
are true and correct.
(b) The Assignor represents and warrants to the Assignee that:
2
<PAGE>
(i) it is duly incorporated, validly existing and in good standing
under the laws of the State of Maryland and the United States pertaining
to its trust and fiduciary powers to execute and deliver this Assignment
Agreement;
(ii) the execution and delivery by it of this Assignment Agreement
and the performance by it of its obligations hereunder have been duly
authorized by it and will not violate its articles of association or
by-laws or the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it is bound; and
(iii) this Assignment Agreement constitutes the legal, valid and
binding obligations of it enforceable against it in accordance with its
terms, except and 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.
7. GOVERNING LAW. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
8. Counterparts. This Assignment Agreement may be executed in any
number of counterparts, all of which together shall constitute a single
instrument. It shall not be necessary that any counterpart be signed by both
parties so long as each party shall sign at least one counterpart.
9. Third Party Beneficiaries. The Assignee hereby agrees, for the
benefit of the Beneficiaries, that is representations,, warranties and covenants
contained herein are also intended to be for the benefit of each Beneficiary,
and each Beneficiary shall be deemed to be an express third party beneficiary
with respect thereto, entitled to enforce directly and in its own name any
rights or claims it may have against such party as such beneficiary.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto, through their respective
officers thereunto duly authorized, have duly executed this Assignment Agreement
as of the day and year first above written.
ASSIGNOR:
THE FIRST NATIONAL BANK OF MARYLAND, not in its
individual capacity except as expressly provided
herein, but solely as trustee under the Pass
Through Trust Agreement and Trust Supplement in
respect of the Midway Airlines Pass
Through Trust 1998-1A-O
By:____________________________________________
Title:
ASSIGNEE:
THE FIRST NATIONAL BANK OF MARYLAND, not in its
individual capacity except as expressly provided
herein, but solely as trustee under the Pass
Through Trust Agreement and Trust Supplement in
respect of the Midway Airlines Pass
Through Trust 1998-1A-S
By:____________________________________________
Title:
4
<PAGE>
SCHEDULE 1
Schedule of Assigned Documents
(1) Intercreditor Agreement dated as of August 13, 1998 among the
Trustee, the Other Trustees, the Liquidity Providers, the liquidity provider, if
any, relating to the Certificates issued under (and as defined in) each of the
Other Pass Through Trust Agreements and the Subordination Agent.
(2) Escrow and Paying Agent Agreement (Class A) dated as of August
13, 1998 among the Escrow Agent, the Underwriters, the Trustee and the Paying
Agent.
(3) Note Purchase Agreement dated as of August 13, 1998 among the
Company, the Trustee, the Other Trustees, the Depositary, the Escrow Agent, the
Paying Agent and the Subordination Agent.
(4) Deposit Agreement (Class A) dated as of August 13, 1998 between
the Escrow Agent and the Depositary.
(5) Each of the Operative Agreements (as defined in the
Participation Agreement for each Aircraft) in effect as of the Transfer Date.
<PAGE>
SCHEDULE 2
Schedule of Beneficiaries
The First National Bank of Maryland, not in its individual capacity but solely
as Subordination Agent
The First National Bank of Maryland, not in its individual capacity but solely
as Paying Agent
ABN AMRO Bank N.V., acting through its Chicago branch, as Liquidity Provider
Midway Airlines Corporation
Morgan Stanley & Co. Incorporated, as Initial Purchaser
Credit Suisse First Boston Corporation, as Initial Purchaser
First Union Trust Company, National Association, as Escrow Agent
Each of the other parties to the Assigned Documents
- - --------------------------------------------------------------------------------
PASS THROUGH TRUST AGREEMENT
Dated as of August 13, 1998
among
MIDWAY AIRLINES CORPORATION
and
THE FIRST NATIONAL BANK OF MARYLAND
as Trustee
Midway Airlines 1998-1B-S Pass Through Trust
8.14% 1998-1B-S Initial Pass Through Certificates
8.14% 1998-1B-S Exchange Pass Through Certificates
- - --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS................................................ 2
Section 1.01. Definitions....................................... 2
Section 1.02. Compliance Certificates and Opinions.............. 14
Section 1.03. Form of Documents Delivered to Trustee............ 15
Section 1.04. Acts of Certificateholders........................ 15
ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES.......................... 17
Section 2.01. Acquisition of Trust Property..................... 17
Section 2.02. [Reserved]........................................ 18
Section 2.03. The Trustee....................................... 18
Section 2.04. Acceptance by Trustee............................. 18
Section 2.05. Limitation of Powers.............................. 18
ARTICLE III THE CERTIFICATES........................................... 19
Section 3.01. Title, Form, Denomination and Execution
of Certificates................................... 19
Section 3.02. Restrictive Legends............................... 21
Section 3.03. Authentication of Certificates.................... 23
Section 3.04. Transfer and Exchange............................. 23
Section 3.05. Book-Entry Provisions for U.S. Global Certificate
and Offshore Global Certificates.................. 24
Section 3.06. Special Transfer Provisions....................... 25
Section 3.07. Mutilated, Destroyed, Lost or Stolen Certificates. 28
Section 3.08. Persons Deemed Owners............................. 28
Section 3.09. Cancellation...................................... 29
Section 3.10. Limitation of Liability for Payments.............. 29
Section 3.11. Temporary Certificates............................ 29
Section 3.12. ERISA Restrictive Legend.......................... 29
ARTICLE IV DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS............ 30
Section 4.01. Certificate Account and Special Payments Account.. 30
Section 4.02. Distributions from Certificate Account and
Special Payments Account.......................... 30
Section 4.03. Statements to Certificateholders.................. 32
Section 4.04. Investment of Special Payment Moneys.............. 33
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ARTICLE V THE COMPANY................................................ 34
Section 5.01. Maintenance of Corporate Existence................ 34
Section 5.02. Consolidation, Merger, Etc........................ 34
ARTICLE VI DEFAULT.................................................... 35
Section 6.01. Events of Default................................. 35
Section 6.02. Incidents of Sale of Equipment Notes.............. 38
Section 6.03. Judicial Proceedings Instituted by Trustee;
Trustee May Bring Suit............................ 38
Section 6.04. Control by Certificateholders..................... 39
Section 6.05. Waiver of Past Defaults........................... 39
Section 6.06. Right of Certificateholders to Receive Payments
Not to Be Impaired................................ 40
Section 6.07. Certificateholders May Not Bring Suit Except
Under Certain Conditions.......................... 40
Section 6.08. Remedies Cumulative............................... 41
Section 6.09. Undertaking for Costs............................. 41
ARTICLE VII THE TRUSTEE................................................ 41
Section 7.01. Certain Duties and Responsibilities............... 41
Section 7.02. Notice of Defaults................................ 41
Section 7.03. Certain Rights of Trustee......................... 42
Section 7.04. Not Responsible for Recitals or Issuance of
Certificates...................................... 43
Section 7.05. May Hold Certificates............................. 43
Section 7.06. Money Held in Trust............................... 44
Section 7.07. Compensation and Reimbursement.................... 44
Section 7.08. Corporate Trustee Required; Eligibility........... 45
Section 7.09. Resignation and Removal; Appointment of
Successor......................................... 45
Section 7.10. Acceptance of Appointment by Successor............ 47
Section 7.11. Merger, Conversion, Consolidation or Succession to
Business.......................................... 47
Section 7.12. Maintenance of Agencies........................... 48
Section 7.13. Money for Certificate Payments to Be Held
in Trust.......................................... 49
Section 7.14. Registration of Equipment Notes in Name of
Subordination Agent............................... 49
Section 7.15. Representations and Warranties of Trustee......... 49
Section 7.16. Withholding Taxes; Information Reporting.......... 50
Section 7.17. Trustee's Liens................................... 51
Section 7.18. Preferential Collection of Claims................. 51
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ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS
BY TRUSTEE................................................. 51
Section 8.01. The Company to Furnish Trustee with Names and
Addresses of Certificateholders................... 51
Section 8.02. Preservation of Information; Communications to
Certificateholders................................ 52
Section 8.03. Reports by Trustee................................ 52
Section 8.04. Reports by the Company............................ 52
ARTICLE IX SUPPLEMENTAL AGREEMENTS.................................... 53
Section 9.01. Supplemental Agreements Without Consent of
Certificateholders................................ 53
Section 9.02. Supplemental Agreements with Consent of
Certificateholders................................ 54
Section 9.03. Documents Affecting Immunity or Indemnity......... 55
Section 9.04. Execution of Supplemental Agreements.............. 55
Section 9.05. Effect of Supplemental Agreements................. 56
Section 9.06. Conformity with Trust Indenture Act............... 56
Section 9.07. Reference in Certificates to Supplemental
Agreements........................................ 56
ARTICLE X AMENDMENTS TO INDENTURES AND FINANCING
DOCUMENTS.................................................. 56
Section 10.01 Amendments and Supplement to Indentures and
Other Note Documents.............................. 56
ARTICLE XI TERMINATION OF TRUST....................................... 57
Section 11.01. Termination of the Trust.......................... 57
ARTICLE XII MISCELLANEOUS PROVISIONS................................... 58
Section 12.01. Limitation on Rights of Certificateholders........ 58
Section 12.02. Certificates Nonassessable and Fully Paid......... 58
Section 12.03. Notices........................................... 58
Section 12.04. Governing Law..................................... 60
Section 12.05. Severability of Provisions........................ 60
Section 12.06. Effect of Headings and Table of Contents.......... 60
Section 12.07. Successors and Assigns............................ 60
Section 12.08. Benefits of Agreement............................. 60
Section 12.09. Legal Holidays.................................... 60
Section 12.10. Counterparts...................................... 60
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Section 12.11. Communication by Certificateholders with Other
Certificateholders................................ 60
Section 12.12. Intention of Parties.............................. 61
Section 12.13. Trust Indenture Act Controls...................... 61
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EXHIBIT LIST
Exhibit A Form of Certificate
Exhibit B Form of Certificate for Unlegended Certificates
Exhibit C Form of Certificate to be Delivered in connection with
Transfers Pursuant to Regulation S
Exhibit D Form of Certificate to be Delivered in connection with
Transfers to Non-QIB Accredited Investors
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PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of August 13, 1998,
among MIDWAY AIRLINES CORPORATION, a Delaware corporation (the "Company"), and
THE FIRST NATIONAL BANK OF MARYLAND, a national banking association, as Trustee,
is made with respect to the formation of Midway Airlines 1998-1B-S Pass Through
Trust and the issuance of 8.14% Midway Airlines 1998-1B-S Pass Through
Certificates representing fractional undivided interests in the Trust.
WITNESSETH:
WHEREAS, the Company has obtained commitments from Bombardier for
the delivery of certain Aircraft;
WHEREAS, as of the Transfer Date (as defined below), the Company
will have financed the acquisition of all or a portion of such Aircraft either
(i) through separate leveraged lease transactions, in which case the Company
leases such Aircraft (collectively, the "Leased Aircraft") or (ii) through
separate secured loan transactions, in which case the Company owns such Aircraft
(collectively, the "Owned Aircraft");
WHEREAS, as of the Transfer Date in the case of each Leased
Aircraft, each Owner Trustee, acting on behalf of the corresponding Owner
Participant, will have issued pursuant to an Indenture, on a non-recourse basis,
Equipment Notes in order to finance a portion of its purchase price of such
Leased Aircraft;
WHEREAS, as of the Transfer Date, in the case of each Owned
Aircraft, the Company will have issued pursuant to an Indenture, on a resource
basis, Equipment Notes to finance a portion of the purchase price of such Owned
Aircraft;
WHEREAS, as of the Transfer Date, the Related Trustee will assign,
transfer and deliver all of such trustee's right, title and interest to the
trust property held by the Related Trustee to the Trustee pursuant to the
Assignment and Assumption Agreement (as defined below);
WHEREAS, the Trustee, effective only, but automatically, upon
execution and delivery of the Assignment and Assumption Agreement, will be
deemed to have declared the creation of the Midway Airlines Pass Through Trust
1998-1B-S (the "Trust") for the benefit of the Certificateholders, and each
Holder of Certificates outstanding as of the Transfer Date, as the grantors of
the Trust, by their respective acceptances of such Certificates, will join in
the creation of this Trust with the Trustee;
WHEREAS, all Certificates deemed issued by the Trust will evidence
fractional undivided interests in the Trust and will convey no rights, benefits
or
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interests in respect of any property other than the Trust Property except for
those Certificates to which an Escrow Receipt (as defined below) has been
affixed;
WHEREAS, upon execution and delivery of the Assignment and
Assumption Agreement, all of the conditions and requirements necessary to make
this Trust Agreement, 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 Agreement in the form and with the terms hereof have been
in all respects duly authorized; and
WHEREAS, upon issuance of the Exchange Certificates, if any, or the
effectiveness of the Shelf Registration Statement, this Agreement, as amended or
supplemented from time to time, will be subject to the provisions of the Trust
Indenture Act of 1939, and shall, to the extent applicable, be governed by such
provisions;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, 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 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 other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference herein have the meanings
assigned to them therein;
(3) all references in this Agreement to designated "Articles",
"Sections", "Subsections" and other subdivisions are to the designated
Articles, Sections, Subsections and other subdivisions of this Agreement;
(4) 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, Subsection or other subdivision; and
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(5) unless the context otherwise requires, whenever the words
"including", "include" or "includes" are used herein, it shall be deemed
to be followed by the phrase "without limitation".
Act: With respect to any Certificateholder has the meaning specified
in Section 1.04.
Affiliate: Means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person. For 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.
Agent Members: Has the meaning specified in Section 3.05(a).
Aircraft: Means each of the New Aircraft in respect of which a
Participation Agreement is entered into in accordance with the Note
Purchase Agreement.
Assignment and Assumption Agreement: Means the assignment and
assumption agreement substantially in the form of Exhibit E to the Related
Trust Agreement executed and delivered in accordance with Section 11.01 of
the Related Trust Agreement.
Authorized Agent: Means any Paying Agent or Registrar for the
Certificates.
Avoidable Tax: Means a state or local tax (i) upon (w) the Trust,
(x) the Trust Property, (y) Certificateholders or (z) the Trustee for
which the Trustee is entitled to seek reimbursement from the Trust
Property, 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 if the Company or any Owner Trustee
shall agree to pay, and shall pay, such tax.
Book-Entry Certificates: With respect to the Certificates, means a
beneficial interest in the Certificates, ownership and transfers of which
shall be made through book entries as described in Section 3.04.
Business Day: Means any day other than a Saturday, a Sunday or a day
on which commercial banks are required or authorized to close in
Baltimore, Maryland, New York, New York, Charlotte, North Carolina or, so
long as any Certificate is outstanding, the city and state in which the
Trustee or any Loan Trustee maintains its Corporate Trust Office or
receives and disburses funds.
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Cedel: Means Cedel Bank societe anonyme.
Certificate: Means any of the Initial Certificates or Exchange
Certificates issued by the Related Trust and that are "Outstanding" (as
defined in the Related Pass Through Trust Agreement) as of the Transfer
Date (the "Transfer Date Certificates") and any Certificates issued in
exchange therefor or replacement thereof pursuant to this Agreement.
Certificate Account: Means the account or accounts created and
maintained pursuant to Section 4.01(a).
Certificateholder or Holder: Means the Person in whose name a
Certificate is registered in the Register.
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.
Code: Means the United States Internal Revenue Code of 1986, as
amended.
Company: Means Midway Airlines Corporation, a Delaware corporation,
or its successor in interest.
Controlling Party: Means the party entitled to act as such pursuant
to the terms of the Intercreditor Agreement.
Corporate Trust Office: With respect to the Trustee or any Loan
Trustee, means the office of such trustee in the city at which at any
particular time its corporate trust business shall be principally
administered.
Delivery Notice: Has the meaning specified in the Note Purchase
Agreement.
Delivery Period Termination Date: Has the meaning specified in the
Related Pass Through Trust Agreement.
Deposits: Has the meaning specified in the Deposit Agreement.
Deposit Agreement: Means the Deposit Agreement dated as of August
13, 1998 relating to the Certificates between the Depositary and the
Escrow Agent,
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as the same may be amended, supplemented or otherwise modified from time
to time in accordance with its terms.
Depositary: Means First Union National Bank.
DTC: Means The Depository Trust Company, its nominees and their
respective successors.
Direction: Has the meaning specified in Section 1.04(c).
Distribution Date: Means each Regular Distribution Date or Special
Distribution Date.
Equipment Notes: Means the Equipment Notes issued pursuant to the
Indentures.
ERISA: Means the Employee Retirement Income Security Act of 1974, as
amended.
Escrow Agent: Means, initially, First Union Trust Company, National
Association, and any replacement or successor therefor appointed in
accordance with the Escrow Agreement.
Escrow Agreement: Means the Escrow and Paying Agent Agreement dated
as of August 13, 1998 relating to the Certificates, among the Escrow
Agent, the Escrow Paying Agent, the Trustee and the Initial Purchasers, as
the same may be amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Escrow Paying Agent: Means the Person acting as paying agent under
the Escrow Agreement.
Escrow Receipt: Means the receipt substantially in the form annexed
to the Escrow Agreement representing a fractional undivided interest in
the funds held in escrow thereunder.
Euroclear: Means the Euroclear System.
Exchange Certificates: Means the pass through certificates
substantially in the form of Exhibit A hereto issued in exchange for the
Initial Certificates pursuant to the Registration Rights Agreement and
authenticated hereunder.
Exchange Offer: Means the exchange offer which may be made pursuant
to the Registration Rights Agreement to exchange Initial Certificates for
Exchange Certificates.
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Exchange Offer Registration Statement: Means the registration
statement that, pursuant to the Registration Rights Agreement, is filed by
the Company with the SEC with respect to the exchange of Initial
Certificates for Exchange Certificates.
Event of Default: Means the occurrence of an Indenture Default under
any Indenture pursuant to which Equipment Notes held by the Trust were
issued.
Final Maturity Date: Means July, 2, 2014.
Final Withdrawal: Has the meaning specified in the Escrow Agreement.
Final Withdrawal Date: Has the meaning specified in the Escrow
Agreement.
Fractional Undivided Interest: Means the fractional undivided
interest in the Trust that is evidenced by a Certificate.
Global Certificates: Has the meaning assigned to such term in
Section 3.01.
Indenture: Means each of the separate trust indenture and security
agreements relating to the Aircraft, each as specified or described in a
Delivery Notice delivered pursuant to the Note Purchase Agreement or the
related Participation Agreement in each case as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
its terms.
Indenture Default: With respect to any Indenture, means any
Indenture Event of Default (as such term is defined in such Indenture)
thereunder.
Initial Certificates: Means the certificates issued and
authenticated hereunder substantially in the form of Exhibit A hereto
other than the Exchange Certificates.
Initial Purchasers: Means Morgan Stanley & Co. Incorporated and
Credit Suisse First Boston Corporation.
Initial Regular Distribution Date: Means the first Regular
Distribution Date on which a Scheduled Payment is to be made.
Institutional Accredited Investor: Means an institutional investor
that is an "accredited investor" within the meaning set forth in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act.
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Intercreditor Agreement: Means the Intercreditor Agreement dated
August 13, 1998 among the Trustee, the Other Trustees, the Liquidity
Provider, the liquidity providers, if any, relating to the Certificates
issued under (and as defined in) the Other Pass Through Trust Agreements,
and The First National Bank of Maryland, as Subordination Agent
thereunder, as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Issuance Date: Means the date of the issuance of the Initial
Certificates.
Lease: Means, with respect to each Leased Aircraft, the 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.
Leased Aircraft: Has the meaning given to such term in the recitals
hereto.
Letter of Representations: Means the agreement dated the Issuance
Date among the Company, the Trustee and the initial Clearing Agency.
Liquidity Facility: Means the Irrevocable Revolving Credit Agreement
dated August 13, 1998 relating to the Certificates, between the Liquidity
Provider and the Subordination Agent, as amended, replaced, supplemented
or otherwise modified from time to time in accordance with its terms and
the terms of the Intercreditor Agreement.
Liquidity Provider: Means, initially, ABN AMRO Bank N.V., acting
through its Chicago branch, and any replacement or successor therefor
appointed in accordance with the Liquidity Facility and the Intercreditor
Agreement.
Loan 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 Loan
Trustee as such trustee; and Loan Trustees means all of the Loan Trustees
under the Indentures.
New Aircraft: Has the meaning specified in the Note Purchase
Agreement.
Non-U.S. Person: Means a Person that is not a U.S. Person, as
defined in Regulation S.
Note Documents: With respect to any Equipment Note, means (i) the
Indenture and the Participation Agreement relating to such Equipment Note,
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and (ii) in the case of any Equipment Note related to a Leased Aircraft,
also includes the Lease relating to such Leased Aircraft.
Note Purchase Agreement. Means the Note Purchase Agreement dated as
of August 13, 1998 among the Trustee, the Other Trustees, the Company, the
Escrow Agent, the Escrow Paying Agent and the Subordination Agent,
providing for, among other things, the purchase of Equipment Notes by the
Trustee on behalf of the Trust, as the same may be amended, supplemented
or otherwise modified from time to time, in accordance with its terms.
Officer's Certificate: Means a certificate signed, (a) in the case
of the Company, by (i) 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 a Loan
Trustee, a Responsible Officer of the Trustee or such Owner Trustee or
such Loan Trustee, as the case may be.
Offshore Certificates Exchange Date: Has the meaning specified in
Section 3.01.
Offshore Global Certificates: Has the meaning assigned to such term
in Section 3.01.
Offshore Physical Certificates: Has the meaning assigned to such
term in Section 3.01.
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 or (ii) such other counsel
designated by the Company and reasonably acceptable to the Trustee and (b)
in the case of any Owner Trustee or any Loan Trustee may be such counsel
as may be designated by any of them whether or not such counsel is an
employee of any of them, and who shall be reasonably acceptable to the
Trustee.
Other Pass Through Trust Agreement: Means each of the three other
Midway Airlines 1998-1 Pass Through Trust Agreements relating to,
respectively, Midway Airlines 1998-1A-S Pass Through Trust, Midway
Airlines 1998-1C-S Pass Through Trust and Midway Airlines 1998-1D-S Pass
Through Trust, each dated the date hereof; and Other Pass Through Trust
Agreements means all such agreements.
Other Trust: Means each of the Midway Airlines Pass Through Trust
1998-1A-S, the Midway Airlines Pass Through Trust 1998-1C-S and the Midway
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Airlines Pass Through Trust 1998-1D-S, each created on the date hereof;
and Other Trusts means all such trusts.
Other Trustee: Means the trustee under each of the Other Pass
Through Trust Agreements, and any successor or other trustee appointed as
provided therein; and Other Trustees means all such trustees.
Outstanding: With respect to Certificates, means, as of the date of
determination, all Certificates theretofore authenticated and delivered
under this Agreement, except:
(i) Certificates theretofore cancelled by the Registrar or delivered
to the Trustee or the Registrar for cancellation;
(ii) All of the Certificates if money in the full amount
required to make the final distribution with respect thereto
pursuant to Section 11.01 hereof has been theretofore deposited with
the Trustee in trust for the Holders of such Certificates as
provided in Section 4.01 pending distribution of such money to such
Certificateholders pursuant to such final distribution payment; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been authenticated and delivered pursuant to this
Agreement.
Owned Aircraft: Has the meaning given to such term in the recitals
hereto.
Owner Participant: With respect to any Equipment Note relating to a
Leased Aircraft, means the "Owner Participant" 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 relating to a
Leased Aircraft, means the "Owner Trustee", 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 Indentures.
Participation Agreement: Means each Participation Agreement to be
entered into by the Trustee pursuant to the Note Purchase Agreement, as
the same may be amended, supplemented or otherwise modified in accordance
with its terms.
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Paying Agent: Means the paying agent maintained and appointed for
the Certificates pursuant to Section 7.12.
Permanent Offshore Global Certificates: Has the meaning specified in
Section 3.01.
Permitted Investments: Means obligations of the United States of
America or agencies or instrumentalities thereof for the payment of which
the full faith and credit of the United States of America is pledged,
maturing in not more than 60 days or such lesser time as is necessary for
payment of any Special Payments on a Special Distribution Date or any
mutual fund the portfolio of which is limited to such obligations,
including any proprietary mutual fund of The First National Bank of
Maryland for which such bank or an affiliate is investment advisor or to
which such bank provides other services and receives reasonable
compensation for such services.
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.
Physical Certificates: Has the meaning specified in Section 3.01.
Plan Transferee: Means any Plan or any entity that is using the
assets of any Plan to purchase or hold its interest in a 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.
Pool Balance: Means, as of any date, (i) the original aggregate face
amount of the Certificates less (ii) the aggregate amount of all payments
made in respect of such Certificates or in respect of Deposits 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 as of any Distribution Date shall be computed after giving effect
to any special distribution with respect to unused Deposits, payment of
principal, if any, on the Equipment Notes or other Trust Property held in
the Trust and the distribution thereof to be made on such Distribution
Date.
Pool Factor: Means, as of any date, the quotient (rounded to the
seventh decimal place) computed by dividing (i) the Pool Balance as at
such date by (ii) the original aggregate face amount of the Certificates.
The Pool Factor as of any Distribution Date shall be computed after giving
effect to any special distribution with respect to unused Deposits,
payment of principal, if any, on the Equipment Notes or other Trust
Property and the distribution thereof to be made on such Distribution
Date.
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Private Placement Legend: Has the meaning specified in Section 3.02.
Purchase Agreement: Means the Purchase Agreement dated August 6,
1998 between the Company and the Initial Purchasers.
QIB: Means a qualified institutional buyer as defined in Rule 144A.
Record Date: Means (i) for Scheduled Payments to be distributed on
any Regular Distribution Date, other than the final distribution, 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, the 15th day
(whether or not a Business Day) preceding such Special Distribution Date.
Register and Registrar: Mean the register maintained and the
registrar appointed pursuant to Sections 3.04 and 7.12.
Registration Rights Agreement: Means the Registration Rights
Agreement, dated as of August 13, 1998, among the Initial Purchasers, the
Trustee, the Other Trustees and the Company, as amended, supplemented or
otherwise modified from time to time in accordance with its terms.
Regular Distribution Date: With respect to distributions of
Scheduled Payments in respect of the Certificates, means each date
designated as a Regular Distribution Date in this Agreement, until payment
of all the Scheduled Payments to be made under the Equipment Notes held in
the Trust have been made; 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.
Regulation S: Means Regulation S under the Securities Act or any
successor regulation thereto.
Related Other Pass Through Trust Agreements: Means the "Other
Agreements" as defined in the Related Pass Through Trust Agreement.
Related Other Trustees: Means the "Other Trustees" as defined in the
Related Pass Through Trust Agreement.
Related Pass Through Trust Agreement: Means the Pass Through Trust
Agreement 1998-1B-O dated the date hereof relating to the Midway Airlines
Pass Through Trust 1998-1B-O and entered into by the Company and the
Trustee.
Related Trust: Means the Midway Pass Through Trust 1998-1B-O, to be
formed under the Related Pass Through Trust Agreement.
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Related Trustee: Means the trustee under the Related Pass Through
Trust Agreement.
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 Agreement.
Responsible Officer: With respect to the Trustee, any Loan Trustee
and any Owner Trustee, means any officer in the Corporate Trust Division
of the Trustee, Loan 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.
Rule 144A: Means Rule 144A under the Securities Act and any
successor regulation thereto.
Scheduled Payment: With respect to any Equipment Note, means any
payment of principal and interest on such Equipment Note (other than any
such payment which is not in fact received by the Trustee or any
Subordination Agent within five days of the date on which such payment is
scheduled to be made) or any payment of interest on the Certificates with
funds drawn under the Liquidity Facility 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, as
amended, 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.
Securities Act: Means the United States Securities Act of 1933, as
amended from time to time, or any successor thereto.
Shelf Registration Statement: Means the shelf registration statement
which may be required to be filed by the Company with the SEC pursuant to
any Registration Rights Agreement, other than an Exchange Offer
Registration Statement.
Special Distribution Date: Means each date on which a Special
Payment is to be distributed as specified in this Agreement; provided,
however, that, if any
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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) or Special Redemption Premium.
Special Payments Account: Means the account or accounts created and
maintained pursuant to Section 4.01(b).
Special Redemption Premium: Means the premium payable by the Company
in respect of the Final Withdrawal pursuant to the Note Purchase
Agreement.
Specified Investments: Means (i) obligations of, or guaranteed by,
the United States Government or agencies thereof, (ii) open market
commercial paper of any corporation incorporated under the laws of the
United States of America or any State thereof rated at least P-2 or its
equivalent by Moody's Investors Service, Inc. or at least A-2 or its
equivalent by Standard & Poor's Ratings Group, (iii) certificates of
deposit issued by commercial banks organized under the laws of the United
States or of any political subdivision thereof having a combined capital
and surplus in excess of $500,000,000 which banks or their holding
companies have a rating of A or its equivalent by Moody's Investors
Service, Inc. or Standard & Poor's Ratings Group; provided, however, that
the aggregate amount at any one time so invested in certificates of
deposit issued by any one bank shall not exceed 5% of such bank's capital
and surplus, (iv) U.S. dollar denominated offshore certificates of deposit
issued by, or offshore time deposits with, any commercial bank described
in (iii) or any subsidiary thereof, (v) repurchase agreements with any
financial institution having combined capital and surplus of at least
$500,000,000 with any of the obligations described in clauses (i) through
(iv) as collateral and (vi) any mutual fund the portfolio of which is
limited to investments of the types specified in the preceding clauses (i)
through (v), including any proprietary mutual fund of The First National
Bank of Maryland for which such bank or an affiliate is investment advisor
or to which such bank provides other services and receives reasonable
compensation for such services; 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.
Subordination Agent: Has the meaning specified in the Intercreditor
Agreement.
Temporary Offshore Global Certificates: Has the meaning specified in
Section 3.01.
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Transfer Date: Means the moment of execution and delivery of the
Assignment and Assumption Agreement by each of the parties thereto.
Transfer Date Certificate: Has the meaning specified in the
definition of "Certificates".
Triggering Event: Has the meaning assigned to such term in the
Intercreditor Agreement.
Trust: Means the trust created by this Agreement, the estate of
which consists of the Trust Property.
Trust Indenture Act: Except as otherwise provided in Section 9.06,
means the United States Trust Indenture Act of 1939 as in force at the
date hereof.
Trust Property: Means (i) subject to the Intercreditor Agreement,
the Equipment Notes held as the property of the Trust, 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, subject to the Intercreditor Agreement, any
proceeds from the sale by the Trustee pursuant to Section 6.02 of any
Equipment Note and (iii) all rights of the Trust and the Trustee, on
behalf of the Trust, under the Intercreditor Agreement, the Escrow
Agreement, the Note Purchase Agreement and the Liquidity Facilities,
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 Facilities,
provided that rights with respect to the Deposits or under the Escrow
Agreement, except for the right to direct withdrawals for the purchase of
Equipment Notes to be held herein, will not constitute Trust Property.
Trustee: Means The First National Bank of Maryland, or its successor
in interest, and any successor or other trustee appointed as provided
herein.
Trustee's Lien: Has the meaning specified in Section 7.17.
U.S. Global Certificate: Has the meaning specified in Section 3.01.
U.S. Physical Certificates: Has the meaning specified in Section
3.01.
Section 1.02. Compliance Certificates and Opinions. Upon any
application or request by the Company, any Owner Trustee or any Loan Trustee to
the Trustee to take any action under any provision of this Agreement, the
Company, such Owner Trustee or such Loan Trustee, as the case may be, shall
furnish to the Trustee (i) an Officer's Certificate stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in this Agreement
relating to the proposed action have been complied with and (ii) an Opinion of
Counsel stating that in the opinion of such counsel
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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 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 Agreement (other than a certificate
provided pursuant to Section 8.04(d)) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions in this
Agreement relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such
matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but
one such Person may certify or give an opinion with respect to some
matters and 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 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 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,
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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 Loan 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 this
Agreement and conclusive in favor of the Trustee, the Company and any Loan
Trustee, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument acknowledged to him
the execution thereof, or by an affidavit of a witness to such execution sworn
to before any such notary or such other officer and where such execution is by
an officer of a corporation or association or a member of a partnership, on
behalf of such corporation, association or partnership, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other reasonable manner
which the Trustee deems sufficient.
(c) In determining whether the Certificateholders of the requisite
Fractional Undivided Interests of Certificates Outstanding have given any
direction, consent or waiver (a "Direction") under this Agreement, Certificates
owned by the Company, any Owner Trustee, any Owner Participant or any Affiliate
of any such Person thereof 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 the
Trustee in fact knows to be so owned shall be so disregarded. Notwithstanding
the foregoing, (i) if any such Person owns 100% of the Certificates Outstanding,
such Certificates shall not be so disregarded as aforesaid, and (ii) if any
amount of Certificates 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
Owner Trustee, any Owner Participant or any Affiliate of any such Person.
(d) For all purposes of this Agreement, all Initial Certificates and
all Exchange Certificates shall vote and take all other actions of
Certificateholders together as one series of Certificates.
(e) The Company may at its option, by delivery of an Officer's
Certificate to the Trustee, set a record date to determine the
Certificateholders entitled to give any consent, request, demand, authorization,
direction, notice, waiver or other 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,
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request, demand, authorization, direction, notice, waiver or other Act may be
given before or after such record date, but only the Certificateholders of
record 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 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 shall be
computed as of such record date; provided that no such consent, request, demand,
authorization, direction, notice, waiver or other Act by the Certificateholders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Agreement not later than one year after such
record date.
(f) 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.
(g) Except as otherwise provided in Section 1.04(c), Certificates
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.
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Acquisition of Trust Property. (a) The Trustee is
hereby irrevocably authorized and directed to execute and deliver the Assignment
and Assumption Agreement on the date specified in Section 11.01 of the Related
Trust Supplement, subject only to the satisfaction of the conditions set forth
in said Section 11.01. This Agreement (except only for the immediately preceding
sentence hereof, which is effective upon execution and delivery hereof) shall
become effective upon the execution and delivery of the Assignment and
Assumption Agreement by the Trustee and the Related Trustee, automatically and
without any further signature or action on the part of the Company and the
Trustee, and shall thereupon constitute the legal, valid and binding obligation
of the parties hereto enforceable against each of the parties hereto in
accordance with its terms. Upon such execution and delivery of the Assignment
and Assumption Agreement, the Related Trust shall be terminated, the
Certificateholders shall receive beneficial interests in the Trust in exchange
for their interests in the Related Trust equal to their respective beneficial
interests in the Related Trust and the "Outstanding" (as defined in the Related
Pass Through Trust Agreement) pass through certificates representing fractional
undivided interests in the Related Trust shall be deemed for all purposes of
this Agreement, without further signature or action of any party or
Certificateholder, to be Certificates representing the same Fractional Undivided
Interests in the Trust and Trust Property. By acceptance
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of its Certificate, each Certificateholder consents to and ratifies such
assignment, transfer and delivery of the trust property of the Related Trust to
the Trustee upon the execution and delivery of the Assignment and Assumption
Agreement. Except as provided in Sections 3.04, 3.05, 3.07 and 3.11, the Trustee
shall not execute, authenticate or deliver Certificates in excess of the
aggregate amount specified in this paragraph.
(b) The Trustee, upon the execution and delivery of the Assignment
and Assumption Agreement, acknowledges its acceptance of all right, title and
interest in and to the Trust Property and declares that the Trustee holds and
will hold such right, title and interest for the benefit of all then present and
future Certificateholders, upon the trusts herein set forth. By the acceptance
of each Certificate issued to it under the Related Pass Through Trust Agreement
and deemed issued under this Agreement, each Holder of any such Certificate as
grantor of the Trust thereby joins in the creation and declaration of the Trust.
Section 2.02. [Reserved]
Section 2.03. The Trustee. Subject to Section 7.15, the Trustee
shall not be responsible in any manner whatsoever for or in respect of the
validity or sufficiency of this Agreement, the Deposit Agreement or the Escrow
Agreement or the due execution hereof or thereof by the Company or the other
parties thereto (other than the Trustee), or for or in respect of the recitals
and statements contained herein or therein, all of which recitals and statements
are made solely by the Company.
Section 2.04. Acceptance by Trustee. The Trustee, upon the execution
and delivery of this Agreement, acknowledges its acceptance of all right, title
and interest in and to the Trust Property acquired pursuant to Section 2.01
hereof and the Note Purchase Agreement and declares that the Trustee holds and
will hold such right, title and interest, together with all other property
constituting the Trust Property, for the benefit of all then present and future
Certificateholders, upon the trusts herein set forth. Subject to Section 7.14,
the Trustee shall take all actions reasonably necessary to effect the
registration of all such Equipment Notes in the name of the Subordination Agent.
By its payment for and acceptance of each Certificate issued to it under this
Agreement, each initial Certificateholder as grantor of the Trust thereby joins
in the creation and declaration of the Trust.
Section 2.05. Limitation of Powers. The Trust is constituted solely
for the purpose of making the investment in the Equipment Notes, and, except as
set forth herein, 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 any Aircraft (as
defined in the respective Indentures) by bidding such Equipment Notes or
otherwise, or taking any action with respect to any such Aircraft once
acquired).
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ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution of
Certificates. (a) The Initial Certificates shall be known as the "8.14%
1998-1B-S Initial Pass Through Certificates" and the Exchange Certificates shall
be known as the "8.14% 1998-1B-S Exchange Pass Through Certificates", in each
case, of the Trust. Each Certificate will represent a fractional undivided
interest in the Trust and shall be substantially in the form set forth as
Exhibit A hereto, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Agreement and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Certificates, as evidenced by their execution of 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. At the Escrow Agent's request under the Escrow Agreement, the
Trustee shall affix the corresponding Escrow Receipt to each Certificate. In any
event, any transfer or exchange of any Certificate shall also effect a transfer
or exchange of the related Escrow Receipt. Prior to the Final Withdrawal Date,
no transfer or exchange of any Certificate shall be permitted unless the
corresponding Escrow Receipt is attached thereto and also is so transferred or
exchanged. By acceptance of any Certificate to which an Escrow Receipt is
attached, each Holder of such a Certificate acknowledges and accepts the
restrictions on transfer of the Escrow Receipt set forth herein and in the
Escrow Agreement.
(b) The Initial Certificates shall be issued only in fully
registered form without coupons and only in denominations of $100,000 or
integral multiples of $1,000 in excess thereof, except that one Certificate may
be issued in a denomination of less than $100,000. The Exchange Certificates
will be issued in denominations of $1,000 or integral multiples thereof. Each
Certificate shall be dated the date of its authentication. The aggregate
Fractional Undivided Interest of Certificates shall not at any time exceed
$20,528,000.
(c) Initial Certificates offered and sold in reliance on Rule 144A
shall be issued initially in the form of a single permanent global Certificate
in registered form, substantially in the form set forth as Exhibit A hereto (the
"U.S. Global Certificate"), duly executed and authenticated by the Trustee as
hereinafter provided. The U.S. Global Certificate will be registered in the name
of a nominee for DTC and deposited with the Trustee, as custodian for DTC. The
aggregate principal amount of the U.S. Global Certificate may from time to time
be increased or decreased by adjustments made on the records of the Depositary
or its nominee, or of the Trustee, as custodian for DTC or its nominee, as
hereinafter provided.
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(d) Initial Certificates offered and sold in offshore transactions
in reliance on Regulation S shall be issued initially in the form of a single
temporary global Certificate in registered form, substantially in the form set
forth as Exhibit A hereto (the "Temporary Offshore Global Certificate") duly
executed and authenticated by the Trustee as hereinafter provided. The Temporary
Offshore Global Certificate will be registered in the name of a nominee of DTC
for credit to the account of the Agent Members acting as depositaries for
Euroclear and Cedel and deposited with the Trustee as custodian for DTC. At any
time on or after September 23, 1998 (the "Offshore Certificates Exchange Date"),
upon receipt by the Trustee of a certificate substantially in the form of
Exhibit B hereto, a single permanent global Certificate in registered form
substantially in the form set forth in Exhibit A (the "Permanent Offshore Global
Certificate"; and together with the Temporary Offshore Global Certificate, the
"Offshore Global Certificates"), duly executed and authenticated by the Trustee
as hereinafter provided, shall be registered in the name of a nominee for DTC
and deposited with the Trustee, as custodian for DTC, and the Registrar shall
reflect on its books and records the date of such transfer and a decrease in the
principal amount of any Temporary Offshore Global Certificate in an amount equal
to the principal amount of the beneficial interest in such Temporary Offshore
Global Certificate transferred. The U.S. Global Certificate and the Offshore
Global Certificates are sometimes referred to as the "Global Certificates".
(e) Initial Certificates offered and sold to Institutional
Accredited Investors shall be issued in the form of permanent certificated
Certificates in registered form in substantially the form set forth as Exhibit A
hereto (the "U.S. Physical Certificates"). Certificates issued pursuant to
Section 3.05(b) in exchange for interests in any Offshore Global Certificate
shall be in the form of permanent certificated Certificates in registered form
substantially in the form set forth in Exhibit A (the "Offshore Physical
Certificates"). The Offshore Physical Certificates and U.S. Physical
Certificates are sometimes collectively herein referred to as the "Physical
Certificates".
(f) The Exchange Certificates shall be issued in the form of one or
more global Certificates substantially in the form of Exhibit A hereto (each, a
"Global Exchange Certificate"), except that (i) the Private Placement Legend
(hereinafter defined) shall be omitted. Such Global Exchange Certificates shall
be in registered form and be registered in the name of DTC and deposited with
the Trustee, at its Corporate Trust Office, as custodian DTC. The aggregate
principal amount of any Global Exchange Certificate may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for DTC for such Global Exchange Certificate, which adjustments shall
be conclusive as to the aggregate principal amount of any such Global Exchange
Certificates. Subject to clause (i) of the first sentence of this Section
3.01(f), the terms hereof applicable to Global Certificates shall apply to the
Global Exchange Certificates, mutatis mutandis.
(g) The definitive Certificates shall be in registered form and
shall be typed, printed, lithographed or engraved or produced by any combination
of these
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methods or may be produced in any other manner, all as determined by the
officers executing such Certificates, as evidenced by their execution of such
Certificates.
Section 3.02. Restrictive Legends. (a) Subject to Section 3.06, each
Global Certificate (other than the Permanent Offshore Global Certificate) and
each U.S. Physical Certificate shall bear the following legend (the "Private
Placement Legend") on the face thereof:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY
MIDWAY AIRLINES CORPORATION ("MIDWAY") OR ANY AFFILIATE OF MIDWAY, RESELL
OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO MIDWAY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATES
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE
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ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
CERTIFICATE WAS HELD BY MIDWAY OR AN AFFILIATE OF MIDWAY, THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND MIDWAY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
(b) Each Global Certificate shall also bear the following legend on
the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE 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 HEREON 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.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST
AGREEMENT REFERRED TO HEREIN.
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Section 3.03. Authentication of Certificates. (a) The Trustee shall
duly execute, authenticate and deliver Certificates in authorized denominations
equalling in the aggregate the aggregate principal amount of the Equipment Notes
to be purchased by the Trustee pursuant to the Participation Agreements and
evidencing the entire ownership of the Trust.
(b) No Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose, unless there appears on
such Certificate a certificate of authentication substantially in the form
provided for herein executed by the Trustee by the manual signature of one of
its authorized signatories, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.
Section 3.04. Transfer and Exchange. The Trustee shall cause to be
kept at the office or agency to be maintained by it in accordance with the
provisions of Section 7.12 of this Agreement a register (the "Register") for the
Certificates in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of the Certificates
and of transfers and exchanges of the Certificates as herein provided. The
Trustee shall initially be the registrar (the "Registrar") for the purpose of
registering the Certificates and transfers and exchanges of the Certificates as
herein provided. A Certificateholder may transfer or exchange a Certificate by
written application to the Registrar stating the name of the proposed transferee
and otherwise complying with the terms of this Agreement, including providing a
written certificate or other evidence of compliance with any restrictions on
transfer; provided that no exchanges of Initial Certificates for Exchange
Certificates shall occur until an Exchange Offer Registration Statement shall
have been declared effective by the SEC (notice of which shall be provided to
the Trustee by the Company). No such transfer shall be effected until, and such
transferee shall succeed to the rights of a Certificateholder only upon, final
acceptance and registration of the transfer by the Registrar in the Register.
Prior to the registration of any transfer by a Certificateholder as provided
herein, the Trustee shall treat the person in whose name the Certificate is
registered as the owner thereof for all purposes, and the Trustee shall not be
affected by notice to the contrary. Furthermore, DTC shall, by acceptance of a
Global Certificate, agree that transfers of beneficial interests in such Global
Certificate may be effected only through a book-entry system maintained by the
Depositary (or its agent), and that ownership of a beneficial interest in the
Certificate shall be required to be reflected in a book entry. When Certificates
are presented to the Registrar with a request to register the transfer or to
exchange them for an equal face amount of Certificates of other authorized
denominations, the Registrar shall register the transfer or make the exchange as
requested if its requirements for such transactions are met. To permit
registrations of transfers and exchanges in accordance with the terms,
conditions and restrictions hereof, the Trustee shall execute and authenticate
Certificates at the Registrar's request. No service charge shall be made for any
registration of transfer or exchange of the Certificates, but the Trustee may
require payment by the transferor of a sum sufficient to cover any transfer tax
or similar governmental charge payable in connection therewith.
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Section 3.05. Book-Entry Provisions for U.S. Global Certificate and
Offshore Global Certificates. (a) Members of, or participants in, DTC ("Agent
Members") shall have no rights under this Agreement with respect to any Global
Certificate held on their behalf by DTC, or the Trustee as its custodian, and
DTC may be treated by the Trustee and any agent of the Trustee as the absolute
owner of such Global Certificate for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Trustee or any agent of the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by DTC or shall impair, as between DTC and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a holder of any Certificate. Upon the issuance of any Global
Certificate, the Registrar or its duly appointed agent shall record a nominee of
DTC as the registered holder of such Global Certificate.
(b) Transfers of any Global Certificate shall be limited to
transfers of such Global Certificate in whole, but not in part, to nominees of
DTC, its successor or such successor's nominees. Beneficial interests in the
U.S. Global Certificate and any Offshore Global Certificate may be transferred
in accordance with the rules and procedures of DTC and the provisions of Section
3.06. Beneficial interests in the U.S. Global Certificate or an Offshore Global
Certificate shall be delivered to all beneficial owners in the form of U.S.
Physical Certificates or Offshore Physical Certificates, as the case may be, if
(i) the Company notifies the Trustee in writing that DTC is unwilling or unable
to discharge properly its responsibilities as DTC for the U.S. Global
Certificate or such Offshore Global Certificate, as the case may be, and the
Company is unable to locate a qualified successor depositary within 90 days of
such notice or (ii) after the occurrence of an Event of Default, beneficial
owners of the U.S. Global Certificate or Offshore Global Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in the Trust, by Act of such Certificateholders delivered to the Company and the
Trustee, advise the Company, the Trustee and DTC through its Clearing Agency
Participants in writing that the continuation of a book-entry system through DTC
is no longer in the best interests of the Certificateholders, then the Trustee
shall notify all owners of beneficial interests in the U.S. Global Certificate
or an Offshore Global Certificate, through DTC, of the occurrence of any such
event and the availability of definitive Certificates.
(c) Any beneficial interest in one of the Global Certificates that
is transferred to a Person who takes delivery in the form of an interest in the
other Global Certificate will, upon such transfer, cease to be an interest in
such Global Certificate and become an interest in the other Global Certificate
and, accordingly, will thereafter be subject to all transfer restrictions, if
any, and other procedures applicable to beneficial interests in such other
Global Certificate for as long as it remains such an interest.
(d) [Intentionally omitted.]
(e) In connection with the transfer of the entire U.S. Global
Certificate or an entire Offshore Global Certificate to the beneficial owners
thereof pursuant to
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paragraph (b) of this Section 3.05, such U.S. Global Certificate or Offshore
Global Certificate, as the case may be, shall be deemed to be surrendered to the
Trustee for cancellation, and the Trustee shall execute, authenticate and
deliver, to each beneficial owner identified by DTC in exchange for its
beneficial interest in such U.S. Global Certificate or Offshore Global
Certificate, as the case may be, an equal aggregate principal amount of U.S.
Physical Certificates or Offshore Physical Certificates, as the case may be, of
authorized denominations.
(f) Any U.S. Physical Certificate delivered in exchange for an
interest in the U.S. Global Certificate pursuant to paragraph (b) of this
Section 3.05 shall, except as otherwise provided by paragraph (f) of Section
3.06, bear the Private Placement Legend.
(g) Any Offshore Physical Certificate delivered in exchange for an
interest in an Offshore Global Certificate pursuant to paragraph (b) of this
Section shall, except as otherwise provided by paragraph (f) of Section 3.06,
bear the applicable legend regarding transfer restrictions set forth in Section
3.02(a).
(h) The registered holder of the U.S. Global Certificate or any
Offshore Global Certificate may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Agreement or the Certificates.
Section 3.06. Special Transfer Provisions. Unless and until (i) an
Initial Certificate is sold under an effective Shelf Registration Statement or
(ii) an Initial Certificate is exchanged for an Exchange Certificate pursuant to
an effective Exchange Offer Registration Statement, in each case pursuant to the
terms of the Registration Rights Agreement, the following provisions shall apply
to the Certificates:
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Certificate to any Institutional Accredited Investor
which is not a QIB (excluding transfers to or by Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Certificate,
whether or not such Certificate bears the Private Placement Legend, if (x)
the requested transfer is at least two years after the later of the
original issue date of the Certificates and the last date on which such
Certificate was held by the Company or any affiliate thereof or (y) the
proposed transferee has delivered to the Registrar a letter substantially
in the form of Exhibit D hereto and the aggregate principal amount of the
Certificates being transferred is at least $100,000.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Certificate, upon receipt by the
Registrar of (x) the documents, if any, required by paragraph (i) and (y)
instructions given in accordance with DTC's and the Registrar's
procedures, the Registrar shall reflect
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on its books and records the date of the transfer and a decrease in the
principal amount of such U.S. Global Certificate in an amount equal to the
principal amount of the beneficial interest in such U.S. Global
Certificate to be transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver to the transferor or at its
direction, one or more U.S. Physical Certificates of like tenor and
amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of an Initial Certificate
to a QIB (excluding Non-U.S. Persons):
(i) If the Certificate to be transferred consists of U.S. Physical
Certificates or an interest in any Temporary Offshore Global Certificate,
the Registrar shall register the transfer if such transfer is being made
by a proposed transferor who has checked the box provided for on the form
of Initial Certificate stating, or has otherwise advised the Trustee and
the Registrar in writing, that the sale has been made in compliance with
the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Initial Certificate stating, or
has otherwise advised the Trustee and the Registrar in writing, that it is
purchasing the Initial Certificate for its own account or an account with
respect to which it exercises sole investment discretion and that it, or
the Person on whose behalf it is acting with respect to any such account,
is a QIB within the meaning of Rule 144A, and is aware that the sale to it
is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Trust and/or the Company as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
(ii) Upon receipt by the Registrar of the documents referred to in
clause (i) above and instructions given in accordance with DTC's and the
Registrar's procedures therefor, the Registrar shall reflect on its books
and records the date of such transfer and an increase in the principal
amount of the U.S. Global Certificate in an amount equal to the principal
amount of the U.S. Physical Certificates or interests in the Temporary
Offshore Global Certificate, as the case may be, being transferred, and
the Trustee shall cancel such Physical Certificates or decrease the amount
of such Temporary Offshore Global Certificate so transferred.
(c) [Intentionally omitted.]
(d) Transfers of Interests in the Permanent Offshore Global
Certificate or Offshore Physical Certificates. The Registrar shall register any
transfer of interests in the Permanent Offshore Global Certificate or Offshore
Physical Certificates without requiring any additional certification.
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(e) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any registration of any transfer of an
Initial Certificate to a Non-U.S. Person:
(i) Prior to the Offshore Certificates Exchange Date, the Registrar
shall register any proposed transfer of an Initial Certificate to a
Non-U.S. Person upon receipt of a certificate substantially in the form
set forth as Exhibit C hereto from the proposed transferor.
(ii) On and after the Offshore Certificates Exchange Date, the
Registrar shall register any proposed transfer to any Non-U.S. Person if
the Certificate to be transferred is a U.S. Physical Certificate or an
interest in the U.S. Global Certificate, upon receipt of a certificate
substantially in the form of Exhibit C from the proposed transferor. The
Registrar shall promptly send a copy of such certificate to the Company.
(iii) Upon receipt by the Registrar of (x) the documents, if any,
required by paragraph (ii) and (y) instructions in accordance with the
Depositary's and the Registrar's procedures, the Registrar shall reflect
on its books and records the date of such transfer and a decrease in the
principal amount of such U.S. Global Certificate in an amount equal to the
principal amount of the beneficial interest in such U.S. Global
Certificate to be transferred, and (B) upon receipt by the Registrar of
instructions given in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and an increase in the principal amount of the Offshore Global Certificate
in an amount equal to the principal amount of the U.S. Physical
Certificate or the U.S. Global Certificate, as the case may be, to be
transferred, and the Trustee shall cancel the Physical Certificate, if
any, so transferred or decrease the amount of such U.S. Global
Certificate.
(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Certificates not bearing the Private Placement Legend, the
Registrar shall deliver Certificates that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Certificates bearing the
Private Placement Legend, the Registrar shall deliver only Certificates that
bear the Private Placement Legend unless either (i) the circumstances
contemplated by paragraph (a)(i)(x) or (e)(ii) of this Section 3.06 exist or
(ii) there is delivered to the Registrar an Opinion of Counsel to the effect
that neither such legend nor the related restrictions on transfer are required
in order to maintain compliance with the provisions of the Securities Act.
(g) General. By its acceptance of any Certificate bearing the
Private Placement Legend, each Holder of such a Certificate acknowledges the
restrictions on transfer of such Certificate set forth in this Agreement and
agrees that it will transfer such Certificate only as provided in this
Agreement. The Registrar shall not register a transfer of any Certificate unless
such transfer complies with the restrictions on transfer of such Certificate set
forth in this Agreement. In connection with any
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transfer of Certificates, each Certificateholder agrees by its acceptance of the
Certificates to furnish the Registrar or the Trustee such certifications, legal
opinions or other information as either of them may reasonably require to
confirm that such transfer is being made pursuant to an exemption from, or a
transaction not subject to, the registration requirements of the Securities Act;
provided that neither the Trustee nor the Registrar shall be required to
determine the sufficiency of any such certifications, legal opinions or other
information.
Until such time as no Certificates remain Outstanding, the Registrar
shall retain copies of all letters, notices and other written communications
received pursuant to Section 3.05 or this Section 3.06. The Trustee, if not the
Registrar at such time, shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Registrar.
Section 3.07. 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, in authorized denominations and of like Fractional Undivided
Interest and bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Certificate under this
Section 3.07, 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 3.07 shall
constitute conclusive evidence of the appropriate Fractional Undivided Interest
in the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Trustee, the Registrar and any
Paying Agent 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 Article IV and for all
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other purposes whatsoever, and none of the Trustee, the Registrar or any Paying
Agent shall be affected by any notice to the contrary.
Section 3.09. Cancellation. All Certificates surrendered for payment
or transfer or exchange shall, if surrendered to the Trustee or any agent of the
Trustee other than the Registrar, be delivered to the Registrar for cancellation
and shall promptly be cancelled by it. No Certificates shall be authenticated in
lieu of or in exchange for any Certificates cancelled as provided in this
Section, except as expressly permitted by this Agreement. All cancelled
Certificates held by the Registrar shall be destroyed and a certification of
their destruction delivered to the Trustee.
Section 3.10. Limitation of Liability for Payments. All payments and
distributions made to Certificateholders 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 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 to the extent available for distribution to such
Certificateholder as provided in this Agreement.
Section 3.11. Temporary Certificates. Until definitive Certificates
are ready for delivery, the Trustee shall authenticate temporary Certificates.
Temporary Certificates shall be substantially in the form of definitive
Certificates but may have insertions, substitutions, omissions and other
variations determined to be appropriate by the officers executing the temporary
Certificates, as evidenced by their execution of such temporary Certificates. If
temporary Certificates are issued, the Trustee will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
office or agency of the Trustee designated for such purpose pursuant to Section
7.12, without charge to the Certificateholder. Upon surrender for cancellation
of any one or more temporary Certificates, the Trustee shall execute,
authenticate and deliver in exchange therefor a like face amount of definitive
Certificates of authorized denominations. Until so exchanged, the temporary
Certificates shall be entitled to the same benefits under this Agreement as
definitive Certificates.
Section 3.12. ERISA Restrictive Legend. All Certificates issued
pursuant to this Agreement shall bear a legend to the following effect (the
"ERISA Legend") unless the Company and the Trustee determine otherwise
consistent with applicable law:
"BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS FOR THE BENEFIT OF
THE COMPANY AND EACH OWNER PARTICIPANT THAT (A) IT IS NOT A PLAN TRANSFEREE (AS
DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR (B) ONE OR MORE PROHIBITED
TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS APPLIES SUCH THAT THE USE OF
PLAN ASSETS TO PURCHASE AND HOLD THIS PASS THROUGH CERTIFICATE WILL
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NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975
OF THE CODE. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF
THE FOREGOING RESTRICTIONS."
By acceptance of any Certificate bearing the ERISA Legend, each
Holder of such a Certificate acknowledges for the benefit of the Company and
each Owner Participant the restrictions on transfer of such Certificate set
forth in this Agreement and agrees that it will transfer such Certificate only
as provided in this Agreement. The Registrar shall not register a transfer of
any Certificate unless such transfer complies with the restrictions on transfer,
if any, of such Certificate set forth in this Agreement.
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 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, 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 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 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 Loan Trustee to which an
Equipment Note relates such Equipment Note on the date of its stated final
maturity or, in the case of any Equipment Note which is to be redeemed in whole
pursuant to the relevant Indenture, on the applicable redemption date under such
Indenture.
Section 4.02. Distributions from Certificate Account and Special
Payments Account. (a) On each Regular Distribution Date or as soon thereafter as
the Trustee has confirmed receipt of the payment of the Scheduled Payments due
on such date, the
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Trustee shall distribute out of the Certificate Account the entire amount
deposited therein pursuant to Section 4.01(a). There shall be so distributed to
each Certificateholder of record 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
Fractional Undivided Interest in the Trust held by such Certificateholder) of
the total amount in the Certificate Account, except that, with respect to
Certificates registered on the Record Date in the name of the nominee of the
Depositary (initially, such nominee to be Cede & Co.), such distribution shall
be made by wire transfer in immediately available funds to the account
designated by such nominee.
(b) On each Special Distribution Date with respect to any Special
Payment or as soon thereafter as the Trustee has confirmed receipt of any
Special Payments, the Trustee shall distribute out of the 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 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 Trust held by such Certificateholder) of the aggregate amount in
the Special Payments Account on account of such Special Payment, except that,
with respect to Certificates registered on the Record Date in the name of the
nominee of the Depositary (initially, such nominee to be Cede & Co.), such
distribution shall be made by wire transfer in immediately available funds to
the account designated by such nominee.
(c) The Trustee shall, at the expense of the Company, cause notice
of each Special Payment to be mailed to each Certificateholder at his address as
it appears in the Register. In the event of redemption, prepayment or purchase
of Equipment Notes held in the Trust, such notice shall be mailed not less than
15 days prior to the date any 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 (which notice, in the case of a Special Redemption Premium,
shall include a copy of the notice delivered by the Escrow Paying Agent under
Section 2.06 of the Escrow Agreement). Notices mailed by the Trustee shall set
forth:
(i) the Special Distribution Date and the Record Date therefor
(except as otherwise provided in Section 11.01),
(ii) the amount of the Special Payment for each $1,000 face amount
Certificate (taking into account any payment to be made by the Company
pursuant to Section 2.02) and the amount thereof constituting principal,
premium, if any, and interest,
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(iii) the reason for the Special Payment, and
(iv) if the Special Distribution Date is the same date as a Regular
Distribution Date, the total amount to be received on such date for each
$1,000 face amount Certificate.
If the amount of (x) premium, if any, payable upon the redemption, prepayment or
purchase of an Equipment Note or (y) Special Redemption Premium has not been
calculated at the time 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 such premium or Special Redemption Premium, as the case may
be, received will also be distributed.
If any redemption of the Equipment Notes held in the Trust is
cancelled, the Trustee, as soon as possible after learning thereof, shall cause
notice thereof to be mailed to each Certificateholder at its address as it
appears on the Register.
Section 4.03. Statements to Certificateholders. (a) On each
Distribution Date, the Trustee will include with each distribution to
Certificateholders of a Scheduled Payment or Special Payment, as the case may
be, a statement setting forth the information provided below (in the case of a
Special Payment, including any Special Redemption Premium, reflecting in part
the information provided by the Escrow Paying Agent under the Escrow Agreement).
Such statement shall set forth (per $1,000 face amount Certificate as to (ii),
(iii), (iv) and (v) below) the following information:
(i) the aggregate amount of funds distributed on such Distribution
Date under the Agreement and under the Escrow Agreement, indicating the
amount allocable to each source;
(ii) the amount of such distribution under the Agreement allocable
to principal and the amount allocable to premium (including the Special
Redemption Premium), if any;
(iii) the amount of such distribution under the Agreement allocable
to interest;
(iv) the amount of such distribution under the Escrow Agreement
allocable to interest;
(v) the amount of such distribution under the Escrow Agreement
allocable to Deposits; and
(vi) the Pool Balance and the Pool Factor.
With respect to the Certificates registered in the name of a
Clearing Agency or its nominee, on the record date prior to each Distribution
Date, the Trustee
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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 Trustee will mail to each such Clearing
Agency Participant the statement described above and will make available
additional copies as requested by such Clearing Agency Participant for
forwarding to holders of Certificates.
(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), (a)(ii), (a)(iii), (a)(iv) and (a)(v)
above with respect to the 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 a Clearing Agency or its nominee, such report and such other items shall be
prepared on the basis of information supplied to the Trustee 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.
(c) Utilizing information provided by Midway, promptly following (i)
the Delivery Period Termination Date, if there has been any change in the
information set forth in clauses (x), (y) and (z) below from that set forth in
page 65 of the Offering Memorandum, and (ii) any early redemption or purchase
of, or any default in the prepayment of principal or interest in respect of, any
of the Equipment Notes held in the Trust, or any Final Withdrawal, the Trustee
shall furnish to Certificateholders of record on such date a statement setting
forth (x) the expected Pool Balances for each subsequent Regular Distribution
Date following the Delivery Period Termination Date, (y) the related Pool
Factors for such Regular Distribution Dates and (z) the expected principal
distribution schedule of the Equipment Notes, in the aggregate, held as Trust
Property at the date of such notice. With respect to the Certificates registered
in the name of a Clearing Agency, on the Delivery Period Termination Date, the
Trustee will request from such Clearing Agency a securities position listing
setting forth the names of all Clearing Agency Participants reflected on such
Clearing Agency's books as holding interests in the Certificates on such date.
The Trust 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.
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
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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 gross negligence (or simple negligence in the handling of
funds) 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 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 (i) organized and validly existing under the laws of the United States
of America or any state thereof or the District of Columbia, (ii) a
"citizen of the United States" (as defined in Section 40102(a)(15) of
Title 49 of the United States Code) and (iii) a United States certificated
air carrier, if and so long as such status is a condition of entitlement
to the benefits of Section 1110 of the Bankruptcy Reform Act of 1978, as
amended (11 U.S.C. ss. 1110), with respect to the Aircraft;
(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 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 this Agreement, the Other Pass Through Trust Agreements, the
Participation Agreements, and each other Note Document to be performed or
observed by the Company;
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(c) immediately after giving effect to such transaction, no Event of
Default (as defined in any Lease or any Indenture relating to an Owned
Aircraft), shall have occurred and be continuing; and
(d) the Company shall have delivered to the Trustee an Officer's
Certificate of the Company and an Opinion of Counsel of the Company
reasonably satisfactory to the Trustee, each stating that such
consolidation, merger, conveyance, transfer or lease and the assumption
agreement mentioned in clause (b) above comply with this Section 5.02 and
that all conditions precedent herein provided for relating to such
transaction have been complied with.
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 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 this Agreement or any Financing Document 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 the Intercreditor
Agreement.
(b) Purchase Rights of Certificateholders.
(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 principal amount of the
Certificates held by each such Certificateholder and (B) if prior to the
end of such ten-day period any
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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 6.01(b)(i).
(ii) By its acceptance of its Certificate, each Certificateholder
agrees that at any time after the occurrence and during the continuation
of a Triggering Event:
(A) each Class C Certificateholder shall have the right (which shall
not expire upon any purchase of the Class A Certificates pursuant to
clause (b)(i) above) to purchase all, but not less than all, of the
Certificates and the Class A Certificates upon ten days' written notice to
the Trustee, the Class A 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 Certificates and the Class A 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
Certificates and the Class A Certificates pursuant to this Section
6.01(b).
(B) each Class D Certificateholder shall have the right (which shall
not expire upon any purchase of the Class A Certificates pursuant to
clause (b)(i) above and the Certificates and the Class A Certificates
pursuant to clause (ii)(A) above) to purchase all, but not less than all,
of the Certificates, the Class A Certificates and the Class C Certificates
upon ten days' written notice to the Trustee, the Class A 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 Class D Certificateholder to purchase all, but not less than
all, of the Certificates, the Class A 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
Certificates, the Class A Certificates and the Class C Certificates
pursuant to this Section 6.01(b).
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The purchase price with respect to the Certificates shall be equal
to the Pool Balance of the Certificates, 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, the Intercreditor Agreement, the Escrow Agreement or any Note
Document or on or in respect of the Certificates; provided, however, that (i) if
such purchase occurs after the record date specified in Section 2.03(b) of the
Escrow Agreement relating to the distribution of unused Deposits and accrued and
unpaid interest thereunder, such purchase price shall be reduced by the
aggregate amount of unused Deposits and interest to be distributed under the
Escrow Agreement (which deducted amounts shall remain distributable to, and may
be retained by the Certificateholder as of such record date) and (ii) if such
purchase occurs after a Record Date, such purchase price shall be reduced by the
amount to be distributed hereunder on the related Distribution date (which
deducted amounts shall remain distributable to, and may be retained by, the
Certificateholder as of such Record Date); provided further that no such
purchase of Certificates 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 Pass Through
Trust Agreements, the Certificates, the Class A Certificates and the Class C
Certificates which are senior to the Class of Certificates (as defined in the
Intercreditor Agreement) held by such purchaser. Each payment of the purchase
price of the Certificates 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 agrees by its acceptance of its Certificate that
it will, subject to Section 3.04 hereof, upon payment from such Class C
Certificateholder(s) or Class D Certificateholder(s) of the purchase price set
forth in the first sentence of this paragraph, 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, the Escrow
Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity
Facility, the Note Documents and all Certificates and Escrow Receipts 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, the Escrow Agreement,
the Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility and
the Note Documents. The Certificates 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 (whether in the form of Physical
Certificates or beneficial interests in Global Certificates) 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 the
Certificates and (ii) if the purchaser shall so request, such Certificateholder
will comply with all the provisions of Section 3.04 hereof to enable new
Certificates 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.
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As used in this Section 6.01(b), the terms "Certificateholders",
"Class", "Class A Certificate", "Class A Certificateholder", "Class A Trust",
"Class A Trustee", "Class C Certificate", "Class C Certificateholder", "Class C
Trust", "Class C Trustee", "Class D Certificate", "Class D Certificateholder",
"Class D Trust" and "Class D Trustee", shall have the respective meanings
assigned to such terms in the Intercreditor Agreement.
Section 6.02. Incidents of Sale of Equipment Notes. Upon any sale of
all or any part of the Equipment Notes made either under the power of sale given
under this Agreement or otherwise for the enforcement of this Agreement, the
following shall be applicable:
(1) Certificateholders and Trustee May Purchase Equipment Notes. Any
Certificateholder, the Trustee in its individual or any other capacity or
any other Person may bid for and purchase any of the Equipment Notes, and
upon compliance with the terms of sale, may hold, retain, possess and
dispose of such Equipment Notes in their own absolute right without
further accountability.
(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 received by
the Trustee from the Subordination Agent pursuant to the Intercreditor
Agreement upon any sale made either under the power of sale given by this
Agreement or otherwise for the enforcement of this Agreement shall 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 of the principal of,
premium, if any, or interest on any Equipment Note, or if there shall be any
failure to pay Rent (as defined in the relevant Lease) under any Lease when due
and payable, then the Trustee, in its own name and as trustee of an express
trust, as holder of such Equipment Notes, to the extent permitted by and in
accordance with the terms of the Intercreditor Agreement and the Financing
Documents (subject to the rights of the applicable Owner Trustee or Owner
Participant to cure any such failure in accordance with Section 8.03 of any
applicable Indenture relating to a Leased Aircraft), shall be entitled and
empowered to institute any suits, actions or proceedings at law, in equity or
otherwise, for the collection of the sums so due and unpaid on such Equipment
Notes or under such Lease and may prosecute any such claim or proceeding to
judgment or final decree with respect to the whole amount of any such sums so
due and unpaid.
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Section 6.04. Control by Certificateholders. Subject to Section 6.03
and the Intercreditor Agreement, the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the 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 the Trust or pursuant to the terms of the Intercreditor Agreement, or
exercising any trust or power conferred on the Trustee under this Agreement or
the Intercreditor Agreement, including any right of the Trustee as Controlling
Party under the Intercreditor Agreement or as holder of the Equipment Notes,
provided that
(1) such Direction shall not 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 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 the Intercreditor
Agreement, the Certificateholders holding Certificates 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 Loan 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 Loan
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, 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 or X cannot be modified or amended without the consent of each
Certificateholder holding an Outstanding Certificate affected thereby.
Upon any such waiver, such default shall cease to exist with respect
to the Certificates 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 to the relevant Loan Trustee shall be annulled
with respect thereto;
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but no such waiver shall extend to any subsequent or other default or Event of
Default or impair any right consequent thereon. Upon any such waiver, the
Trustee shall vote the Equipment Notes issued under the relevant Indenture to
waive the corresponding Indenture Default.
Section 6.06. Right of Certificateholders to Receive Payments Not to
Be Impaired. Anything in this Agreement to the contrary notwithstanding,
including, without limitation, Section 6.07 hereof, but subject to the
Intercreditor Agreement, the right of any Certificateholder to receive
distributions of payments required pursuant to Section 4.02 hereof on the
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 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) Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than 25% of the 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 7.03(e);
(3) the Trustee shall have refused or neglected to institute such an
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 shall have
been given to the Trustee during such 60-day period by Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating
not less than a majority in interest in the Trust.
It is understood and intended that no one or more of the
Certificateholders shall have any right in any manner whatsoever hereunder or
under the Certificates to (i) surrender, impair, waive, affect, disturb or
prejudice any property in the Trust Property or the lien of any Indenture on any
property subject thereto, or the rights of the Certificateholders or the holders
of the Equipment Notes, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Certificateholder 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 subject to the
provisions of this Agreement.
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Section 6.08. Remedies Cumulative. Every remedy given hereunder to
the Trustee or to any of the Certificateholders 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. Certain Duties and Responsibilities. (a) Except during
the continuance of an Event of Default, the Trustee undertakes to perform only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Trustee.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of its
own affairs.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own gross negligence (or simple negligence in the
handling of funds) or wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section; and
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts.
(d) Whether or not herein expressly so provided, every provision of
this Trust Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
Section 7.02. 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
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below) hereunder known to the Trustee, the Trustee shall transmit by mail to the
Company, the Owner Trustees, the Owner Participants, the Loan Trustees and the
Certificateholders 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, premium, if any, or interest on any
Equipment Note or any other Trust Property, 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. For the purpose of this Section, the term
"default" means any event that is, or after notice or lapse of time or both
would become, an Event of Default.
Section 7.03. 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 the
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
Officer's Certificate of the Company, any Owner Trustee or any Loan
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 the Intercreditor
Agreement at the request or direction of any of the Certificateholders
pursuant to this Agreement or the 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;
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(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, 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 the Intercreditor Agreement or perform any duties under this
Agreement or the 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 the Intercreditor Agreement;
(h) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction of the Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in
interest in the 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 the
Intercreditor Agreement; and
(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.
Section 7.04. Not Responsible for Recitals or Issuance of
Certificates. The recitals contained herein and in the Certificates, 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 7.15, the Trustee makes no representations as to the validity
or sufficiency of this Agreement, any Participation Agreement, the Escrow
Agreement, the Deposit Agreement, any Equipment Notes, the Certificates or any
other Note Document, except that the Trustee hereby represents and warrants that
this Agreement has been, and the Intercreditor Agreement, each Note Document and
each Certificate will be, executed, authenticated and delivered by one of its
officers who is duly authorized to execute, authenticate and deliver such
document on its behalf.
Section 7.05. 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, if
applicable, may otherwise deal with the Company, the Owner Trustees or the Loan
Trustees with the same rights it would have if it were not Trustee, Paying
Agent, Registrar or such other agent.
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Section 7.06. Money Held in Trust. Money held by the Trustee or the
Paying Agent in trust hereunder need not be segregated from other funds except
to the extent required herein or by law and neither the Trustee nor the Paying
Agent shall have any liability for interest upon any such moneys except as
provided for herein.
Section 7.07. Compensation and Reimbursement. The Company agrees:
(1) to pay, or cause to be paid, to the Trustee from time to time
compensation (as set out in a separate fee agreement between the Trustee
and the Company) 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 herein, 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 Agreement or the
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 own
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 7.15;
(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 gross negligence (or
simple negligence in the handling of funds), 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 7.15. 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 (which consent shall not be
unreasonably withheld) and the Company will pay the reasonable fees and
expenses of such counsel. The Company need not pay for any settlement made
without its consent; and
(4) to indemnify, or cause to be indemnified, the Trustee, solely in
its individual capacity, for, and to hold it harmless against, any tax
(except to the extent the Trustee is reimbursed therefor pursuant to the
next paragraph, provided that no indemnification shall be available with
respect to any tax attributable to the Trustee's compensation for serving
as such) incurred without negligence, willful misconduct or bad faith, on
its part, arising out of or in connection with the acceptance or
administration of this Trust, including any
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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 cooperate in the defense. The
Trustee, in its individual capacity, may have separate counsel with the
consent of the Company (which consent shall not be unreasonably withheld)
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 upon, the Trust Property for any tax incurred
without gross negligence (or simple negligence in the handling of funds), 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. If the Trustee
reimburses itself from the Trust Property of such Trust for any such tax, it
will mail a brief report within 30 days setting forth the circumstances thereof
to all Certificateholders as their names and addresses appear in the Register.
Section 7.08. Corporate Trustee Required; Eligibility. There shall
at all times be a Trustee hereunder 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 $75,000,000 (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 and having a combined capital
and surplus of at least $75,000,000). If such corporation publishes reports of
conditions at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section 7.08, 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 7.08 to act as Trustee, the
Trustee shall resign immediately as Trustee in the manner and with the effect
specified in Section 7.09.
Section 7.09. Resignation and Removal; Appointment of Successor. (a)
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 7.10.
(b) The Trustee may resign at any time as trustee by giving prior
written notice thereof to the Company, the Authorized Agents, the Owner Trustees
and
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the Loan Trustees. In addition, upon the occurrence of an Event of Default, in
the event the Trustee shall not have received instructions from the
Certificateholders or the Certificateholders with respect to any Other Trust,
the Trustee shall resign. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Company, the Authorized Agents, the Owner
Trustees, the Loan 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 by Act of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Trustee, the Company, the Owner Trustees and the Loan Trustees.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 310 of the Trust
Indenture Act, if applicable, after written request therefor by the
Company or by any Certificateholder who has been a bona fide
Certificateholder for at least six months; or
(2) the Trustee shall cease to be eligible under Section 7.08 and
shall fail to resign after written request therefor by the Company or by
any such Certificateholder; or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any case, (i) the Company may remove the Trustee or (ii) any
Certificateholder who has been a bona fide Certificateholder for at least six
months may, on behalf of itself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
(e) If a Responsible Officer of the Trustee shall obtain actual
knowledge of an Avoidable Tax 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 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 in a jurisdiction where there
are no Avoidable Taxes.
(f) If the Trustee shall resign, be removed or become incapable of
acting as trustee or if a vacancy shall occur in the office of the Trustee for
any cause, the Company shall promptly appoint a successor Trustee. If, within 90
days after such
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resignation, removal or incapability, or other occurrence of such vacancy, a
successor Trustee shall be appointed by Act of the Certificateholders holding
Certificates evidencing Fractional Undivided Interests aggregating not less than
a majority in interest in the Trust delivered to the Company, the Owner
Trustees, the Loan Trustees and the retiring Trustee, and the Company approves
such appointment, which approval shall not be unreasonably withheld, then the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee and supersede the successor Trustee
appointed as provided above. If no successor Trustee shall have been so
appointed as provided above and accepted appointment in the manner hereinafter
provided, any Certificateholder 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 appointment of a successor
Trustee.
(g) The successor Trustee 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 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 7.10. Acceptance of Appointment by Successor. Every
successor Trustee appointed hereunder shall execute and deliver to the Company,
the Authorized Agents, the Owner Trustees and the Loan Trustees and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee 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 Trust Property held
by such retiring Trustee hereunder, subject nevertheless to its lien, if any,
provided for in Section 7.07 and the retiring Trustee shall thereupon be
released from further liability hereunder. 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.
No institution shall accept its appointment as a Trustee hereunder
unless at the time of such acceptance such institution shall be qualified and
eligible under this Article VII.
Section 7.11. 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
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to all or substantially all of the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided such corporation shall
be otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties hereto.
In case any Certificates shall have been executed or authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such execution or
authentication and deliver the Certificates so executed or authenticated with
the same effect as if such successor Trustee had itself executed or
authenticated such Certificates.
Section 7.12. Maintenance of Agencies. (a) There shall at all times
be maintained an office or agency where Certificates 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 may be served. 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. Each such Authorized Agent shall be
a bank or trust company, shall be a corporation organized and doing business
under the laws of the United States or any state, with a combined capital and
surplus of at least $75,000,000, or a corporation having a combined capital and
surplus in excess of $5,000,000, the obligations of which are guaranteed by a
corporation organized and doing business under the laws of the United States or
any state, with a combined capital and surplus of at least $75,000,000, and
shall be authorized under such laws to exercise corporate trust powers, subject
to supervision by federal or state authorities. The Trustee shall initially be
the Paying Agent and, as provided in Section 3.04, Registrar hereunder with
respect to the Certificates. 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, the Owner Trustees and the
Loan 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
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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, the Owner Trustees and the Loan Trustees; and in each case the Trustee
shall mail notice of such appointment to all Certificateholders as their names
and addresses appear on the Register.
(e) The Company agrees to pay, or cause to be paid, from time to
time to each Authorized Agent reasonable compensation for its services and to
reimburse it for its reasonable expenses.
Section 7.13. 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 7.14. Registration of Equipment Notes in Name of
Subordination Agent. The Trustee agrees that all Equipment Notes to be purchased
by the Trust shall be issued in the name of the Subordination Agent or its
nominee and held by the Subordination Agent in trust for the benefit of the
Certificateholders, or, if not so held, the 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 7.15. Representations and Warranties of Trustee. The Trustee
hereby represents and warrants that:
(a) the Trustee has full power, authority and legal right to receive
the Trust Property assigned by the Related Trustee, assume the obligations
under, and perform, the Assignment and Assumption Agreement, this
Agreement, the Intercreditor Agreement, the Escrow Agreement and the Note
Documents and has taken all necessary action to authorize such receipt,
assumption and performance by it of this Agreement, the Intercreditor
Agreement, the Escrow Agreement and the Note Documents to which it is a
party;
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(b) the receipt of the Trust Property under the Assignment and
Assumption Agreement and the performance by the Trustee of the Assignment
and Assumption Agreement, this Agreement, the Intercreditor Agreement, the
Escrow Agreement and the Note Documents (i) will not violate any provision
of any United States law or Maryland law or any order, writ, judgement, or
decree of any court, arbitrator or governmental authority of the United
States or the State of Maryland applicable to the Trustee or any of its
assets, (ii) will not violate any provision of the articles or by-laws of
the Trustee, or (iii) will not violate any provision of, or constitute,
with or without notice or lapse of time, a default under, or result in the
creation or imposition of any lien on any properties included in the Trust
Property pursuant to the provisions of any mortgage, indenture, contract,
agreement or other undertaking to which it is a party, which violation,
default or lien could reasonably be expected to have an adverse effect on
the Trustee's performance or ability to perform its duties hereunder or
thereunder or on the transactions contemplated herein or therein;
(c) the receipt of the Trust Property under the Assignment and
Assumption Agreement and the performance by the Trustee of the Assignment
and Assumption Agreement, this Agreement, the Intercreditor Agreement, the
Escrow Agreement and the Note Documents 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 the United Sates where it is located regulating the banking and
corporate trust activities of the Trustee; and
(d) the Assignment and Assumption Agreement has been duly executed
and delivered by the Trustee and this Agreement, the Intercreditor
Agreement, the Escrow Agreement and the Note Documents have been, or will
be, as applicable, duly executed and delivered by the Trustee and
constitute, or will constitute, as applicable, the legal, valid and
binding agreements of the Trustee, enforceable against it in accordance
with their respective terms; provided, however, 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 7.16. Withholding Taxes; Information Reporting. (a) The
Trustee, as trustee of the 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
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 present or future taxes or similar charges are required to be withheld with
respect to any amounts payable in respect of the Certificates, to withhold such
amounts and timely pay the same to the appropriate authority in the name of and
on behalf of the Certificateholders, 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
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Certificateholder appropriate documentation showing the payment thereof,
together with such additional documentary evidence as such Certificateholders
may reasonably request from time to time. The Trustee agrees to file any other
information reports as may be required to be filed by it under United States
law.
(b) The Trustee may satisfy certain of its obligations with respect
to this Agreement by retaining, at the expense of the Company, a firm of
independent public accountants (the "Accountants") which shall (i) be
responsible for all tax filing requirements and (ii) perform the obligations of
the Trustee in respect of tax filing requirements. The Trustee shall be deemed
to have discharged its tax filing obligations under this Agreement upon its
retention of the Accountants, and, if the Trustee shall have selected in the
Accountants in good faith and without gross negligence, the Trustee shall not
have any liability with respect to the default or misconduct of the Accountants.
(c) The Trustee, at the request (and expense) of the Company, will
make such United States federal income tax elections as may be necessary to
prevent the Trust from being classified for federal income tax purposes as an
association taxable as a corporation.
Section 7.17. Trustee's Liens. The Trustee in its individual
capacity agrees that it will 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 which is attributable to the
Trustee either (i) in its individual capacity and which is unrelated to the
transactions contemplated by this Agreement, the Intercreditor Agreement, the
Note Purchase Agreement or the Note Documents, or (ii) as Trustee hereunder or
in its individual capacity and which arises out of acts or omissions which are
not contemplated by this Agreement.
Section 7.18. 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 or cause to be
furnished 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
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may reasonably require, of all information in the possession or control of the
Company as to the names and addresses of the Certificateholders, 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, 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 7.12.
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 contained
in the most recent list furnished to the Trustee as provided in Section 7.12 or
Section 8.01, as the case may be, and the names and addresses of
Certificateholders 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
7.12 or Section 8.01, as the case may be, upon receipt of a new list so
furnished.
Section 8.03. Reports by Trustee. Within 60 days after May 15 of
each year commencing with the first full year following the issuance of the
Certificates, the Trustee shall transmit to the Certificateholders, 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;
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(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; and
(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 regard to any period of grace
or requirement of notice provided under this Agreement).
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 (and at the sole cost and expense of the Company), enter into one or
more agreements supplemental hereto or, if applicable, to the Escrow Agreement,
the Deposit Agreement, the Note Purchase Agreement, the Intercreditor Agreement
or the Liquidity Facility in form and substance satisfactory to the Trustee, for
any of the following purposes:
(1) 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 in the Note Purchase Agreement; or
(2) to add to the covenants of the Company for the benefit of the
Certificateholders, or to surrender any right or power in this Agreement
or in the Note Purchase Agreement conferred upon the Company; or
(3) to correct or supplement any provision in this Agreement, the
Escrow Agreement, the Deposit Agreement, the Note Purchase Agreement, the
Intercreditor Agreement or the Liquidity Facility which may be defective
or inconsistent with any other provision of this Agreement, the Deposit
Agreement, the Escrow Agreement, the Note Purchase Agreement, the
Intercreditor Agreement or any Liquidity Facility, as applicable, or to
cure any ambiguity or to modify any other provisions with respect to
matters or questions arising under this Agreement, the Escrow Agreement,
the Note Purchase Agreement, the Deposit Agreement, the Intercreditor
Agreement or the Liquidity Facility, provided that any such action shall
not materially adversely affect the interests of the Certificateholders;
or
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(4) as provided in the Intercreditor Agreement, to give effect to or
provide for a Replacement Liquidity Facility or to comply with any
requirement of the Commission, any applicable law, rules or regulations of
any exchange or quotation system on which the Certificates are listed, or
any regulatory body;
(5) to modify, eliminate or add to the provisions of this Agreement,
the Deposit Agreement, the Escrow Agreement, the Intercreditor Agreement,
the Note Purchase Agreement or the Liquidity Facility to such extent as
shall be necessary to qualify or continue the qualification of this
Agreement under the Trust Indenture Act, or any similar federal statute
enacted after the execution of this Agreement, and to add to this
Agreement, the Deposit Agreement, the Escrow Agreement, the Intercreditor
Agreement, the Note Purchase Agreement or the Liquidity Facility such
provisions as may be expressly permitted by the Trust Indenture Act; and
(6) to evidence and provide for the acceptance of appointment under
this Agreement, the Deposit Agreement, the Escrow Agreement, the
Intercreditor Agreement, the Note Purchase Agreement or the Liquidity
Facility of a successor Trustee and to add or change any of the provisions
of this Agreement, the Deposit Agreement, the Escrow Agreement, the
Intercreditor Agreement, the Note Purchase Agreement or the Liquidity
Facility as shall be necessary to provide for or facilitate the
administration of the Trust under this Agreement by more than one Trustee,
provided that in each case, such modification or supplement 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 9.02. Supplemental Agreements with Consent of
Certificateholders. With the consent of the Certificateholders holding
Certificates evidencing Fractional Undivided Interests aggregating not less than
a majority in interest in the Trust, by Act of said Certificateholders delivered
to the Company and the Trustee, the Company may, and the Trustee (subject to
Section 9.03) shall, at the sole cost and expense of the Company, 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, the Deposit Agreement, the Escrow Agreement, the Intercreditor
Agreement, the Liquidity Facility or the Note Purchase Agreement to the extent
applicable to such Certificateholders or of modifying in any manner the rights
and obligations of such Certificateholders under this Agreement, the Deposit
Agreement, the Escrow Agreement, the Intercreditor Agreement, the Liquidity
Facility or the Note Purchase 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 (or, with respect to the Deposits, the
Receiptholders) of
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payments on the Deposits or Equipment Notes held in the Trust or
distributions that are required to be made herein on any Certificate, or
change any date of payment of any Certificate, or change the place of
payment where, or the coin or currency in which, any Certificate is
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 included in the
Trust Property except as permitted by this Agreement, or otherwise deprive
such Certificateholder of the benefit of the ownership of the Equipment
Notes in the Trust; or
(3) alter the priority of distributions specified in the
Intercreditor Agreement in a manner materially adverse to the interests of
the Certificateholders;
(4) modify any of the provisions of this Section 9.02 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 affected thereby;
(5) modify any of the provisions relating to the rights of the
Certificateholders in respect of the waiver of Events of Default or
receipt of payment; or
(6) adversely affect the status of this 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.
It shall not be necessary for any Act of 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 Agreement, the Trustee may in its
discretion decline to execute such document.
Section 9.04. Execution of Supplemental Agreements. In executing, or
accepting the additional trusts created by, any supplemental agreement permitted
by this Article or the modifications thereby of the trusts created by this
Agreement, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental agreement is authorized or permitted by this Agreement.
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Section 9.05. Effect of Supplemental Agreements. Upon the execution
of any agreement supplemental to this Agreement under this Article, this
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every
Certificateholder theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
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 authenticated and delivered after the execution of any supplemental
agreement 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 after
proper presentation and demand.
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01 Amendments and Supplement to Indentures and Other Note
Documents. In the event that the Trustee, as holder (or beneficial owner through
the Subordination Agent) of any Equipment Note in trust for the benefit of the
Certificateholders or as Controlling Party, receives a request for a consent to
any amendment, modification, waiver or supplement under any Indenture or other
Note Document or other related document, the Trustee shall forthwith send a
notice of such proposed amendment, modification, waiver or supplement to each
Certificateholder registered on the Register as of the date of such notice. The
Trustee shall request from the Certificateholders a Direction as to (a) whether
or not to take or refrain from taking (or to direct the Subordination Agent to
take or refrain from taking) any action which a holder of such Equipment Note or
the Controlling Party has the option to direct, (b) whether or not to give or
execute (or to direct the Subordination Agent to give or execute) any waivers,
consents, amendments, modifications or supplements as a holder of such Equipment
Note or as Controlling Party and (c) how to vote or direct the Subordination
Agent 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 (or in directing the Subordination Agent in any of
the foregoing), (i) other than as Controlling Party, 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 (x) the aggregate face amount of all Certificates
actually voted in favor of or for giving consent to such action by such
direction of Certificateholders to (y) the aggregate face amount of all
outstanding Certificates of the Trust and (ii) as the Controlling Party, the
Trustee shall vote as directed in such Certificateholder direction
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by the Certificateholders evidencing fractional undivided interests aggregating
not less than a majority in interest in the Trust. 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 prior to two Business Days
before the Trustee directs such action or casts such vote or gives such consent.
Notwithstanding the foregoing, but subject to Section 6.04 and the Intercreditor
Agreement, the Trustee may, in its own discretion and at its own direction,
consent and notify the relevant Loan Trustee of such consent (or direct the
Subordination Agent to consent and notify the relevant Loan Trustee of such
consent) to any amendment, modification, waiver or supplement under the relevant
Indenture or any other Note Document or other related document, if an Event of
Default hereunder shall have occurred and be continuing, or if such amendment,
modification or waiver will not materially adversely affect the interests of the
Certificateholders.
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust. The respective obligations
and responsibilities of the Company and the Trustee with respect to the Trust
shall terminate upon distribution to all Certificateholders 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; provided,
however, that in no event shall the Trust continue beyond one hundred ten (110)
years following the date of the execution of this Agreement.
Notice of any termination, specifying the Distribution Date upon
which the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be mailed promptly by
the Trustee to Certificateholders not earlier than the 60th day and not later
than the 15th day next preceding such final Distribution Date specifying (A) the
Distribution Date upon which the proposed final payment of the Certificates will
be made upon presentation and surrender of Certificates at the office or agency
of the Trustee therein specified, (B) the amount of any such proposed final
payment, and (c) that the Record Date otherwise applicable to such Distribution
Date is not applicable, payments being made only upon presentation and surrender
of the Certificates at the office or agency of the Trustee therein specified,
(B) the amount of any such proposed final payment, and (c) that the Record Date
otherwise applicable to such Distribution Date is not applicable, payments being
made only upon presentation and surrender of the Certificates 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. Upon
presentation and surrender of the Certificates in accordance with such notice,
the Trustee shall cause to be distributed to Certificateholders such final
payments.
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In the event that all of the Certificateholders 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 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 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 Loan Trustee the appropriate amount of money relating
to such Loan Trustee and shall give written notice thereof to the related Owner
Trustees, the Owner Participants and the Company.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the 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. Certificates Nonassessable and Fully Paid. Except as
set forth in the last sentence of this Section 12.02, Certificateholders shall
not be personally liable for obligations of the Trust, the Fractional Undivided
Interests represented by the Certificates shall be nonassessable for any losses
or expenses of the Trust or for any reason whatsoever, and Certificates, upon
authentication thereof by the Trustee pursuant to Section 3.03, are and shall be
deemed fully paid. No Certificateholder shall have any right (except as
expressly provided herein) to vote or in any manner otherwise control the
operation and management of the Trust Property, the Trust, or the obligations of
the parties hereto, nor shall anything set forth herein, or contained in the
terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association.
Neither the existence of the Trust nor any provision herein is intended to or
shall limit the liability the Certificateholders would otherwise incur if the
Certificateholders owned Trust Property as co-owners, or incurred any
obligations of the Trust, directly rather than through the Trust.
Section 12.03. Notices. (a) Unless otherwise specifically provided
herein, all notices required under the terms and provisions of this Agreement
shall be in English and in writing, and any such notice may be given by United
States mail, courier
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service or telecopy, and any such notice shall be effective when delivered or
received or, if mailed, three days after deposit in the United States mail with
proper postage for ordinary mail prepaid,
if to the Company, to:
Midway Airlines Corporation
300 W. Morgan Street, Suite 1200
Durham, North Carolina 27701
Attention: General Counsel
Facsimile: (919) 956-7568
Telephone: (919) 956-4810
if to the Trustee, to:
The First National Bank of Maryland
25 South Charles Street
Mail Code 101-591
Baltimore, Maryland 21201
Attention: Corporate Trust Department
Facsimile: (410) 244-4236
Telephone: (410) 244-4626
(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 shall be
mailed by first-class mail to the addresses for Certificateholders shown on the
Register kept by the Registrar. 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.
(d) If a notice or communication is mailed in the manner provided
above within the time prescribed, it is conclusively presumed to have been duly
given, whether or not the addressee receives it.
(e) If the Company mails a notice or communication to the
Certificateholders, it shall mail a copy to the Trustee and to the Paying Agent
at the same time.
(f) 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.
-59-
<PAGE>
(g) 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 Loan Trustee.
Section 12.04. Governing Law. THIS AGREEMENT AND THE CERTIFICATES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
Section 12.05. 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 the Trust, or of the
Certificates or the rights of the Certificateholders thereof.
Section 12.06. 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 12.07. 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 assigns, whether so
expressed or not.
Section 12.08. Benefits of Agreement. Nothing in this Agreement or
in the Certificates, express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder, and the Certificateholders,
any benefit or any legal or equitable right, remedy or claim under this
Agreement.
Section 12.09. Legal Holidays. In any case where any Regular
Distribution Date or Special Distribution Date relating to any Certificate shall
not be a Business Day, 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 12.10. 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 12.11. Communication by Certificateholders with Other
Certificateholders. Certificateholders may communicate with other
Certificateholders with respect to their rights under this Agreement or the
Certificates pursuant to
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<PAGE>
Section 312(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 12.12. Intention of Parties. The parties hereto intend that
the Trust be classified for U.S. federal income tax purposes as a grantor trust
under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as
amended, and not as a trust or association taxable as a corporation or as a
partnership. Each Certificateholder, by its acceptance of its Certificate or a
beneficial interest therein, agrees to treat the Trust as a grantor trust for
all U.S. federal, state and local income tax purposes. The powers granted and
obligations undertaken pursuant to this Agreement shall be so construed so as to
further such intent.
Section 12.13. Trust Indenture Act Controls. Upon the qualification
of this Agreement under the Trust Indenture Act, this Agreement shall be subject
to the provisions of the Trust Indenture Act and shall, to the extent
applicable, be governed by such provisions. If any provision of this Agreement
limits, qualifies or conflicts with another provision which is required to be
included in this Agreement by the Trust Indenture Act, the required provision
shall control.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first written above.
MIDWAY AIRLINES CORPORATION
By: /s/ Jonathan S. Waller
--------------------------------
Name: Jonathan S. Waller
Title: Senior Vice President
General Counsel
THE FIRST NATIONAL BANK OF
MARYLAND, as Trustee
By: /s/ Robert D. Brown
--------------------------------
Name: Robert D. Brown
Title: Assistant Vice President
-61-
<PAGE>
Exhibit A
FORM OF CERTIFICATE
REGISTERED
No. ______________
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY
MIDWAY AIRLINES CORPORATION ("MIDWAY") OR ANY AFFILIATE OF MIDWAY, RESELL
OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO MIDWAY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
A-1
<PAGE>
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
CERTIFICATE WAS HELD BY MIDWAY OR ANY AFFILIATE OF MIDWAY, THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND MIDWAY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.]*
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS FOR THE BENEFIT OF MIDWAY
AIRLINES CORPORATION AND EACH OWNER PARTICIPANT THAT (A) IT IS NOT A PLAN
TRANSFEREE (AS DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR (B) ONE OR
MORE PROHIBITED TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS APPLIES
SUCH THAT THE USE OF PLAN ASSETS TO PURCHASE AND HOLD THIS PASS THROUGH
CERTIFICATE WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER
ERISA OR SECTION 4975 OF THE CODE. THE PASS THROUGH TRUST AGREEMENT
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
- - ----------
* Not to be included on the face of the Permanent Offshore Global
Certificate.
A-2
<PAGE>
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE 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 HEREON 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.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST
AGREEMENT REFERRED TO HEREIN.]*
- - ----------
* To be included on the face of each Global Certificate.
A-3
<PAGE>
[GLOBAL CERTIFICATE]*
MIDWAY AIRLINES 1998-1B-S PASS THROUGH TRUST
8.14% Midway Airlines [Initial/Exchange] Pass Through Certificate
Series 1998-1B-S
Final Expected Distribution Date: January 2, 2013
evidencing a fractional undivided interest in a trust, the property of which
includes certain equipment notes each secured by an Aircraft leased to or owned
by Midway Airlines Corporation.
$____________ Fractional Undivided Interest
representing ._____% of the Trust per $1,000 face amount
THIS CERTIFIES THAT ____________, for value received, is the
registered owner of a $_________ (_____________ dollars) Fractional Undivided
Interest in Midway Airlines 1998-1B-S Pass Through Trust (the "Trust") created
pursuant to a Pass Through Trust Agreement, dated as of August 13, 1998 (the
"Agreement"), between The First National Bank of Maryland (the "Trustee") and
Midway Airlines Corporation, a corporation incorporated under Delaware law (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 "8.14%
Midway Airlines [Initial/Exchange] Pass Through Certificates Series 1998-1B-S"
(herein called the "Certificates"). This Certificate is issued under and is
subject to the terms, provisions, and conditions of the Agreement. By virtue of
its acceptance hereof the Certificateholder of this Certificate assents to and
agrees to be bound by the provisions of the Agreement and the Intercreditor
Agreement. 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, among other things, a security interest in the 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 assets or property other than the Trust Property.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from and to the extent of funds then available to the
Trustee,
- - ----------
* To be included on the face of each Global Certificate.
A-4
<PAGE>
there will be distributed on each January 2 and July 2 (a "Regular Distribution
Date"), commencing on January 2, 1999, 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 and the Intercreditor Agreement, in the event that Special Payments on
the Equipment Notes are received by the Trustee, from funds then available to
the Trustee, there shall be distributed on the applicable Special Distribution
Date, to the Person in whose name this Certificate is registered at the close of
business on the 15th day preceding the Special Distribution Date, an amount in
respect of such Special Payments on the Equipment Notes, the receipt of which
has been confirmed by the Trustee, equal to the product of the percentage
interest in the Trust evidenced by this Certificate and an amount equal to the
sum of such Special Payments so received. If a Regular Distribution Date or
Special Distribution Date is not a Business Day, distribution shall be made on
the immediately following Business Day with the same force and effect as if made
on such Regular Distribution Date or Special Distribution Date and no interest
shall accrue during the intervening period. The Trustee shall mail notice of
each Special Payment and the Special Distribution Date therefor to the
Certificateholder of this Certificate.
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 AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND
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.
Reference is hereby made to the further provisions of this
Certificate set forth in the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
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.
A-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: ____________ __, 1998 MIDWAY AIRLINES
1998-1B-S PASS THROUGH TRUST
By: The First National Bank of
Maryland, as Trustee
By:_______________________________
Name:
Title:
A-6
<PAGE>
[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred
to in the within-mentioned Agreement.
The First National Bank of Maryland,
as Trustee
By:_______________________________
Authorized Officer
A-7
<PAGE>
[REVERSE OF CERTIFICATE]
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
of their affiliates. 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 Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein 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, in the Borough of Manhattan, the City of New York,
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.
A-8
<PAGE>
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $100,000 Fractional Undivided
Interest and integral multiples of $1,000 in excess thereof. 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 by the Holder 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.
A-9
<PAGE>
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
__________________________
__________________________
please print or typewrite name and address including zip code of assignee
__________________________
the within Certificate and all rights thereunder, hereby irrevocably
constituting and appointing
__________________________
attorney to transfer said Certificate on the books of the Trustee with full
power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT PERMANENT OFFSHORE GLOBAL AND
OFFSHORE PHYSICAL CERTIFICATES]
In connection with any transfer of this Certificate occurring prior
to __________, the undersigned confirms that without utilizing any general
solicitation or general advertising that:
[Check One]
[ ] (a) this Certificate is being transferred in compliance with the
exemption from registration under the Securities Act of 1933, as
amended, provided by Rule 144A thereunder.
or
[ ] (b) this Certificate is being transferred other than in accordance
with (a) above and documents are being furnished that comply with
the conditions of transfer set forth in this Certificate and the
Agreement.
A-10
<PAGE>
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Certificate in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 3.06 of the Agreement
shall have been satisfied.
Date: [Name of Transferor]
-------------- ----------------------------------------
NOTE: The signature must correspond with
the name as written upon the face of the
within-mentioned instrument in every
particular, without alteration or any
change whatsoever.
Signature Guarantee: _______________
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Certificate for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated: ________________
______________________________________
NOTE: To be executed by an executive
officer.
A-11
<PAGE>
Exhibit B
FORM OF CERTIFICATE FOR UNLEGENDED CERTIFICATES
[Date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1A-O Pass Through Trust (the "Trust"),
8.14% Midway Airlines Pass Through Certificates Series
1998-1B-S (the "Certificates")
Dear Sirs:
This letter relates to U.S. $__________ Fractional Undivided
Interest of Certificates represented by a Certificate (the "Legended
Certificate") which bears a legend outlining restrictions upon transfer of such
Legended Certificate. Pursuant to Section 3.01 of the Pass Through Trust
Agreement relating to the Certificates dated as of August 13, 1998 (the "Trust
Agreement"), between Midway Airlines Corporation ("Midway") and you, we hereby
certify that we are (or we will hold such securities on behalf of) a person
outside the United States to whom the Certificates could be transferred in
accordance with Rule 904 of Regulation S promulgated under the U.S. Securities
Act of 1933, as amended. Accordingly, you are hereby requested to exchange the
legended certificate for an unlegended certificate representing an identical
principal amount of Certificates, all in the manner provided for in the Trust
Agreement.
You and Midway are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Certificateholder]
By:__________________________
Authorized Signature
B-1
<PAGE>
Exhibit C
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
[date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1B-S Pass Through Trust (the "Trust"),
8.14% Midway Airlines Pass Through Certificates Series
1998-1B-S (the "Certificates")
Sirs:
In connection with our proposed sale of $_______ Fractional Undivided Interest
of the Certificates, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the Securities Act of 1933, as amended,
and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a person in the
United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
C-1
<PAGE>
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You, Midway Airlines Corporation are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof to
any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:_______________________________
Authorized Signature
C-2
<PAGE>
Exhibit D
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
[date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1B-S Pass Through Trust (the "Trust"),
8.14% Midway Airlines Pass Through Certificates Series
1998-1B-S (the "Certificates")
Dear Sirs:
In connection with our proposed purchase of $_______________
aggregate principal amount of the Certificates, we confirm that:
1. We understand that any subsequent transfer of the Certificates is
subject to certain restrictions and conditions set forth in the Pass
Through Trust Agreement dated as of August 13, 1998 relating to the
Certificates (the "Pass Through Trust Agreement") and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the
Certificates except in compliance with, such restrictions and conditions
and the Securities Act of 1933, as amended (the "Securities Act").
2. We are purchasing Certificates having an aggregate principal
amount of not less than $100,000 and each account (if any) for which we
are purchasing Certificates is purchasing Certificates having an aggregate
principal amount of not less than $100,000.
3. We understand that the Certificates have not been registered
under the Securities Act, and that the Certificates may not be offered or
sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Certificate, we will do so
only (A) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (B) to an
institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes to you and Midway Airlines Corporation a signed letter
substantially in the form of this letter, (C) outside the United States in
D-1
<PAGE>
accordance with Rule 904 of Regulation S under the Securities Act, (D)
pursuant to the exemption from registration provided by Rule 144 under the
Securities Act, or (E) pursuant to an effective registration statement
under the Securities Act, and we further agree to provide to any person
purchasing any of the Certificates from us a notice advising such
purchaser that resales of the Notes are restricted as stated herein. We
further understand that the Certificates purchased by us will bear a
legend to the foregoing effect.
4. We understand that, on any proposed resale of any Certificates,
we will be required to furnish to you, Midway Airlines Corporation
("Midway") such certifications, legal opinions and other information as
you, Midway may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that the
Certificates purchased by us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Certificates and we and any accounts for which we are acting are each able
to bear the economic risk of our or its investment.
6. We are acquiring the Certificates purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You and Midway are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By:______________________________
Authorized Signature
D-2
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PASS THROUGH TRUST AGREEMENT
Dated as of August 13, 1998
among
MIDWAY AIRLINES CORPORATION
and
THE FIRST NATIONAL BANK OF MARYLAND
as Trustee
Midway Airlines 1998-1B-O Pass Through Trust
8.14% 1998-1B-O Initial Pass Through Certificates
8.14% 1998-1B-O Exchange Pass Through Certificates
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<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS...................................................... 3
Section 1.01. Definitions........................................... 3
Section 1.02. Compliance Certificates and Opinions.................. 15
Section 1.03. Form of Documents Delivered to Trustee................ 16
Section 1.04. Acts of Certificateholders............................ 16
ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES............................... 18
Section 2.01. Delivery of Documents; Delivery Date.................. 18
Section 2.02. Withdrawal of Deposits................................ 19
Section 2.03. The Trustee........................................... 19
Section 2.04. Acceptance by Trustee................................. 19
Section 2.05. Limitation of Powers.................................. 20
ARTICLE III THE CERTIFICATES............................................... 20
Section 3.01. Title, Form, Denomination and Execution of
Certificates ...................................... 20
Section 3.02. Restrictive Legends................................... 22
Section 3.03. Authentication of Certificates........................ 24
Section 3.04. Transfer and Exchange................................. 24
Section 3.05. Book-Entry Provisions for U.S. Global Certificate
and Offshore Global Certificates................... 25
Section 3.06. Special Transfer Provisions........................... 26
Section 3.07. Mutilated, Destroyed, Lost or Stolen Certificates..... 29
Section 3.08. Persons Deemed Owners................................. 30
Section 3.09. Cancellation.......................................... 30
Section 3.10. Limitation of Liability for Payments.................. 30
Section 3.11. Temporary Certificates................................ 30
Section 3.12. ERISA Restrictive Legend.............................. 30
ARTICLE IV DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS................. 31
Section 4.01. Certificate Account and Special Payments Account...... 31
Section 4.02. Distributions from Certificate Account and Special
Payments Account................................... 32
Section 4.03. Statements to Certificateholders...................... 33
Section 4.04. Investment of Special Payment Moneys.................. 35
ARTICLE V THE COMPANY...................................................... 35
Section 5.01. Maintenance of Corporate Existence.................... 35
Section 5.02. Consolidation, Merger, Etc............................ 35
ARTICLE VI DEFAULT......................................................... 36
Section 6.01. Events of Default..................................... 36
Section 6.02. Incidents of Sale of Equipment Notes.................. 39
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Section 6.03. Judicial Proceedings Instituted by Trustee; Trustee
May Bring Suit..................................... 39
Section 6.04. Control by Certificateholders......................... 40
Section 6.05. Waiver of Past Defaults............................... 40
Section 6.06. Right of Certificateholders to Receive Payments Not
to Be Impaired..................................... 41
Section 6.07. Certificateholders May Not Bring Suit Except Under
Certain Conditions................................. 41
Section 6.08. Remedies Cumulative................................... 42
Section 6.09. Undertaking for Costs................................. 42
ARTICLE VII THE TRUSTEE.................................................... 42
Section 7.01. Certain Duties and Responsibilities................... 42
Section 7.02. Notice of Defaults.................................... 43
Section 7.03. Certain Rights of Trustee............................. 43
Section 7.04. Not Responsible for Recitals or Issuance of
Certificates ...................................... 44
Section 7.05. May Hold Certificates................................. 45
Section 7.06. Money Held in Trust................................... 45
Section 7.07. Compensation and Reimbursement........................ 45
Section 7.08. Corporate Trustee Required; Eligibility............... 46
Section 7.09. Resignation and Removal; Appointment of Successor..... 47
Section 7.10. Acceptance of Appointment by Successor................ 48
Section 7.11. Merger, Conversion, Consolidation or Succession to
Business........................................... 49
Section 7.12. Maintenance of Agencies............................... 49
Section 7.13. Money for Certificate Payments to Be Held in Trust.... 50
Section 7.14. Registration of Equipment Notes in Name of
Subordination Agent................................ 50
Section 7.15. Representations and Warranties of Trustee............. 51
Section 7.16. Withholding Taxes; Information Reporting.............. 51
Section 7.17. Trustee's Liens....................................... 52
Section 7.18. Preferential Collection of Claims..................... 52
ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE.............. 53
Section 8.01. The Company to Furnish Trustee with Names and
Addresses of Certificateholders.................... 53
Section 8.02. Preservation of Information; Communications to
Certificateholders................................. 53
Section 8.03. Reports by Trustee.................................... 53
Section 8.04. Reports by the Company................................ 53
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<PAGE>
ARTICLE IX SUPPLEMENTAL AGREEMENTS......................................... 54
Section 9.01. Supplemental Agreements Without Consent of
Certificateholders................................. 54
Section 9.02. Supplemental Agreements with Consent of
Certificateholders................................. 55
Section 9.03. Documents Affecting Immunity or Indemnity............. 56
Section 9.04. Execution of Supplemental Agreements.................. 57
Section 9.05. Effect of Supplemental Agreements..................... 57
Section 9.06. Conformity with Trust Indenture Act................... 57
Section 9.07. Reference in Certificates to Supplemental Agreements.. 57
ARTICLE X AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS................. 57
Section 10.01 Amendments and Supplement to Indentures and Other
Note Documents..................................... 57
ARTICLE XI TERMINATION OF TRUST............................................ 58
Section 11.01. Termination of the Trust............................. 58
ARTICLE XII MISCELLANEOUS PROVISIONS....................................... 61
Section 12.01. Limitation on Rights of Certificateholders........... 61
Section 12.02. Certificates Nonassessable and Fully Paid............ 61
Section 12.03. Notices.............................................. 61
Section 12.04. Governing Law........................................ 63
Section 12.05. Severability of Provisions........................... 63
Section 12.06. Effect of Headings and Table of Contents............. 63
Section 12.07. Successors and Assigns............................... 63
Section 12.08. Benefits of Agreement................................ 63
Section 12.09. Legal Holidays....................................... 63
Section 12.10. Counterparts......................................... 63
Section 12.11. Communication by Certificateholders with Other
Certificateholders................................. 63
Section 12.12. Intention of Parties................................. 64
Section 12.13. Trust Indenture Act Controls......................... 64
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EXHIBIT LIST
Exhibit A Form of Certificate
Exhibit B Form of Certificate for Unlegended Certificates
Exhibit C Form of Certificate to be Delivered in connection with
Transfers Pursuant to Regulation S
Exhibit D Form of Certificate to be Delivered in connection with
Transfers to Non-QIB Accredited Investors
Exhibit E Form of Assignment and Assumption Agreement
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PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of August 13, 1998,
among MIDWAY AIRLINES CORPORATION, a Delaware corporation (the "Company"), and
THE FIRST NATIONAL BANK OF MARYLAND, a national banking association, as Trustee,
is made with respect to the formation of Midway Airlines 1998-1B-O Pass Through
Trust and the issuance of 8.14% Midway Airlines 1998-1B-O Pass Through
Certificates representing fractional undivided interests in the Trust.
WITNESSETH:
WHEREAS, the Company has obtained commitments from Bombardier for
the delivery of certain Aircraft;
WHEREAS, the Company intends to finance the acquisition of each such
Aircraft either (i) through separate leveraged lease transactions, in which case
the Company will lease such Aircraft (collectively, the "Leased Aircraft") or
(ii) through separate secured loan transactions, in which case the Company will
own such Aircraft (collectively, the "Owned Aircraft");
WHEREAS, in the case of each Leased Aircraft, each Owner Trustee,
acting on behalf of the corresponding Owner Participant, will issue pursuant to
an Indenture, on a non-recourse basis, Equipment Notes in order to finance a
portion of its purchase price of such Leased Aircraft;
WHEREAS, in the case of each Owned Aircraft, the Company will issue
pursuant to an Indenture, on a recourse basis, Equipment Notes to finance a
portion of the purchase price of such Owned Aircraft;
WHEREAS, the Trustee, upon execution and delivery of this Agreement,
hereby declares the creation of this Trust (the "1998-1B-O Trust") for the
benefit of the Certificateholders, and the initial Certificateholders, as the
grantors of the 1998-1B-O Trust, by their respective acceptances of the
Certificates, join in the creation of this 1998-1B-O Trust with the Trustee;
WHEREAS, all Certificates to be issued by the Trust will evidence
fractional undivided interests in the Trust and will convey no rights, benefits
or interests in respect of any property other than the Trust Property except for
those Certificates to which an Escrow Receipt has been affixed;
WHEREAS, the Escrow Agent and the Initial Purchasers have
contemporaneously herewith entered into an Escrow Agreement with the Escrow
Agent pursuant to which the Initial Purchasers have delivered to the Escrow
Agent the
<PAGE>
proceeds from the sale of the Certificates and have irrevocably instructed the
Escrow Agent to withdraw and pay funds from such proceeds upon request and
proper certification by the Trustee to purchase Equipment Notes as the Aircraft
are delivered by Bombardier from time to time prior to the Delivery Period
Termination Date;
WHEREAS, the Escrow Agent on behalf of the Certificateholders has
contemporaneously herewith entered into a Deposit Agreement with the Depositary
under which the Deposits referred to therein will be made and from which it will
withdraw funds to allow the Trustee to purchase Equipment Notes from time to
time prior to the Delivery Period Termination Date;
WHEREAS, pursuant to the terms and conditions of this Agreement and
the Note Purchase Agreement, upon or shortly following the delivery of an
Aircraft, the Trustee on behalf of the 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 Certificates issued
hereunder and shall hold such Equipment Notes in trust for the benefit of the
Certificateholders;
WHEREAS, all of the conditions and requirements necessary to make
this Agreement, when duly executed and delivered, a valid, binding and legal
instrument, enforceable in accordance with its terms and for the purposes herein
expressed, have been done, performed and fulfilled, and the execution and
delivery of this Agreement in the form and with the terms hereof have been in
all respects duly authorized;
WHEREAS, to facilitate the sale of Equipment Notes to, and the
purchase of Equipment Notes by, the Trustee on behalf of the 1998-1B-O Trust the
Company as the "issuer", as such term is defined in and solely for purposes of
the Securities Act of 1933, as amended, of the Certificates to be issued
pursuant hereto 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 Agreement 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;
and
WHEREAS, upon issuance of the Exchange Certificates, if any, or the
effectiveness of the Shelf Registration Statement, this Agreement, as amended or
supplemented from time to time, will be subject to the provisions of the Trust
Indenture Act of 1939, and shall, to the extent applicable, be governed by such
provisions;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and valuable consideration the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
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<PAGE>
ARTICLE I
DEFINITIONS
Section 1.01. 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 other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference herein have the meanings
assigned to them therein;
(3) all references in this Agreement to designated "Articles",
"Sections", "Subsections" and other subdivisions are to the designated
Articles, Sections, Subsections and other subdivisions of this Agreement;
(4) 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, Subsection or other subdivision; and
(5) unless the context otherwise requires, whenever the words
"including", "include" or "includes" are used herein, it shall be deemed
to be followed by the phrase "without limitation".
Act: With respect to any Certificateholder has the meaning specified
in Section 1.04.
Affiliate: Means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person. For 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.
Agent Members: Has the meaning specified in Section 3.05(a).
Aircraft: Means each of the New Aircraft in respect of which a
Participation Agreement is entered into in accordance with the Note
Purchase Agreement.
Applicable Delivery Date: Has the meaning specified in Section
2.01(b).
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<PAGE>
Applicable Participation Agreement: Has the meaning specified in
Section 2.01(b).
Assignment and Assumption Agreement: Means the assignment and
assumption agreement substantially in the form of Exhibit E hereto
executed and delivered in accordance with Section 11.01.
Authorized Agent: Means any Paying Agent or Registrar for the
Certificates.
Avoidable Tax: Means a state or local tax (i) upon (w) the Trust,
(x) the Trust Property, (y) Certificateholders or (z) the Trustee for
which the Trustee is entitled to seek reimbursement from the Trust
Property, 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 if the Company or any Owner Trustee
shall agree to pay, and shall pay, such tax.
Book-Entry Certificates: With respect to the Certificates, means a
beneficial interest in the Certificates, ownership and transfers of which
shall be made through book entries as described in Section 3.04.
Business Day: Means any day other than a Saturday, a Sunday or a day
on which commercial banks are required or authorized to close in
Baltimore, Maryland, New York, New York, Charlotte, North Carolina or, so
long as any Certificate is outstanding, the city and state in which the
Trustee or any Loan Trustee maintains its Corporate Trust Office or
receives and disburses funds.
Cedel: Means Cedel Bank societe anonyme.
Certificate: Means any one of the Initial Certificates or Exchange
Certificates and any such Certificates issued in exchange therefor or
replacement thereof, executed and authenticated by the Trustee.
Certificate Account: Means the account or accounts created and
maintained pursuant to Section 4.01(a).
Certificateholder or Holder: Means the Person in whose name a
Certificate is registered in the Register.
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.
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<PAGE>
Code: Means the United States Internal Revenue Code of 1986, as
amended.
Company: Means Midway Airlines Corporation, a Delaware corporation,
or its successor in interest.
Controlling Party: Means the party entitled to act as such pursuant
to the terms of the Intercreditor Agreement.
Corporate Trust Office: With respect to the Trustee or any Loan
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: Means the earlier of (a) the Delivery Period
Termination Date and (b) the date on which a Triggering Event occurs.
Delivery Date: Has the meaning specified in the Note Purchase
Agreement.
Delivery Notice: Has the meaning specified in the Note Purchase
Agreement.
Delivery Period Termination Date: Means the earlier of (a) September
30, 1999 (provided that, if a labor strike occurs at the Manufacturer
prior to such date, such date shall be extended by adding thereto the
number of days that such strike has continued in effect), and (b) the date
on which Equipment Notes issued have been purchased by the Trust and the
Other Trusts in accordance with the Note Purchase Agreement.
Deposits: Has the meaning specified in the Deposit Agreement.
Deposit Agreement: Means the Deposit Agreement dated as of August
13, 1998 relating to the Certificates between the Depositary and the
Escrow Agent, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
Depositary: Means First Union National Bank.
DTC: Means The Depository Trust Company, its nominees and their
respective successors.
Direction: Has the meaning specified in Section 1.04(c).
Distribution Date: Means each Regular Distribution Date or Special
Distribution Date.
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<PAGE>
Equipment Notes: Means the Equipment Notes issued pursuant to the
Indentures.
ERISA: Means the Employee Retirement Income Security Act of 1974, as
amended.
Escrow Agent: Means, initially, First Union Trust Company, National
Association, and any replacement or successor therefor appointed in
accordance with the Escrow Agreement.
Escrow Agreement: Means the Escrow and Paying Agent Agreement dated
as of August 13, 1998 relating to the Certificates, among the Escrow
Agent, the Escrow Paying Agent, the Trustee and the Initial Purchasers, as
the same may be amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Escrow Paying Agent: Means the Person acting as paying agent under
the Escrow Agreement.
Escrow Receipt: Means the receipt substantially in the form annexed
to the Escrow Agreement representing a fractional undivided interest in
the funds held in escrow thereunder.
Euroclear: Means the Euroclear System.
Exchange Certificates: Means the pass through certificates
substantially in the form of Exhibit A hereto issued in exchange for the
Initial Certificates pursuant to the Registration Rights Agreement and
authenticated hereunder.
Exchange Offer: Means the exchange offer which may be made pursuant
to the Registration Rights Agreement to exchange Initial Certificates for
Exchange Certificates.
Exchange Offer Registration Statement: Means the registration
statement that, pursuant to the Registration Rights Agreement, is filed by
the Company with the SEC with respect to the exchange of Initial
Certificates for Exchange Certificates.
Event of Default: Means the occurrence of an Indenture Default under
any Indenture pursuant to which Equipment Notes held by the Trust were
issued.
Final Maturity Date: Means July 2, 2014.
Final Withdrawal: Has the meaning specified in the Escrow Agreement.
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<PAGE>
Final Withdrawal Date: Has the meaning specified in the Escrow
Agreement.
Final Withdrawal Notice: Has the meaning specified in Section 2.02.
Fractional Undivided Interest: Means the fractional undivided
interest in the Trust that is evidenced by a Certificate.
Global Certificates: Has the meaning assigned to such term in
Section 3.01.
Indenture: Means each of the separate trust indenture and security
agreements relating to the Aircraft, each as specified or described in a
Delivery Notice delivered pursuant to the Note Purchase Agreement or the
related Participation Agreement in each case as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
its terms.
Indenture Default: With respect to any Indenture, means any
Indenture Event of Default (as such term is defined in such Indenture)
thereunder.
Initial Certificates: Means the certificates issued and
authenticated hereunder substantially in the form of Exhibit A hereto
other than the Exchange Certificates.
Initial Purchasers: Means Morgan Stanley & Co. Incorporated and
Credit Suisse First Boston Corporation.
Initial Regular Distribution Date: Means the first Regular
Distribution Date on which a Scheduled Payment is to be made.
Institutional Accredited Investor: Means an institutional investor
that is an "accredited investor" within the meaning set forth in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act.
Intercreditor Agreement: Means the Intercreditor Agreement dated
August 13, 1998 among the Trustee, the Other Trustees, the Liquidity
Provider, the liquidity providers, if any, relating to the Certificates
issued under (and as defined in) the Other Pass Through Trust Agreements,
and The First National Bank of Maryland, as Subordination Agent
thereunder, as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Issuance Date: Means the date of the issuance of the Initial
Certificates.
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<PAGE>
Lease: Means, with respect to each Leased Aircraft, the 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.
Leased Aircraft: Has the meaning given to such term in the recitals
hereto.
Letter of Representations: Means the agreement dated the Issuance
Date among the Company, the Trustee and the initial Clearing Agency.
Liquidity Facility: Means the Irrevocable Revolving Credit Agreement
dated August 13, 1998 relating to the Certificates, between the Liquidity
Provider and the Subordination Agent, as amended, replaced, supplemented
or otherwise modified from time to time in accordance with its terms and
the terms of the Intercreditor Agreement.
Liquidity Provider: Means, initially, ABN AMRO Bank N.V., acting
through its Chicago branch, and any replacement or successor therefor
appointed in accordance with the Liquidity Facility and the Intercreditor
Agreement.
Loan 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 Loan
Trustee as such trustee; and Loan Trustees means all of the Loan Trustees
under the Indentures.
New Aircraft: Has the meaning specified in the Note Purchase
Agreement.
Non-U.S. Person: Means a Person that is not a U.S. Person, as
defined in Regulation S.
Note Documents: With respect to any Equipment Note, means (i) the
Indenture and the Participation Agreement relating to such Equipment Note,
and (ii) in the case of any Equipment Note related to a Leased Aircraft,
also includes the Lease relating to such Leased Aircraft.
Note Purchase Agreement. Means the Note Purchase Agreement dated as
of August 13, 1998 among the Trustee, the Other Trustees, the Company, the
Escrow Agent, the Escrow Paying Agent and the Subordination Agent,
providing for, among other things, the purchase of Equipment Notes by the
Trustee on behalf of the Trust, as the same may be amended, supplemented
or otherwise modified from time to time, in accordance with its terms.
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<PAGE>
Notice of Purchase Withdrawal: Has the meaning specified in the
Deposit Agreement.
Officer's Certificate: Means a certificate signed, (a) in the case
of the Company, by (i) 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 a Loan
Trustee, a Responsible Officer of the Trustee or such Owner Trustee or
such Loan Trustee, as the case may be.
Offshore Certificates Exchange Date: Has the meaning specified in
Section 3.01.
Offshore Global Certificates: Has the meaning assigned to such term
in Section 3.01.
Offshore Physical Certificates: Has the meaning assigned to such
term in Section 3.01.
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 or (ii) such other counsel
designated by the Company and reasonably acceptable to the Trustee and (b)
in the case of any Owner Trustee or any Loan Trustee may be such counsel
as may be designated by any of them whether or not such counsel is an
employee of any of them, and who shall be reasonably acceptable to the
Trustee.
Other Pass Through Trust Agreement: Means each of the three other
Midway Airlines 1998-1 Pass Through Trust Agreements relating to,
respectively, Midway Airlines 1998-1A-O Pass Through Trust, Midway
Airlines 1998-1C-O Pass Through Trust and Midway Airlines 1998-1D-O Pass
Through Trust, each dated the date hereof; and Other Pass Through Trust
Agreements means all such agreements.
Other Trust: Means each of the Midway Airlines Pass Through Trust
1998-1A-O, the Midway Airlines Pass Through Trust 1998-1C-O and the Midway
Airlines Pass Through Trust 1998-1D-O, each created on the date hereof;
and Other Trusts means all such trusts.
Other Trustee: Means the trustee under each of the Other Pass
Through Trust Agreements, and any successor or other trustee appointed as
provided therein; and Other Trustees means all such trustees.
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<PAGE>
Outstanding: With respect to Certificates, means, as of the date of
determination, all Certificates theretofore authenticated and delivered
under this Agreement, except:
(i) Certificates theretofore cancelled by the Registrar or
delivered to the Trustee or the Registrar for cancellation;
(ii) All of the Certificates if money in the full amount
required to make the final distribution with respect thereto
pursuant to Section 11.01 hereof has been theretofore deposited with
the Trustee in trust for the Holders of such Certificates as
provided in Section 4.01 pending distribution of such money to such
Certificateholders pursuant to such final distribution payment; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been authenticated and delivered pursuant to this
Agreement.
Owned Aircraft: Has the meaning given to such term in the recitals
hereto.
Owner Participant: With respect to any Equipment Note relating to a
Leased Aircraft, means the "Owner Participant" 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 relating to a
Leased Aircraft, means the "Owner Trustee", 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 Indentures.
Participation Agreement: Means each Participation Agreement to be
entered into by the Trustee pursuant to the Note Purchase Agreement, as
the same may be amended, supplemented or otherwise modified in accordance
with its terms.
Paying Agent: Means the paying agent maintained and appointed for
the Certificates pursuant to Section 7.12.
Permanent Offshore Global Certificates: Has the meaning specified in
Section 3.01.
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<PAGE>
Permitted Investments: Means obligations of the United States of
America or agencies or instrumentalities thereof for the payment of which
the full faith and credit of the United States of America is pledged,
maturing in not more than 60 days or such lesser time as is necessary for
payment of any Special Payments on a Special Distribution Date or any
mutual fund the portfolio of which is limited to such obligations,
including any proprietary mutual fund of The First National Bank of
Maryland for which such bank or an affiliate is investment advisor or to
which such bank provides other services and receives reasonable
compensation for such services.
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.
Physical Certificates: Has the meaning specified in Section 3.01.
Plan Transferee: Means any Plan or any entity that is using the
assets of any Plan to purchase or hold its interest in a 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.
Pool Balance: Means, as of any date, (i) the original aggregate face
amount of the Certificates less (ii) the aggregate amount of all payments
made in respect of such Certificates or in respect of Deposits 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 as of any Distribution Date shall be computed after giving effect
to any special distribution with respect to unused Deposits, payment of
principal, if any, on the Equipment Notes or other Trust Property held in
the Trust and the distribution thereof to be made on such Distribution
Date.
Pool Factor: Means, as of any date, the quotient (rounded to the
seventh decimal place) computed by dividing (i) the Pool Balance as at
such date by (ii) the original aggregate face amount of the Certificates.
The Pool Factor as of any Distribution Date shall be computed after giving
effect to any special distribution with respect to unused Deposits,
payment of principal, if any, on the Equipment Notes or other Trust
Property and the distribution thereof to be made on such Distribution
Date.
Private Placement Legend: Has the meaning specified in Section 3.02.
Purchase Agreement: Means the Purchase Agreement dated August 6,
1998 between the Company and the Initial Purchasers.
QIB: Means a qualified institutional buyer as defined in Rule 144A.
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<PAGE>
Record Date: Means (i) for Scheduled Payments to be distributed on
any Regular Distribution Date, other than the final distribution, 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, the 15th day
(whether or not a Business Day) preceding such Special Distribution Date.
Register and Registrar: Mean the register maintained and the
registrar appointed pursuant to Sections 3.04 and 7.12.
Registration Rights Agreement: Means the Registration Rights
Agreement, dated as of August 13, 1998, among the Initial Purchasers, the
Trustee, the Other Trustees and the Company, as amended, supplemented or
otherwise modified from time to time in accordance with its terms.
Regular Distribution Date: With respect to distributions of
Scheduled Payments in respect of the Certificates, means each date
designated as a Regular Distribution Date in this Agreement, until payment
of all the Scheduled Payments to be made under the Equipment Notes held in
the Trust have been made; 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.
Regulation S: Means Regulation S under the Securities Act or any
successor regulation thereto.
Related Pass Through Trust Agreement: Means the Pass Through Trust
Agreement 1998-1B-S dated the date hereof relating to the Midway Airlines
Pass Through Trust 1998-1B-S and entered into by the Company and the
Trustee, which agreement becomes effective upon the execution and delivery
of the Assignment and Assumption Agreement pursuant to Section 7.01.
Related Trust: Means the Midway Pass Through Trust 1998-1B-S, to be
formed under the Related Pass Through Trust Agreement.
Related Trustee: Means the trustee under the Related Pass Through
Trust Agreement.
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 Agreement.
Responsible Officer: With respect to the Trustee, any Loan Trustee
and any Owner Trustee, means any officer in the Corporate Trust Division
of the Trustee, Loan Trustee or Owner Trustee or any other officer
customarily performing functions similar to those performed by the persons
who at the time
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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.
Rule 144A: Means Rule 144A under the Securities Act and any
successor regulation thereto.
Scheduled Payment: With respect to any Equipment Note, means any
payment of principal and interest on such Equipment Note (other than any
such payment which is not in fact received by the Trustee or any
Subordination Agent within five days of the date on which such payment is
scheduled to be made) or any payment of interest on the Certificates with
funds drawn under the Liquidity Facility 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, as
amended, 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.
Securities Act: Means the United States Securities Act of 1933, as
amended from time to time, or any successor thereto.
Shelf Registration Statement: Means the shelf registration statement
which may be required to be filed by the Company with the SEC pursuant to
any Registration Rights Agreement, other than an Exchange Offer
Registration Statement.
Special Distribution Date: Means each date on which a Special
Payment is to be distributed as specified in 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) or Special Redemption Premium.
Special Payments Account: Means the account or accounts created and
maintained pursuant to Section 4.01(b).
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Special Redemption Premium: Means the premium payable by the Company
in respect of the Final Withdrawal pursuant to the Note Purchase
Agreement.
Specified Investments: Means (i) obligations of, or guaranteed by,
the United States Government or agencies thereof, (ii) open market
commercial paper of any corporation incorporated under the laws of the
United States of America or any State thereof rated at least P-2 or its
equivalent by Moody's Investors Service, Inc. or at least A-2 or its
equivalent by Standard & Poor's Ratings Group, (iii) certificates of
deposit issued by commercial banks organized under the laws of the United
States or of any political subdivision thereof having a combined capital
and surplus in excess of $500,000,000 which banks or their holding
companies have a rating of A or its equivalent by Moody's Investors
Service, Inc. or Standard & Poor's Ratings Group; provided, however, that
the aggregate amount at any one time so invested in certificates of
deposit issued by any one bank shall not exceed 5% of such bank's capital
and surplus, (iv) U.S. dollar denominated offshore certificates of deposit
issued by, or offshore time deposits with, any commercial bank described
in (iii) or any subsidiary thereof, (v) repurchase agreements with any
financial institution having combined capital and surplus of at least
$500,000,000 with any of the obligations described in clauses (i) through
(iv) as collateral and (vi) any mutual fund the portfolio of which is
limited to investments of the types specified in the preceding clauses (i)
through (v), including any proprietary mutual fund of The First National
Bank of Maryland for which such bank or an affiliate is investment advisor
or to which such bank provides other services and receives reasonable
compensation for such services; 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.
Subordination Agent: Has the meaning specified in the Intercreditor
Agreement.
Temporary Offshore Global Certificates: Has the meaning specified in
Section 3.01.
Transfer Date: Has the meaning specified in Section 11.01.
Triggering Event: Has the meaning assigned to such term in the
Intercreditor Agreement.
Trust: Means the trust created by this Agreement, the estate of
which consists of the Trust Property.
Trust Indenture Act: Except as otherwise provided in Section 9.06,
means the United States Trust Indenture Act of 1939 as in force at the
date hereof.
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Trust Property: Means (i) subject to the Intercreditor Agreement,
the Equipment Notes held as the property of the Trust, 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, subject to the Intercreditor Agreement, any
proceeds from the sale by the Trustee pursuant to Section 6.02 of any
Equipment Note and (iii) all rights of the Trust and the Trustee, on
behalf of the Trust, under the Intercreditor Agreement, the Escrow
Agreement, the Note Purchase Agreement and the Liquidity Facilities,
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 Facilities,
provided that rights with respect to the Deposits or under the Escrow
Agreement, except for the right to direct withdrawals for the purchase of
Equipment Notes to be held herein, will not constitute Trust Property.
Trustee: Means The First National Bank of Maryland, or its successor
in interest, and any successor or other trustee appointed as provided
herein.
Trustee's Lien: Has the meaning specified in Section 7.17.
U.S. Global Certificate: Has the meaning specified in Section 3.01.
U.S. Physical Certificates: Has the meaning specified in Section
3.01.
Section 1.02. Compliance Certificates and Opinions. Upon any
application or request by the Company, any Owner Trustee or any Loan Trustee to
the Trustee to take any action under any provision of this Agreement, the
Company, such Owner Trustee or such Loan Trustee, as the case may be, shall
furnish to the Trustee (i) an Officer's Certificate stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in this Agreement
relating to the proposed action have been complied with and (ii) 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 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 Agreement (other than a certificate
provided pursuant to Section 8.04(d)) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions in this
Agreement relating thereto;
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(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and 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 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 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 Loan
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 this Agreement and conclusive in favor of the
Trustee, the Company and any Loan Trustee, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument acknowledged to him
the execution
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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 Outstanding have given any
direction, consent or waiver (a "Direction") under this Agreement, Certificates
owned by the Company, any Owner Trustee, any Owner Participant or any Affiliate
of any such Person thereof 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 the
Trustee in fact knows to be so owned shall be so disregarded. Notwithstanding
the foregoing, (i) if any such Person owns 100% of the Certificates Outstanding,
such Certificates shall not be so disregarded as aforesaid, and (ii) if any
amount of Certificates 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
Owner Trustee, any Owner Participant or any Affiliate of any such Person.
(d) For all purposes of this Agreement, all Initial Certificates and
all Exchange Certificates shall vote and take all other actions of
Certificateholders together as one series of Certificates.
(e) The Company may at its option, by delivery of an Officer's
Certificate to the Trustee, set a record date to determine the
Certificateholders entitled to give any consent, request, demand, authorization,
direction, notice, waiver or other 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 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 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 shall be computed as of such
record date; provided that no such consent, request, demand, authorization,
direction, notice, waiver or other Act by the Certificateholders on such record
date shall be deemed effective unless it shall become effective pursuant to the
provisions of this Agreement not later than one year after such record date.
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(f) 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.
(g) Except as otherwise provided in Section 1.04(c), Certificates
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.
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Delivery of Documents; Delivery Date. (a) The Trustee
is hereby directed (i) to execute and deliver the Intercreditor Agreement, the
Escrow Agreement and the Note Purchase Agreement on or prior to the Issuance
Date, each in the form delivered to the Trustee by the Company and (ii) subject
to the respective terms thereof, to perform its obligations thereunder. Upon
request of the Company and the satisfaction or waiver of the closing conditions
specified in the Purchase Agreement, the Trustee shall execute, deliver,
authenticate, issue and sell Certificates in authorized denominations equalling
in the aggregate the amount set forth, with respect to the Trust, in Schedule I
to the Purchase Agreement evidencing the entire ownership interest in the Trust,
which amount equals the maximum aggregate principal amount of Equipment Notes
which may be purchased by the Trustee pursuant to the Note Purchase Agreement.
Except as provided in Sections 3.04, 3.05, 3.07 and 3.11, the Trustee shall not
execute, authenticate or deliver Certificates in excess of the aggregate amount
specified in this paragraph.
(b) On or after the Issuance Date, the Company may deliver from time
to time to the Trustee a Delivery Notice relating to one or more Equipment
Notes. After receipt of a Delivery Notice and in any case no later than one
Business Day prior to a Delivery Date as to which such Delivery Notices relates
(the "Applicable Delivery Date"), the Trustee shall (as and when specified in
the Delivery Notice) instruct the Escrow Agent to provide a Notice of Purchase
Withdrawal to the Depositary requesting (A) the withdrawal of one or more
Deposits on the Applicable Delivery Date in accordance with and to the extent
permitted by the terms of the Escrow Agreement and the Deposit Agreement and (B)
the payment of all, or a portion, of such Deposit or Deposits in an amount equal
in the aggregate to the purchase price of such Equipment Notes to or on behalf
of the Owner Trustee or the Company, as the case may be, issuing such Equipment
Notes, all as shall be described in the Delivery Notice. The Trustee shall (as
and when specified in such Delivery Notice), subject to the conditions set forth
in Section 2 of the Note Purchase Agreement, enter into and perform its
obligations under the Participation Agreement specified in such Delivery Notice
(the
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"Applicable Participation Agreement") and cause such certificates, documents and
legal opinions relating to the Trustee to be duly delivered as required by the
Applicable Participation Agreement. If at any time prior to the Applicable
Delivery Date, the Trustee receives a notice of postponement pursuant to Section
1(e) or 1(f) of the Note Purchase Agreement, then the Trustee shall give the
Depositary (with a copy to the Escrow Agent) a notice of cancellation of such
Notice of Purchase Withdrawal relating to such Deposit or Deposits on such
Applicable Delivery Date. Upon satisfaction of the conditions specified in the
Note Purchase Agreement and the Applicable Participation Agreement, the Trustee
shall purchase the applicable Equipment Notes with the proceeds of the
withdrawals of one or more Deposits made on the Applicable Delivery Date in
accordance with the terms of the Deposit Agreement and the Escrow Agreement. The
purchase price of such Equipment Notes shall equal the principal amount of such
Equipment Notes. Amounts withdrawn from such Deposit or Deposits in excess of
the purchase price of the Equipment Notes or to the extent not applied on the
Applicable Delivery Date to the purchase price of the Equipment Notes, shall be
redeposited by the Trustee with the Depositary on the Applicable Delivery Date
in accordance with the terms of the Deposit Agreement.
Section 2.02. Withdrawal of Deposits. If any Deposits remain
outstanding on the Business Day next succeeding the Cut-off Date, (i)(A) the
Trustee shall give the Escrow Agent notice that the Trustee's obligation to
purchase Equipment Notes under the Note Purchase Agreement has terminated and
instruct the Escrow Agent to provide a notice of Final Withdrawal to the
Depositary substantially in the form of Exhibit B to the Deposit Agreement (the
"Final Withdrawal Notice") and (B) the Trustee will make a demand upon the
Company under the Note Purchase Agreement for an amount equal to the Special
Redemption Premium, such payment to be made on the Final Withdrawal Date.
Section 2.03. The Trustee. Subject to Section 7.15, the Trustee
shall not be responsible in any manner whatsoever for or in respect of the
validity or sufficiency of this Agreement, the Deposit Agreement or the Escrow
Agreement or the due execution hereof or thereof by the Company or the other
parties thereto (other than the Trustee), or for or in respect of the recitals
and statements contained herein or therein, all of which recitals and statements
are made solely by the Company.
Section 2.04. Acceptance by Trustee. The Trustee, upon the execution
and delivery of this Agreement, acknowledges its acceptance of all right, title
and interest in and to the Trust Property acquired pursuant to Section 2.01
hereof and the Note Purchase Agreement and declares that the Trustee holds and
will hold such right, title and interest, together with all other property
constituting the Trust Property, for the benefit of all then present and future
Certificateholders, upon the trusts herein set forth. Subject to Section 7.14,
the Trustee shall take all actions reasonably necessary to effect the
registration of all such Equipment Notes in the name of the Subordination Agent.
By its payment for and acceptance of each Certificate issued to it under this
Agreement, each initial Certificateholder as grantor of the Trust thereby joins
in the creation and declaration of the Trust.
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Section 2.05. Limitation of Powers. The Trust is constituted solely
for the purpose of making the investment in the Equipment Notes, and, except as
set forth herein, 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 any Aircraft (as
defined in the respective 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. Title, Form, Denomination and Execution of
Certificates. (a) The Initial Certificates shall be known as the "8.14%
1998-1B-O Initial Pass Through Certificates" and the Exchange Certificates shall
be known as the "8.14% 1998-1B-O Exchange Pass Through Certificates", in each
case, of the Trust. Each Certificate will represent a fractional undivided
interest in the Trust and shall be substantially in the form set forth as
Exhibit A hereto, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Agreement and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Certificates, as evidenced by their execution of 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. At the Escrow Agent's request under the Escrow Agreement, the
Trustee shall affix the corresponding Escrow Receipt to each Certificate. In any
event, any transfer or exchange of any Certificate shall also effect a transfer
or exchange of the related Escrow Receipt. Prior to the Final Withdrawal Date,
no transfer or exchange of any Certificate shall be permitted unless the
corresponding Escrow Receipt is attached thereto and also is so transferred or
exchanged. By acceptance of any Certificate to which an Escrow Receipt is
attached, each Holder of such a Certificate acknowledges and accepts the
restrictions on transfer of the Escrow Receipt set forth herein and in the
Escrow Agreement.
(b) The Initial Certificates shall be issued only in fully
registered form without coupons and only in denominations of $100,000 or
integral multiples of $1,000 in excess thereof, except that one Certificate may
be issued in a denomination of less than $100,000. The Exchange Certificates
will be issued in denominations of $1,000 or integral multiples thereof. Each
Certificate shall be dated the date of its authentication. The aggregate
Fractional Undivided Interest of Certificates shall not at any time exceed
$25,266,000.
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(c) Initial Certificates offered and sold in reliance on Rule 144A
shall be issued initially in the form of a single permanent global Certificate
in registered form, substantially in the form set forth as Exhibit A hereto (the
"U.S. Global Certificate"), duly executed and authenticated by the Trustee as
hereinafter provided. The U.S. Global Certificate will be registered in the name
of a nominee for DTC and deposited with the Trustee, as custodian for DTC. The
aggregate principal amount of the U.S. Global Certificate may from time to time
be increased or decreased by adjustments made on the records of the Depositary
or its nominee, or of the Trustee, as custodian for DTC or its nominee, as
hereinafter provided.
(d) Initial Certificates offered and sold in offshore transactions
in reliance on Regulation S shall be issued initially in the form of a single
temporary global Certificate in registered form, substantially in the form set
forth as Exhibit A hereto (the "Temporary Offshore Global Certificate") duly
executed and authenticated by the Trustee as hereinafter provided. The Temporary
Offshore Global Certificate will be registered in the name of a nominee of DTC
for credit to the account of the Agent Members acting as depositaries for
Euroclear and Cedel and deposited with the Trustee as custodian for DTC. At any
time on or after September 23, 1998 (the "Offshore Certificates Exchange Date"),
upon receipt by the Trustee of a certificate substantially in the form of
Exhibit B hereto, a single permanent global Certificate in registered form
substantially in the form set forth in Exhibit A (the "Permanent Offshore Global
Certificate"; and together with the Temporary Offshore Global Certificate, the
"Offshore Global Certificates"), duly executed and authenticated by the Trustee
as hereinafter provided, shall be registered in the name of a nominee for DTC
and deposited with the Trustee, as custodian for DTC, and the Registrar shall
reflect on its books and records the date of such transfer and a decrease in the
principal amount of any Temporary Offshore Global Certificate in an amount equal
to the principal amount of the beneficial interest in such Temporary Offshore
Global Certificate transferred. The U.S. Global Certificate and the Offshore
Global Certificates are sometimes referred to as the "Global Certificates".
(e) Initial Certificates offered and sold to Institutional
Accredited Investors shall be issued in the form of permanent certificated
Certificates in registered form in substantially the form set forth as Exhibit A
hereto (the "U.S. Physical Certificates"). Certificates issued pursuant to
Section 3.05(b) in exchange for interests in any Offshore Global Certificate
shall be in the form of permanent certificated Certificates in registered form
substantially in the form set forth in Exhibit A (the "Offshore Physical
Certificates"). The Offshore Physical Certificates and U.S. Physical
Certificates are sometimes collectively herein referred to as the "Physical
Certificates".
(f) The Exchange Certificates shall be issued in the form of one or
more global Certificates substantially in the form of Exhibit A hereto (each, a
"Global Exchange Certificate"), except that the Private Placement Legend
(hereinafter defined) shall be omitted. Such Global Exchange Certificates shall
be in registered form and be registered in the name of DTC and deposited with
the Trustee, at its Corporate Trust Office, as custodian DTC. The aggregate
principal amount of any Global Exchange
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Certificate may from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for DTC for such Global Exchange
Certificate, which adjustments shall be conclusive as to the aggregate principal
amount of any such Global Exchange Certificates. Subject to clause (i) of the
first sentence of this Section 3.01(f), the terms hereof applicable to Global
Certificates shall apply to the Global Exchange Certificates, mutatis mutandis.
(g) The definitive Certificates shall be in registered form and
shall be typed, printed, lithographed or engraved or produced by any combination
of these methods or may be produced in any other manner, all as determined by
the officers executing such Certificates, as evidenced by their execution of
such Certificates.
Section 3.02. Restrictive Legends. (a) Subject to Section 3.06, each
Global Certificate (other than the Permanent Offshore Global Certificate) and
each U.S. Physical Certificate shall bear the following legend (the "Private
Placement Legend") on the face thereof:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY
MIDWAY AIRLINES CORPORATION ("MIDWAY") OR ANY AFFILIATE OF MIDWAY, RESELL
OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO MIDWAY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATES
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE
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TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS
CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY
MIDWAY OR AN AFFILIATE OF MIDWAY, THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR
TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND MIDWAY SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
(b) Each Global Certificate shall also bear the following legend on
the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE 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 HEREON 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.
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TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST
AGREEMENT REFERRED TO HEREIN.
Section 3.03. Authentication of Certificates. (a) The Trustee shall
duly execute, authenticate and deliver Certificates in authorized denominations
equalling in the aggregate the aggregate principal amount of the Equipment Notes
to be purchased by the Trustee pursuant to the Participation Agreements and
evidencing the entire ownership of the Trust.
(b) No Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose, unless there appears on
such Certificate a certificate of authentication substantially in the form
provided for herein executed by the Trustee by the manual signature of one of
its authorized signatories, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.
Section 3.04. Transfer and Exchange. The Trustee shall cause to be
kept at the office or agency to be maintained by it in accordance with the
provisions of Section 7.12 of this Agreement a register (the "Register") for the
Certificates in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of the Certificates
and of transfers and exchanges of the Certificates as herein provided. The
Trustee shall initially be the registrar (the "Registrar") for the purpose of
registering the Certificates and transfers and exchanges of the Certificates as
herein provided. A Certificateholder may transfer or exchange a Certificate by
written application to the Registrar stating the name of the proposed transferee
and otherwise complying with the terms of this Agreement, including providing a
written certificate or other evidence of compliance with any restrictions on
transfer; provided that no exchanges of Initial Certificates for Exchange
Certificates shall occur until an Exchange Offer Registration Statement shall
have been declared effective by the SEC (notice of which shall be provided to
the Trustee by the Company). No such transfer shall be effected until, and such
transferee shall succeed to the rights of a Certificateholder only upon, final
acceptance and registration of the transfer by the Registrar in the Register.
Prior to the registration of any transfer by a Certificateholder as provided
herein, the Trustee shall treat the person in whose name the Certificate is
registered as the owner thereof for all purposes, and the Trustee shall not be
affected by notice to the contrary. Furthermore, DTC shall, by acceptance of a
Global Certificate, agree that transfers of beneficial interests in such Global
Certificate may be effected only through a book-entry system maintained by the
Depositary (or its agent), and that ownership of a beneficial interest in the
Certificate shall be required to be reflected in a book entry. When Certificates
are presented to the Registrar with a request to register the transfer or to
exchange them for an equal face amount of
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Certificates of other authorized denominations, the Registrar shall register the
transfer or make the exchange as requested if its requirements for such
transactions are met. To permit registrations of transfers and exchanges in
accordance with the terms, conditions and restrictions hereof, the Trustee shall
execute and authenticate Certificates at the Registrar's request. No service
charge shall be made for any registration of transfer or exchange of the
Certificates, but the Trustee may require payment by the transferor of a sum
sufficient to cover any transfer tax or similar governmental charge payable in
connection therewith.
Section 3.05. Book-Entry Provisions for U.S. Global Certificate and
Offshore Global Certificates. (a) Members of, or participants in, DTC ("Agent
Members") shall have no rights under this Agreement with respect to any Global
Certificate held on their behalf by DTC, or the Trustee as its custodian, and
DTC may be treated by the Trustee and any agent of the Trustee as the absolute
owner of such Global Certificate for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Trustee or any agent of the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by DTC or shall impair, as between DTC and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a holder of any Certificate. Upon the issuance of any Global
Certificate, the Registrar or its duly appointed agent shall record a nominee of
DTC as the registered holder of such Global Certificate.
(b) Transfers of any Global Certificate shall be limited to
transfers of such Global Certificate in whole, but not in part, to nominees of
DTC, its successor or such successor's nominees. Beneficial interests in the
U.S. Global Certificate and any Offshore Global Certificate may be transferred
in accordance with the rules and procedures of DTC and the provisions of Section
3.06. Beneficial interests in the U.S. Global Certificate or an Offshore Global
Certificate shall be delivered to all beneficial owners in the form of U.S.
Physical Certificates or Offshore Physical Certificates, as the case may be, if
(i) the Company notifies the Trustee in writing that DTC is unwilling or unable
to discharge properly its responsibilities as DTC for the U.S. Global
Certificate or such Offshore Global Certificate, as the case may be, and the
Company is unable to locate a qualified successor depositary within 90 days of
such notice or (ii) after the occurrence of an Event of Default, beneficial
owners of the U.S. Global Certificate or Offshore Global Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in the Trust, by Act of such Certificateholders delivered to the Company and the
Trustee, advise the Company, the Trustee and DTC through its Clearing Agency
Participants in writing that the continuation of a book-entry system through DTC
is no longer in the best interests of the Certificateholders, then the Trustee
shall notify all owners of beneficial interests in the U.S. Global Certificate
or an Offshore Global Certificate, through DTC, of the occurrence of any such
event and the availability of definitive Certificates.
(c) Any beneficial interest in one of the Global Certificates that
is transferred to a Person who takes delivery in the form of an interest in the
other Global Certificate will, upon such transfer, cease to be an interest in
such Global
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Certificate and become an interest in the other Global Certificate and,
accordingly, will thereafter be subject to all transfer restrictions, if any,
and other procedures applicable to beneficial interests in such other Global
Certificate for as long as it remains such an interest.
(d) [Intentionally omitted.]
(e) In connection with the transfer of the entire U.S. Global
Certificate or an entire Offshore Global Certificate to the beneficial owners
thereof pursuant to paragraph (b) of this Section 3.05, such U.S. Global
Certificate or Offshore Global Certificate, as the case may be, shall be deemed
to be surrendered to the Trustee for cancellation, and the Trustee shall
execute, authenticate and deliver, to each beneficial owner identified by DTC in
exchange for its beneficial interest in such U.S. Global Certificate or Offshore
Global Certificate, as the case may be, an equal aggregate principal amount of
U.S. Physical Certificates or Offshore Physical Certificates, as the case may
be, of authorized denominations.
(f) Any U.S. Physical Certificate delivered in exchange for an
interest in the U.S. Global Certificate pursuant to paragraph (b) of this
Section 3.05 shall, except as otherwise provided by paragraph (f) of Section
3.06, bear the Private Placement Legend.
(g) Any Offshore Physical Certificate delivered in exchange for an
interest in an Offshore Global Certificate pursuant to paragraph (b) of this
Section shall, except as otherwise provided by paragraph (f) of Section 3.06,
bear the applicable legend regarding transfer restrictions set forth in Section
3.02(a).
(h) The registered holder of the U.S. Global Certificate or any
Offshore Global Certificate may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Agreement or the Certificates.
Section 3.06. Special Transfer Provisions. Unless and until (i) an
Initial Certificate is sold under an effective Shelf Registration Statement or
(ii) an Initial Certificate is exchanged for an Exchange Certificate pursuant to
an effective Exchange Offer Registration Statement, in each case pursuant to the
terms of the Registration Rights Agreement, the following provisions shall apply
to the Certificates:
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Certificate to any Institutional Accredited Investor
which is not a QIB (excluding transfers to or by Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Certificate,
whether or not such Certificate bears the Private Placement Legend, if (x)
the requested transfer is at least two years after the later of the
original issue date of the
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Certificates and the last date on which such Certificate was held by the
Company or any affiliate thereof or (y) the proposed transferee has
delivered to the Registrar a letter substantially in the form of Exhibit D
hereto and the aggregate principal amount of the Certificates being
transferred is at least $100,000.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Certificate, upon receipt by the
Registrar of (x) the documents, if any, required by paragraph (i) and (y)
instructions given in accordance with DTC's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
of the transfer and a decrease in the principal amount of such U.S. Global
Certificate in an amount equal to the principal amount of the beneficial
interest in such U.S. Global Certificate to be transferred, and the
Company shall execute, and the Trustee shall authenticate and deliver to
the transferor or at its direction, one or more U.S. Physical Certificates
of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of an Initial Certificate
to a QIB (excluding Non-U.S. Persons):
(i) If the Certificate to be transferred consists of U.S. Physical
Certificates or an interest in any Temporary Offshore Global Certificate,
the Registrar shall register the transfer if such transfer is being made
by a proposed transferor who has checked the box provided for on the form
of Initial Certificate stating, or has otherwise advised the Trustee and
the Registrar in writing, that the sale has been made in compliance with
the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Initial Certificate stating, or
has otherwise advised the Trustee and the Registrar in writing, that it is
purchasing the Initial Certificate for its own account or an account with
respect to which it exercises sole investment discretion and that it, or
the Person on whose behalf it is acting with respect to any such account,
is a QIB within the meaning of Rule 144A, and is aware that the sale to it
is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Trust and/or the Company as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
(ii) Upon receipt by the Registrar of the documents referred to in
clause (i) above and instructions given in accordance with DTC's and the
Registrar's procedures therefor, the Registrar shall reflect on its books
and records the date of such transfer and an increase in the principal
amount of the U.S. Global Certificate in an amount equal to the principal
amount of the U.S. Physical Certificates or interests in the Temporary
Offshore Global Certificate, as the case may be, being transferred, and
the Trustee shall cancel such Physical Certificates
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or decrease the amount of such Temporary Offshore Global Certificate so
transferred.
(c) [Intentionally omitted.]
(d) Transfers of Interests in the Permanent Offshore Global
Certificate or Offshore Physical Certificates. The Registrar shall register any
transfer of interests in the Permanent Offshore Global Certificate or Offshore
Physical Certificates without requiring any additional certification.
(e) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any registration of any transfer of an
Initial Certificate to a Non-U.S. Person:
(i) Prior to the Offshore Certificates Exchange Date, the Registrar
shall register any proposed transfer of an Initial Certificate to a
Non-U.S. Person upon receipt of a certificate substantially in the form
set forth as Exhibit C hereto from the proposed transferor.
(ii) On and after the Offshore Certificates Exchange Date, the
Registrar shall register any proposed transfer to any Non-U.S. Person if
the Certificate to be transferred is a U.S. Physical Certificate or an
interest in the U.S. Global Certificate, upon receipt of a certificate
substantially in the form of Exhibit C from the proposed transferor. The
Registrar shall promptly send a copy of such certificate to the Company.
(iii) Upon receipt by the Registrar of (x) the documents, if any,
required by paragraph (ii) and (y) instructions in accordance with the
Depositary's and the Registrar's procedures, the Registrar shall reflect
on its books and records the date of such transfer and a decrease in the
principal amount of such U.S. Global Certificate in an amount equal to the
principal amount of the beneficial interest in such U.S. Global
Certificate to be transferred, and (B) upon receipt by the Registrar of
instructions given in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and an increase in the principal amount of the Offshore Global Certificate
in an amount equal to the principal amount of the U.S. Physical
Certificate or the U.S. Global Certificate, as the case may be, to be
transferred, and the Trustee shall cancel the Physical Certificate, if
any, so transferred or decrease the amount of such U.S. Global
Certificate.
(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Certificates not bearing the Private Placement Legend, the
Registrar shall deliver Certificates that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Certificates bearing the
Private Placement Legend, the Registrar shall deliver only Certificates that
bear the Private Placement Legend unless either (i) the circumstances
contemplated by paragraph (a)(i)(x) or (e)(ii) of this
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Section 3.06 exist or (ii) there is delivered to the Registrar an Opinion of
Counsel to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of the
Securities Act.
(g) General. By its acceptance of any Certificate bearing the
Private Placement Legend, each Holder of such a Certificate acknowledges the
restrictions on transfer of such Certificate set forth in this Agreement and
agrees that it will transfer such Certificate only as provided in this
Agreement. The Registrar shall not register a transfer of any Certificate unless
such transfer complies with the restrictions on transfer of such Certificate set
forth in this Agreement. In connection with any transfer of Certificates, each
Certificateholder agrees by its acceptance of the Certificates to furnish the
Registrar or the Trustee such certifications, legal opinions or other
information as either of them may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or a transaction not
subject to, the registration requirements of the Securities Act; provided that
neither the Trustee nor the Registrar shall be required to determine the
sufficiency of any such certifications, legal opinions or other information.
Until such time as no Certificates remain Outstanding, the Registrar
shall retain copies of all letters, notices and other written communications
received pursuant to Section 3.05 or this Section 3.06. The Trustee, if not the
Registrar at such time, shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Registrar.
Section 3.07. 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, in authorized denominations and of like Fractional Undivided
Interest and bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Certificate under this
Section 3.07, 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 3.07 shall
constitute conclusive evidence of the appropriate Fractional Undivided Interest
in the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
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The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Trustee, the Registrar and any
Paying Agent 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 Article IV and for all other purposes whatsoever, and none of the
Trustee, the Registrar or any Paying Agent shall be affected by any notice to
the contrary.
Section 3.09. Cancellation. All Certificates surrendered for payment
or transfer or exchange shall, if surrendered to the Trustee or any agent of the
Trustee other than the Registrar, be delivered to the Registrar for cancellation
and shall promptly be cancelled by it. No Certificates shall be authenticated in
lieu of or in exchange for any Certificates cancelled as provided in this
Section, except as expressly permitted by this Agreement. All cancelled
Certificates held by the Registrar shall be destroyed and a certification of
their destruction delivered to the Trustee.
Section 3.10. Limitation of Liability for Payments. All payments and
distributions made to Certificateholders 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 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 to the extent available for distribution to such
Certificateholder as provided in this Agreement.
Section 3.11. Temporary Certificates. Until definitive Certificates
are ready for delivery, the Trustee shall authenticate temporary Certificates.
Temporary Certificates shall be substantially in the form of definitive
Certificates but may have insertions, substitutions, omissions and other
variations determined to be appropriate by the officers executing the temporary
Certificates, as evidenced by their execution of such temporary Certificates. If
temporary Certificates are issued, the Trustee will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
office or agency of the Trustee designated for such purpose pursuant to Section
7.12, without charge to the Certificateholder. Upon surrender for cancellation
of any one or more temporary Certificates, the Trustee shall execute,
authenticate and deliver in exchange therefor a like face amount of definitive
Certificates of authorized denominations. Until so exchanged, the temporary
Certificates shall be entitled to the same benefits under this Agreement as
definitive Certificates.
Section 3.12. ERISA Restrictive Legend. All Certificates issued
pursuant to this Agreement shall bear a legend to the following effect (the
"ERISA Legend")
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unless the Company and the Trustee determine otherwise consistent with
applicable law:
"BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS FOR THE BENEFIT OF
THE COMPANY AND EACH OWNER PARTICIPANT THAT (A) IT IS NOT A PLAN TRANSFEREE (AS
DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR (B) ONE OR MORE PROHIBITED
TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS APPLIES SUCH THAT THE USE OF
PLAN ASSETS TO PURCHASE AND HOLD THIS PASS THROUGH CERTIFICATE WILL NOT
CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975 OF
THE CODE. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF
THE FOREGOING RESTRICTIONS."
By acceptance of any Certificate bearing the ERISA Legend, each
Holder of such a Certificate acknowledges for the benefit of the Company and
each Owner Participant the restrictions on transfer of such Certificate set
forth in this Agreement and agrees that it will transfer such Certificate only
as provided in this Agreement. The Registrar shall not register a transfer of
any Certificate unless such transfer complies with the restrictions on transfer,
if any, of such Certificate set forth in this Agreement.
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 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, 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 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 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.
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(c) The Trustee shall present to the Loan Trustee to which an
Equipment Note relates such Equipment Note on the date of its stated final
maturity or, in the case of any Equipment Note which is to be redeemed in whole
pursuant to the relevant Indenture, on the applicable redemption date under such
Indenture.
Section 4.02. Distributions from Certificate Account and Special
Payments Account. (a) On each Regular Distribution Date or as soon thereafter as
the Trustee has confirmed receipt of the payment of the Scheduled Payments due
on such date, the Trustee shall distribute out of the Certificate Account the
entire amount deposited therein pursuant to Section 4.01(a). There shall be so
distributed to each Certificateholder of record 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 Fractional Undivided Interest in the Trust held by such
Certificateholder) of the total amount in the Certificate Account, except that,
with respect to Certificates registered on the Record Date in the name of the
nominee of the Depositary (initially, such nominee to be Cede & Co.), such
distribution shall be made by wire transfer in immediately available funds to
the account designated by such nominee.
(b) On each Special Distribution Date with respect to any Special
Payment or as soon thereafter as the Trustee has confirmed receipt of any
Special Payments, the Trustee shall distribute out of the 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 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 Trust held by such Certificateholder) of the aggregate amount in
the Special Payments Account on account of such Special Payment, except that,
with respect to Certificates registered on the Record Date in the name of the
nominee of the Depositary (initially, such nominee to be Cede & Co.), such
distribution shall be made by wire transfer in immediately available funds to
the account designated by such nominee.
(c) The Trustee shall, at the expense of the Company, cause notice
of each Special Payment to be mailed to each Certificateholder at his address as
it appears in the Register. In the event of redemption, prepayment or purchase
of Equipment Notes held in the Trust, such notice shall be mailed not less than
15 days prior to the date any 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 (which notice, in the case of a Special Redemption Premium,
shall include a copy of the notice delivered by the Escrow Paying Agent under
Section 2.06 of the Escrow Agreement). Notices mailed by the Trustee shall set
forth:
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(i) the Special Distribution Date and the Record Date therefor
(except as otherwise provided in Section 11.01),
(ii) the amount of the Special Payment for each $1,000 face amount
Certificate (taking into account any payment to be made by the Company
pursuant to Section 2.02) 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, the total amount to be received on such date for each
$1,000 face amount Certificate.
If the amount of (x) premium, if any, payable upon the redemption, prepayment or
purchase of an Equipment Note or (y) Special Redemption Premium has not been
calculated at the time 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 such premium or Special Redemption Premium, as the case may
be, received will also be distributed.
If any redemption of the Equipment Notes held in the Trust is
cancelled, the Trustee, as soon as possible after learning thereof, shall cause
notice thereof to be mailed to each Certificateholder at its address as it
appears on the Register.
Section 4.03. Statements to Certificateholders. (a) On each
Distribution Date, the Trustee will include with each distribution to
Certificateholders of a Scheduled Payment or Special Payment, as the case may
be, a statement setting forth the information provided below (in the case of a
Special Payment, including any Special Redemption Premium, reflecting in part
the information provided by the Escrow Paying Agent under the Escrow Agreement).
Such statement shall set forth (per $1,000 face amount Certificate as to (ii),
(iii), (iv) and (v) below) the following information:
(i) the aggregate amount of funds distributed on such Distribution
Date under the Agreement and under the Escrow Agreement, indicating the
amount allocable to each source;
(ii) the amount of such distribution under the Agreement allocable
to principal and the amount allocable to premium (including the Special
Redemption Premium), if any;
(iii) the amount of such distribution under the Agreement allocable
to interest;
(iv) the amount of such distribution under the Escrow Agreement
allocable to interest;
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(v) the amount of such distribution under the Escrow Agreement
allocable to Deposits; and
(vi) the Pool Balance and the Pool Factor.
With respect to the Certificates registered in the name of a
Clearing Agency or its nominee, 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 Trustee will
mail to each such Clearing Agency Participant the statement described above and
will make available additional copies as requested by such Clearing Agency
Participant for forwarding to holders of Certificates.
(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), (a)(ii), (a)(iii), (a)(iv) and (a)(v)
above with respect to the 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 a Clearing Agency or its nominee, such report and such other items shall be
prepared on the basis of information supplied to the Trustee 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.
(c) Utilizing information provided by Midway, promptly following (i)
the Delivery Period Termination Date, if there has been any change in the
information set forth in clauses (x), (y) and (z) below from that set forth in
page 65 of the Offering Memorandum, and (ii) any early redemption or purchase
of, or any default in the prepayment of principal or interest in respect of, any
of the Equipment Notes held in the Trust, or any Final Withdrawal, the Trustee
shall furnish to Certificateholders of record on such date a statement setting
forth (x) the expected Pool Balances for each subsequent Regular Distribution
Date following the Delivery Period Termination Date, (y) the related Pool
Factors for such Regular Distribution Dates and (z) the expected principal
distribution schedule of the Equipment Notes, in the aggregate, held as Trust
Property at the date of such notice. With respect to the Certificates registered
in the name of a Clearing Agency, on the Delivery Period Termination Date, the
Trustee will request from such Clearing Agency a securities position listing
setting forth the names of all Clearing Agency Participants reflected on such
Clearing Agency's books as holding interests in the Certificates on such date.
The Trust will mail to each such Clearing Agency Participant the statement
described above and will make available
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additional copies as requested by such Clearing Agency Participant for
forwarding to holders of interests in the 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 gross negligence (or simple negligence in
the handling of funds) 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 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 (i) organized and validly existing under the laws of the United States
of America or any state thereof or the District of Columbia, (ii) a
"citizen of the United States" (as defined in Section 40102(a)(15) of
Title 49 of the United States Code) and (iii) a United States certificated
air carrier, if and so long as such status is a condition of entitlement
to the benefits of Section 1110 of the Bankruptcy Reform Act of 1978, as
amended (11 U.S.C. ss. 1110), with respect to the Aircraft;
(b) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance, transfer or
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lease substantially all of the assets of the Company as an entirety shall
execute and deliver to the Trustee 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 this Agreement, the Other Pass Through Trust Agreements, the
Participation Agreements, and each other Note Document to be performed or
observed by the Company;
(c) immediately after giving effect to such transaction, no Event of
Default (as defined in any Lease or any Indenture relating to an Owned
Aircraft), shall have occurred and be continuing; and
(d) the Company shall have delivered to the Trustee an Officer's
Certificate of the Company and an Opinion of Counsel of the Company
reasonably satisfactory to the Trustee, each stating that such
consolidation, merger, conveyance, transfer or lease and the assumption
agreement mentioned in clause (b) above comply with this Section 5.02 and
that all conditions precedent herein provided for relating to such
transaction have been complied with.
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 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 this Agreement or any Financing Document 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 the Intercreditor
Agreement.
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(b) Purchase Rights of Certificateholders.
(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 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 6.01(b)(i).
(ii) By its acceptance of its Certificate, each Certificateholder
agrees that at any time after the occurrence and during the continuation
of a Triggering Event:
(A) each Class C Certificateholder shall have the right (which shall
not expire upon any purchase of the Class A Certificates pursuant to
clause (b)(i) above) to purchase all, but not less than all, of the
Certificates and the Class A Certificates upon ten days' written notice to
the Trustee, the Class A 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 Certificates and the Class A 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
Certificates and the Class A Certificates pursuant to this Section
6.01(b).
(B) each Class D Certificateholder shall have the right (which shall
not expire upon any purchase of the Class A Certificates pursuant to
clause (b)(i) above and the Certificates and the Class A Certificates
pursuant to clause (ii)(A) above) to purchase all, but not less than all,
of the Certificates, the Class A Certificates and the Class C Certificates
upon ten days' written notice to the Trustee, the Class A 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
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Certificateholder that such other Class D Certificateholder wants to
participate in such purchase, then such other Class D Certificateholder
may join with the purchasing Class D Certificateholder to purchase all,
but not less than all, of the Certificates, the Class A 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 Certificates, the Class A Certificates and the Class C
Certificates pursuant to this Section 6.01(b).
The purchase price with respect to the Certificates shall be equal
to the Pool Balance of the Certificates, 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, the Intercreditor Agreement, the Escrow Agreement or any Note
Document or on or in respect of the Certificates; provided, however, that (i) if
such purchase occurs after the record date specified in Section 2.03(b) of the
Escrow Agreement relating to the distribution of unused Deposits and accrued and
unpaid interest thereunder, such purchase price shall be reduced by the
aggregate amount of unused Deposits and interest to be distributed under the
Escrow Agreement (which deducted amounts shall remain distributable to, and may
be retained by the Certificateholder as of such record date) and (ii) if such
purchase occurs after a Record Date, such purchase price shall be reduced by the
amount to be distributed hereunder on the related Distribution date (which
deducted amounts shall remain distributable to, and may be retained by, the
Certificateholder as of such Record Date); provided further that no such
purchase of Certificates 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 Pass Through
Trust Agreements, the Certificates, the Class A Certificates and the Class C
Certificates which are senior to the Class of Certificates (as defined in the
Intercreditor Agreement) held by such purchaser. Each payment of the purchase
price of the Certificates 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 agrees by its acceptance of its Certificate that
it will, subject to Section 3.04 hereof, upon payment from such Class C
Certificateholder(s) or Class D Certificateholder(s) of the purchase price set
forth in the first sentence of this paragraph, 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, the Escrow
Agreement, the Deposit Agreement, the Intercreditor Agreement, the Liquidity
Facility, the Note Documents and all Certificates and Escrow Receipts 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
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this Agreement, the Escrow Agreement, the Deposit Agreement, the Intercreditor
Agreement, the Liquidity Facility and the Note Documents. The Certificates 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 (whether in the form of Physical Certificates or beneficial
interests in Global Certificates) 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 the Certificates and (ii) if the purchaser
shall so request, such Certificateholder will comply with all the provisions of
Section 3.04 hereof to enable new Certificates 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.
As used in this Section 6.01(b), the terms "Certificateholders",
"Class", "Class A Certificate", "Class A Certificateholder", "Class A Trust",
"Class A Trustee", "Class C Certificate", "Class C Certificateholder", "Class C
Trust", "Class C Trustee", "Class D Certificate", "Class D Certificateholder",
"Class D Trust" and "Class D Trustee", shall have the respective meanings
assigned to such terms in the Intercreditor Agreement.
Section 6.02. Incidents of Sale of Equipment Notes. Upon any sale of
all or any part of the Equipment Notes made either under the power of sale given
under this Agreement or otherwise for the enforcement of this Agreement, the
following shall be applicable:
(1) Certificateholders and Trustee May Purchase Equipment Notes. Any
Certificateholder, the Trustee in its individual or any other capacity or
any other Person may bid for and purchase any of the Equipment Notes, and
upon compliance with the terms of sale, may hold, retain, possess and
dispose of such Equipment Notes in their own absolute right without
further accountability.
(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 received by
the Trustee from the Subordination Agent pursuant to the Intercreditor
Agreement upon any sale made either under the power of sale given by this
Agreement or otherwise for the enforcement of this Agreement shall 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 of the principal of,
premium,
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if any, or interest on any Equipment Note, or if there shall be any failure to
pay Rent (as defined in the relevant Lease) under any Lease when due and
payable, then the Trustee, in its own name and as trustee of an express trust,
as holder of such Equipment Notes, to the extent permitted by and in accordance
with the terms of the Intercreditor Agreement and the Financing Documents
(subject to the rights of the applicable Owner Trustee or Owner Participant to
cure any such failure in accordance with Section 8.03 of any applicable
Indenture relating to a Leased Aircraft), shall be entitled and empowered to
institute any suits, actions or proceedings at law, in equity or otherwise, for
the collection of the sums so due and unpaid on such Equipment Notes or under
such Lease and may prosecute any such claim or proceeding to judgment or final
decree with respect to the whole amount of any such sums so due and unpaid.
Section 6.04. Control by Certificateholders. Subject to Section 6.03
and the Intercreditor Agreement, the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the 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 the Trust or pursuant to the terms of the Intercreditor Agreement, or
exercising any trust or power conferred on the Trustee under this Agreement or
the Intercreditor Agreement, including any right of the Trustee as Controlling
Party under the Intercreditor Agreement or as holder of the Equipment Notes,
provided that
(1) such Direction shall not 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 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 the Intercreditor
Agreement, the Certificateholders holding Certificates 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 Loan 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 Loan
Trustee with respect thereto, except a default:
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(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, 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 or X cannot be modified or amended without the consent of each
Certificateholder holding an Outstanding Certificate affected thereby.
Upon any such waiver, such default shall cease to exist with respect
to the Certificates 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 to the relevant Loan Trustee shall be annulled
with respect thereto; but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon. Upon any
such waiver, the Trustee shall vote the Equipment Notes issued under the
relevant Indenture to waive the corresponding Indenture Default.
Section 6.06. Right of Certificateholders to Receive Payments Not to
Be Impaired. Anything in this Agreement to the contrary notwithstanding,
including, without limitation, Section 6.07 hereof, but subject to the
Intercreditor Agreement, the right of any Certificateholder to receive
distributions of payments required pursuant to Section 4.02 hereof on the
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 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) Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than 25% of the 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 7.03(e);
(3) the Trustee shall have refused or neglected to institute such an
action, suit or proceeding for 60 days after receipt of such notice,
request and offer of indemnity; and
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(4) no direction inconsistent with such written request shall have
been given to the Trustee during such 60-day period by Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating
not less than a majority in interest in the Trust.
It is understood and intended that no one or more of the
Certificateholders shall have any right in any manner whatsoever hereunder or
under the Certificates to (i) surrender, impair, waive, affect, disturb or
prejudice any property in the Trust Property or the lien of any Indenture on any
property subject thereto, or the rights of the Certificateholders or the holders
of the Equipment Notes, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Certificateholder 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 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 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. Certain Duties and Responsibilities. (a) Except during
the continuance of an Event of Default, the Trustee undertakes to perform only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Trustee.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of its
own affairs.
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(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own gross negligence (or simple negligence in the
handling of funds) or wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section; and
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts.
(d) Whether or not herein expressly so provided, every provision of
this Trust Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
Section 7.02. 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, the Owner Trustees, the Owner Participants, the
Loan Trustees and the Certificateholders 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, premium, if
any, or interest on any Equipment Note or any other Trust Property, 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. For the purpose of
this Section, the term "default" means any event that is, or after notice or
lapse of time or both would become, an Event of Default.
Section 7.03. 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 the
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
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absence of bad faith on its part, rely upon an Officer's Certificate of
the Company, any Owner Trustee or any Loan 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 the Intercreditor
Agreement at the request or direction of any of the Certificateholders
pursuant to this Agreement or the 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, 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 the Intercreditor Agreement or perform any duties under this
Agreement or the 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 the Intercreditor Agreement;
(h) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction of the Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in
interest in the 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 the
Intercreditor Agreement; and
(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.
Section 7.04. Not Responsible for Recitals or Issuance of
Certificates. The recitals contained herein and in the Certificates, 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 7.15, the Trustee
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makes no representations as to the validity or sufficiency of this Agreement,
any Participation Agreement, the Escrow Agreement, the Deposit Agreement, any
Equipment Notes, the Certificates or any other Note Document, except that the
Trustee hereby represents and warrants that this Agreement has been, and the
Intercreditor Agreement, each Note Document and each Certificate will be,
executed, authenticated and delivered by one of its officers who is duly
authorized to execute, authenticate and deliver such document on its behalf.
Section 7.05. 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, if
applicable, may otherwise deal with the Company, the Owner Trustees or the Loan
Trustees with the same rights it would have if it were not Trustee, Paying
Agent, Registrar or such other agent.
Section 7.06. Money Held in Trust. Money held by the Trustee or the
Paying Agent in trust hereunder need not be segregated from other funds except
to the extent required herein or by law and neither the Trustee nor the Paying
Agent shall have any liability for interest upon any such moneys except as
provided for herein.
Section 7.07. Compensation and Reimbursement. The Company agrees:
(1) to pay, or cause to be paid, to the Trustee from time to time
compensation (as set out in a separate fee agreement between the Trustee
and the Company) 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 herein, 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 Agreement or the
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 own
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 7.15;
(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 gross negligence (or
simple negligence in the handling of funds), 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
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of its representations and warranties set forth in Section 7.15. 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 (which consent shall not be unreasonably withheld)
and the Company will pay the reasonable fees and expenses of such counsel.
The Company need not pay for any settlement made without its consent; and
(4) to indemnify, or cause to be indemnified, the Trustee, solely in
its individual capacity, for, and to hold it harmless against, any tax
(except to the extent the Trustee is reimbursed therefor pursuant to the
next paragraph, provided that no indemnification shall be available with
respect to any tax attributable to the Trustee's compensation for serving
as such) incurred without negligence, willful misconduct or bad faith, on
its part, arising out of or in connection with the acceptance or
administration of this Trust, including any costs and expenses incurred in
contesting the imposition of any such tax. The Trustee, in its individual
capacity, shall notify the Company promptly of any claim for any tax for
which it may seek indemnity. The Trustee shall permit the Company to
contest the imposition of such tax and the Trustee, in its individual
capacity, shall cooperate in the defense. The Trustee, in its individual
capacity, may have separate counsel with the consent of the Company (which
consent shall not be unreasonably withheld) 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 upon, the Trust Property for any tax incurred
without gross negligence (or simple negligence in the handling of funds), 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. If the Trustee
reimburses itself from the Trust Property of such Trust for any such tax, it
will mail a brief report within 30 days setting forth the circumstances thereof
to all Certificateholders as their names and addresses appear in the Register.
Section 7.08. Corporate Trustee Required; Eligibility. There shall
at all times be a Trustee hereunder 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 $75,000,000 (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 and having a combined capital
and surplus of at least $75,000,000). If such corporation publishes reports of
conditions at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising
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or examining authority, then for the purposes of this Section 7.08, 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 7.08 to act as Trustee, the
Trustee shall resign immediately as Trustee in the manner and with the effect
specified in Section 7.09.
Section 7.09. Resignation and Removal; Appointment of Successor. (a)
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 7.10.
(b) The Trustee may resign at any time as trustee by giving prior
written notice thereof to the Company, the Authorized Agents, the Owner Trustees
and the Loan Trustees. In addition, upon the occurrence of an Event of Default,
in the event the Trustee shall not have received instructions from the
Certificateholders or the Certificateholders with respect to any Other Trust,
the Trustee shall resign. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Company, the Authorized Agents, the Owner
Trustees, the Loan 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 by Act of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Trustee, the Company, the Owner Trustees and the Loan Trustees.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 310 of the Trust
Indenture Act, if applicable, after written request therefor by the
Company or by any Certificateholder who has been a bona fide
Certificateholder for at least six months; or
(2) the Trustee shall cease to be eligible under Section 7.08 and
shall fail to resign after written request therefor by the Company or by
any such Certificateholder; or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
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then, in any case, (i) the Company may remove the Trustee or (ii) any
Certificateholder who has been a bona fide Certificateholder for at least six
months may, on behalf of itself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
(e) If a Responsible Officer of the Trustee shall obtain actual
knowledge of an Avoidable Tax 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 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 in a jurisdiction where there
are no Avoidable Taxes.
(f) If the Trustee shall resign, be removed or become incapable of
acting as trustee or if a vacancy shall occur in the office of the Trustee for
any cause, the Company shall promptly appoint a successor Trustee. If, within 90
days after such resignation, removal or incapability, or other occurrence of
such vacancy, a successor Trustee shall be appointed by Act of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Company, the Owner Trustees, the Loan Trustees and the retiring
Trustee, and the Company approves such appointment, which approval shall not be
unreasonably withheld, then the successor Trustee so appointed shall, forthwith
upon its acceptance of such appointment, become the successor Trustee and
supersede the successor Trustee appointed as provided above. If no successor
Trustee shall have been so appointed as provided above and accepted appointment
in the manner hereinafter provided, any Certificateholder 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
appointment of a successor Trustee.
(g) The successor Trustee 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 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 7.10. Acceptance of Appointment by Successor. Every
successor Trustee appointed hereunder shall execute and deliver to the Company,
the Authorized Agents, the Owner Trustees and the Loan Trustees and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee 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 Trust Property held
by such retiring Trustee hereunder, subject nevertheless to its lien, if any,
provided for
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in Section 7.07 and the retiring Trustee shall thereupon be released from
further liability hereunder. 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.
No institution shall accept its appointment as a Trustee hereunder
unless at the time of such acceptance such institution shall be qualified and
eligible under this Article VII.
Section 7.11. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Certificates shall have been
executed or authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such execution or authentication and deliver the Certificates so
executed or authenticated with the same effect as if such successor Trustee had
itself executed or authenticated such Certificates.
Section 7.12. Maintenance of Agencies. (a) There shall at all times
be maintained an office or agency where Certificates 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 may be served. 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. Each such Authorized Agent shall be
a bank or trust company, shall be a corporation organized and doing business
under the laws of the United States or any state, with a combined capital and
surplus of at least $75,000,000, or a corporation having a combined capital and
surplus in excess of $5,000,000, the obligations of which are guaranteed by a
corporation organized and doing business under the laws of the United States or
any state, with a combined capital and surplus of at least $75,000,000, and
shall be authorized under such laws to exercise corporate trust powers, subject
to supervision by federal or state authorities. The Trustee shall initially be
the Paying Agent and, as provided in Section 3.04, Registrar hereunder with
respect to the Certificates. 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.
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(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, the Owner Trustees and the
Loan 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, the Owner Trustees and the Loan Trustees; and in each case the Trustee
shall mail notice of such appointment to all Certificateholders as their names
and addresses appear on the Register.
(e) The Company agrees to pay, or cause to be paid, from time to
time to each Authorized Agent reasonable compensation for its services and to
reimburse it for its reasonable expenses.
Section 7.13. 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 7.14. Registration of Equipment Notes in Name of
Subordination Agent. The Trustee agrees that all Equipment Notes to be purchased
by the Trust shall be issued in the name of the Subordination Agent or its
nominee and held by the
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Subordination Agent in trust for the benefit of the Certificateholders, or, if
not so held, the 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 7.15. Representations and Warranties of Trustee. The Trustee
hereby represents and warrants that:
(a) the Trustee is a national banking association organized and
validly existing 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, the Escrow Agreement, the
Intercreditor Agreement and the Note Purchase Agreement and has taken all
necessary action to authorize the execution, delivery, and performance by
it of this Agreement, the Escrow Agreement, the Intercreditor Agreement
and the Note Purchase Agreement;
(c) the execution, delivery and performance by the Trustee of this
Agreement, the Escrow Agreement, the Intercreditor Agreement and the Note
Purchase Agreement (i) will not violate any provision of United States
law, Maryland law or any order, writ, judgment, or decree of any court,
arbitrator or governmental authority of the United States or the State of
Maryland 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, or (iii) will not violate any provision of, or constitute, with
or without notice or lapse of time, a default under, or result in the
creation or imposition of any lien on any properties included in the Trust
Property pursuant to the provisions of any mortgage, indenture, contract,
agreement or other undertaking to which it is a party, which violation,
default or lien could reasonably be expected to have an adverse effect on
the Trustee's performance or ability to perform its duties hereunder or
thereunder or on the transactions contemplated herein or therein;
(d) the execution, delivery and performance by the Trustee of this
Agreement, the Escrow Agreement, the Intercreditor Agreement and the Note
Purchase Agreement 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 the United States where it
is located regulating the banking and corporate trust activities of the
Trustee; and
(e) this Agreement, the Escrow Agreement, the Intercreditor
Agreement and the Note Purchase Agreement 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,
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insolvency, reorganization, moratorium or similar laws affecting the
rights of creditors generally and (ii) general principles of equity.
Section 7.16. Withholding Taxes; Information Reporting. (a) The
Trustee, as trustee of the 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
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 present or future taxes or similar charges are required to be withheld with
respect to any amounts payable in respect of the Certificates, to withhold such
amounts and timely pay the same to the appropriate authority in the name of and
on behalf of the Certificateholders, 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 appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Certificateholders may reasonably request from time
to time. The Trustee agrees to file any other information reports as may be
required to be filed by it under United States law.
(b) The Trustee may satisfy certain of its obligations with respect
to this Agreement by retaining, at the expense of the Company, a firm of
independent public accountants (the "Accountants") which shall (i) be
responsible for all tax filing requirements and (ii) perform the obligations of
the Trustee in respect of tax filing requirements. The Trustee shall be deemed
to have discharged its tax filing obligations under this Agreement upon its
retention of the Accountants, and, if the Trustee shall have selected in the
Accountants in good faith and without gross negligence, the Trustee shall not
have any liability with respect to the default or misconduct of the Accountants.
(c) The Trustee, at the request (and expense) of the Company, will
make such United States federal income tax elections as may be necessary to
prevent the Trust from being classified for federal income tax purposes as an
association taxable as a corporation.
Section 7.17. Trustee's Liens. The Trustee in its individual
capacity agrees that it will 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 which is attributable to the
Trustee either (i) in its individual capacity and which is unrelated to the
transactions contemplated by this Agreement, the Intercreditor Agreement, the
Note Purchase Agreement or the Note Documents, or (ii) as Trustee hereunder or
in its individual capacity and which arises out of acts or omissions which are
not contemplated by this Agreement.
Section 7.18. Preferential Collection of Claims. The Trustee shall
comply with Section 311(a) of the Trust Indenture Act, excluding any creditor
relationship
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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 or cause to be
furnished 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, 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, 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 7.12.
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 contained
in the most recent list furnished to the Trustee as provided in Section 7.12 or
Section 8.01, as the case may be, and the names and addresses of
Certificateholders 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
7.12 or Section 8.01, as the case may be, upon receipt of a new list so
furnished.
Section 8.03. Reports by Trustee. Within 60 days after May 15 of
each year commencing with the first full year following the issuance of the
Certificates, the Trustee shall transmit to the Certificateholders, 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,
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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;
(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; and
(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 regard to any period of grace
or requirement of notice provided under this Agreement).
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 (and at the sole cost and expense of the Company), enter into one or
more agreements supplemental hereto or, if applicable, to the Escrow Agreement,
the Deposit Agreement, the Note Purchase Agreement, the Intercreditor Agreement
or the Liquidity Facility in form and substance satisfactory to the Trustee, for
any of the following purposes:
(1) 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 in the Note Purchase Agreement; or
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(2) to add to the covenants of the Company for the benefit of the
Certificateholders, or to surrender any right or power in this Agreement
or in the Note Purchase Agreement conferred upon the Company; or
(3) to correct or supplement any provision in this Agreement, the
Escrow Agreement, the Deposit Agreement, the Note Purchase Agreement, the
Intercreditor Agreement or the Liquidity Facility which may be defective
or inconsistent with any other provision of this Agreement, the Deposit
Agreement, the Escrow Agreement, the Note Purchase Agreement, the
Intercreditor Agreement or any Liquidity Facility, as applicable, or to
cure any ambiguity or to modify any other provisions with respect to
matters or questions arising under this Agreement, the Escrow Agreement,
the Note Purchase Agreement, the Deposit Agreement, the Intercreditor
Agreement or the Liquidity Facility, provided that any such action shall
not materially adversely affect the interests of the Certificateholders;
or
(4) as provided in the Intercreditor Agreement, to give effect to or
provide for a Replacement Liquidity Facility or to comply with any
requirement of the Commission, any applicable law, rules or regulations of
any exchange or quotation system on which the Certificates are listed, or
any regulatory body;
(5) to modify, eliminate or add to the provisions of this Agreement,
the Deposit Agreement, the Escrow Agreement, the Intercreditor Agreement,
the Note Purchase Agreement or the Liquidity Facility to such extent as
shall be necessary to qualify or continue the qualification of this
Agreement under the Trust Indenture Act, or any similar federal statute
enacted after the execution of this Agreement, and to add to this
Agreement, the Deposit Agreement, the Escrow Agreement, the Intercreditor
Agreement, the Note Purchase Agreement or the Liquidity Facility such
provisions as may be expressly permitted by the Trust Indenture Act; and
(6) to evidence and provide for the acceptance of appointment under
this Agreement, the Deposit Agreement, the Escrow Agreement, the
Intercreditor Agreement, the Note Purchase Agreement or the Liquidity
Facility of a successor Trustee and to add or change any of the provisions
of this Agreement, the Deposit Agreement, the Escrow Agreement, the
Intercreditor Agreement, the Note Purchase Agreement or the Liquidity
Facility as shall be necessary to provide for or facilitate the
administration of the Trust under this Agreement by more than one Trustee,
provided that in each case, such modification or supplement 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 9.02. Supplemental Agreements with Consent of
Certificateholders. With the consent of the Certificateholders holding
Certificates evidencing Fractional Undivided Interests aggregating not less than
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a majority in interest in the Trust, by Act of said Certificateholders delivered
to the Company and the Trustee, the Company may, and the Trustee (subject to
Section 9.03) shall, at the sole cost and expense of the Company, 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, the Deposit Agreement, the Escrow Agreement, the Intercreditor
Agreement, the Liquidity Facility or the Note Purchase Agreement to the extent
applicable to such Certificateholders or of modifying in any manner the rights
and obligations of such Certificateholders under this Agreement, the Deposit
Agreement, the Escrow Agreement, the Intercreditor Agreement, the Liquidity
Facility or the Note Purchase 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 (or, with respect to the Deposits, the
Receiptholders) of payments on the Deposits or the Equipment Notes held in
the Trust or distributions that are required to be made herein on any
Certificate, or change any date of payment of any Certificate, or change
the place of payment where, or the coin or currency in which, any
Certificate is 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 included in the
Trust Property except as permitted by this Agreement, or otherwise deprive
such Certificateholder of the benefit of the ownership of the Equipment
Notes in the Trust; or
(3) alter the priority of distributions specified in the
Intercreditor Agreement in a manner materially adverse to the interests of
the Certificateholders;
(4) modify any of the provisions of this Section 9.02 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 affected thereby;
(5) modify any of the provisions relating to the rights of the
Certificateholders in respect of the waiver of Events of Default or
receipt of payment; or
(6) adversely affect the status of this 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.
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It shall not be necessary for any Act of 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 Agreement, the Trustee may in its
discretion decline to execute such document.
Section 9.04. Execution of Supplemental Agreements. In executing, or
accepting the additional trusts created by, any supplemental agreement permitted
by this Article or the modifications thereby of the trusts created by this
Agreement, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental agreement is authorized or permitted by this Agreement.
Section 9.05. Effect of Supplemental Agreements. Upon the execution
of any agreement supplemental to this Agreement under this Article, this
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every
Certificateholder theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
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 authenticated and delivered after the execution of any supplemental
agreement 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 after
proper presentation and demand.
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01 Amendments and Supplement to Indentures and Other Note
Documents. In the event that the Trustee, as holder (or beneficial owner through
the Subordination Agent) of any Equipment Note in trust for the benefit of the
Certificateholders or as Controlling Party, receives a request for a consent to
any amendment, modification, waiver or supplement under any Indenture or other
Note Document or other related document, the Trustee shall forthwith send a
notice of such proposed amendment, modification, waiver or supplement to each
Certificateholder
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registered on the Register as of the date of such notice. The Trustee shall
request from the Certificateholders a Direction as to (a) whether or not to take
or refrain from taking (or to direct the Subordination Agent to take or refrain
from taking) any action which a holder of such Equipment Note or the Controlling
Party has the option to direct, (b) whether or not to give or execute (or to
direct the Subordination Agent to give or execute) any waivers, consents,
amendments, modifications or supplements as a holder of such Equipment Note or
as Controlling Party and (c) how to vote or direct the Subordination Agent 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 (or in directing the Subordination Agent in any of the
foregoing), (i) other than as Controlling Party, 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 (x) the aggregate face amount of all Certificates actually
voted in favor of or for giving consent to such action by such direction of
Certificateholders to (y) the aggregate face amount of all outstanding
Certificates of the Trust and (ii) as the Controlling Party, the Trustee shall
vote as directed in such Certificateholder direction by the Certificateholders
evidencing fractional undivided interests aggregating not less than a majority
in interest in the Trust. 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 prior to two Business Days before the Trustee directs such action
or casts such vote or gives such consent. Notwithstanding the foregoing, but
subject to Section 6.04 and the Intercreditor Agreement, the Trustee may, in its
own discretion and at its own direction, consent and notify the relevant Loan
Trustee of such consent (or direct the Subordination Agent to consent and notify
the relevant Loan Trustee of such consent) to any amendment, modification,
waiver or supplement under the relevant Indenture or any other Note Document or
other related document, if an Event of Default hereunder shall have occurred and
be continuing, or if such amendment, modification or waiver will not materially
adversely affect the interests of the Certificateholders.
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust. The respective obligations
and responsibilities of the Company and the Trustee with respect to the Trust
shall terminate upon the earlier of (A) the completion of the assignment,
transfer and discharge described in the first sentence of the immediately
following paragraph and (B) distribution to all Certificateholders 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; provided, however, that in no event shall the Trust continue beyond
one hundred ten (110) years following the date of the execution of this
Agreement.
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Not later than (but in the case of clause (i), following the
Delivery Period Termination Date) the earlier of (i) the first Business Day
following September 30, 1999, or, if later, the fifth Business Day following the
Delivery Period Termination Date and (ii) the fifth Business Day following the
date on which a Triggering Event occurs (such date, the "Transfer Date"), or, if
later, the date on which all of the conditions set forth in the immediately
following sentence have been satisfied, the Trustee is hereby directed (subject
only to the immediately following sentence) to, and the Company shall direct the
institution that will serve as the Related Trustee under the Related Pass
Through Trust Agreement to, execute and deliver the Assignment and Assumption
Agreement, pursuant to which the Trustee shall assign, transfer and deliver all
of the Trustee's right, title and interest to the Trust Property to the Related
Trustee under the Related Pass Through Trust Agreement. The Trustee and the
Related Trustee shall execute and deliver the Assignment and Assumption
Agreement upon the satisfaction of the following conditions:
(i) The Trustee, the Related Trustee and each of the Rating Agencies
then rating the Certificates shall have received an Officer's Certificate
and an Opinion of Counsel dated the date of the Assignment and Assumption
Agreement and each satisfying the requirements of Section 1.02, which
Opinion of Counsel shall be substantially to the effect set forth below
and may be relied upon by the Beneficiaries (as defined in the Assignment
and Assumption Agreement):
(a) upon the execution and delivery thereof by the parties
thereto in accordance with the terms of this Agreement and the
Related Pass Through Trust Agreement, the Assignment and Assumption
Agreement will constitute the valid and binding obligation of each
of the parties thereto enforceable against each such party in
accordance with its terms;
(b) upon the execution and delivery of the Assignment and
Assumption Agreement in accordance with the terms of this Agreement
and the Related Pass Through Trust Agreement, each of the
Certificates then Outstanding will be entitled to the benefits of
the Related Pass Through Trust Agreement;
(c) the Related Trust is not required to be registered as an
investment company under the Investment Company Act of 1940, as
amended;
(d) the Related Pass Through Trust Agreement constitutes the
valid and binding obligation of the Company enforceable against the
Company in accordance with its terms; and
(e) neither the execution and delivery of the Assignment and
Assumption Agreement in accordance with the terms of this Agreement
and the Related Pass Through Trust Agreement, nor the consummation
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by the parties thereto of the transactions contemplated to be
consummated thereunder on the date thereof, will violate any law or
governmental rule or regulation of the State of New York or the
United States of America known to such counsel to be applicable to
the transactions contemplated by the Assignment and Assumption
Agreement.
(ii) The Trustee and the Company shall have received (x) a copy of
the articles of incorporation and bylaws of the Related Trustee certified
as of the Transfer Date by the Secretary or Assistant Secretary of such
institution and (y) a copy of the filing (including all attachments
thereto) made by the institution serving as the Related Trustee with the
Office of the Superintendent, State of New York Banking Department for the
qualification of the Related Trustee under Section 131(3) of the New York
Banking Law.
Upon the execution of the Assignment and Assumption Agreement by the
parties thereto, the Trust shall be terminated, the Certificateholders shall
receive beneficial interests in the Related Trust in exchange for their
interests in the Trust equal to their respective beneficial interests in the
Trust, and the Outstanding Certificates representing Fractional Undivided
Interests in the Trust shall be deemed for all purposes of this Agreement and
the Related Pass Through Trust Agreement, without further signature or action of
any party or Certificateholder, to be certificates representing the same
fractional undivided interests in the Related Trust and its trust property. By
acceptance of its Certificate, each Certificateholder consents to such
assignment, transfer and delivery of the Trust Property of the trustee of the
Related Trust upon the execution and delivery of the Assignment and Assumption
Agreement.
In connection with the occurrence of the event set forth in clause
(B) above, notice of any termination, specifying the Regular Distribution Date
(or Special Distribution Date, as the case may be) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be mailed promptly, upon
notice to the Trustee, by the Trustee to Certificateholders not earlier than the
60th day and not later than the 20th day next 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 will
be made upon presentation and surrender of Certificates at the office or agency
of the Trustee therein specified, (B) the amount of any such proposed final
payment, and (C) that the Record Date otherwise applicable to such Regular
Distribution Date (or Special Distribution Date, as the case may be) is not
applicable, payments being made only upon presentation and surrender of the
Certificates 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. Upon presentation and surrender of the Certificates in
accordance with such notice, the Trustee shall cause to be distributed to
Certificateholders such final distribution pursuant to Section 4.02.
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In the event that all of the Certificateholders 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 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 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 Loan Trustee the appropriate amount of money relating
to such Loan Trustee and shall give written notice thereof to the related Owner
Trustees, the Owner Participants and the Company.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the 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. Certificates Nonassessable and Fully Paid. Except as
set forth in the last sentence of this Section 12.02, Certificateholders shall
not be personally liable for obligations of the Trust, the Fractional Undivided
Interests represented by the Certificates shall be nonassessable for any losses
or expenses of the Trust or for any reason whatsoever, and Certificates, upon
authentication thereof by the Trustee pursuant to Section 3.03, are and shall be
deemed fully paid. No Certificateholder shall have any right (except as
expressly provided herein) to vote or in any manner otherwise control the
operation and management of the Trust Property, the Trust, or the obligations of
the parties hereto, nor shall anything set forth herein, or contained in the
terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association.
Neither the existence of the Trust nor any provision herein is intended to or
shall limit the liability the Certificateholders would otherwise incur if the
Certificateholders owned Trust Property as co-owners, or incurred any
obligations of the Trust, directly rather than through the Trust.
Section 12.03. Notices. (a) Unless otherwise specifically provided
herein, all notices required under the terms and provisions of this Agreement
shall be in English and in writing, and any such notice may be given by United
States mail, courier
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service or telecopy, and any such notice shall be effective when delivered or
received or, if mailed, three days after deposit in the United States mail with
proper postage for ordinary mail prepaid,
if to the Company, to:
Midway Airlines Corporation
300 W. Morgan Street, Suite 1200
Durham, North Carolina 27701
Attention: General Counsel
Facsimile: (919) 956-7568
Telephone: (919) 956-4810
if to the Trustee, to:
The First National Bank of Maryland
25 South Charles Street
Mail Code 101-591
Baltimore, Maryland 21201
Attention: Corporate Trust Department
Facsimile: (410) 244-4236
Telephone: (410) 244-4626
(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 shall be
mailed by first-class mail to the addresses for Certificateholders shown on the
Register kept by the Registrar. 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.
(d) If a notice or communication is mailed in the manner provided
above within the time prescribed, it is conclusively presumed to have been duly
given, whether or not the addressee receives it.
(e) If the Company mails a notice or communication to the
Certificateholders, it shall mail a copy to the Trustee and to the Paying Agent
at the same time.
(f) 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.
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(g) 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 Loan Trustee.
Section 12.04. Governing Law. THIS AGREEMENT AND THE CERTIFICATES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
MARYLAND.
Section 12.05. 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 the Trust, or of the
Certificates or the rights of the Certificateholders thereof.
Section 12.06. 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 12.07. 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 assigns, whether so
expressed or not.
Section 12.08. Benefits of Agreement. Nothing in this Agreement or
in the Certificates, express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder, and the Certificateholders,
any benefit or any legal or equitable right, remedy or claim under this
Agreement.
Section 12.09. Legal Holidays. In any case where any Regular
Distribution Date or Special Distribution Date relating to any Certificate shall
not be a Business Day, 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 12.10. 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 12.11. Communication by Certificateholders with Other
Certificateholders. Certificateholders may communicate with other
Certificateholders with respect to their rights under this Agreement or the
Certificates pursuant to
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Section 312(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 12.12. Intention of Parties. The parties hereto intend that
the Trust be classified for U.S. federal income tax purposes as a grantor trust
under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as
amended, and not as a trust or association taxable as a corporation or as a
partnership. Each Certificateholder, by its acceptance of its Certificate or a
beneficial interest therein, agrees to treat the Trust as a grantor trust for
all U.S. federal, state and local income tax purposes. The powers granted and
obligations undertaken pursuant to this Agreement shall be so construed so as to
further such intent.
Section 12.13. Trust Indenture Act Controls. Upon the qualification
of this Agreement under the Trust Indenture Act, this Agreement shall be subject
to the provisions of the Trust Indenture Act and shall, to the extent
applicable, be governed by such provisions. If any provision of this Agreement
limits, qualifies or conflicts with another provision which is required to be
included in this Agreement by the Trust Indenture Act, the required provision
shall control.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first written above.
MIDWAY AIRLINES CORPORATION
By: /s/ Jonathan S. Waller
------------------------------------
Name: Jonathan S. Waller
Title: Senior Vice President
General Counsel
THE FIRST NATIONAL BANK OF
MARYLAND, as Trustee
By: /s/ Robert D. Brown
------------------------------------
Name: Robert D. Brown
Title: Assistant Vice President
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Exhibit A
FORM OF CERTIFICATE
REGISTERED
No. ______________
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY
MIDWAY AIRLINES CORPORATION ("MIDWAY") OR ANY AFFILIATE OF MIDWAY, RESELL
OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO MIDWAY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
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UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
CERTIFICATE WAS HELD BY MIDWAY OR ANY AFFILIATE OF MIDWAY, THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND MIDWAY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.]*
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS FOR THE BENEFIT OF MIDWAY
AIRLINES CORPORATION AND EACH OWNER PARTICIPANT THAT (A) IT IS NOT A PLAN
TRANSFEREE (AS DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR (B) ONE OR
MORE PROHIBITED TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS APPLIES
SUCH THAT THE USE OF PLAN ASSETS TO PURCHASE AND HOLD THIS PASS THROUGH
CERTIFICATE WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER
ERISA OR SECTION 4975 OF THE CODE. THE PASS THROUGH TRUST AGREEMENT
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
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* Not to be included on the face of the Permanent Offshore Global
Certificate.
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[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE 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 HEREON 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.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST
AGREEMENT REFERRED TO HEREIN.]*
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* To be included on the face of each Global Certificate.
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[GLOBAL CERTIFICATE]*
MIDWAY AIRLINES 1998-1B-O PASS THROUGH TRUST
8.14% Midway Airlines [Initial/Exchange] Pass Through Certificate
Series 1998-1B-O
Final Expected Distribution Date: January 2, 2013
evidencing a fractional undivided interest in a trust, the property of which
includes certain equipment notes each secured by an Aircraft leased to or owned
by Midway Airlines Corporation.
$____________ Fractional Undivided Interest
representing ._____% of the Trust per $1,000 face amount
THIS CERTIFIES THAT ____________, for value received, is the
registered owner of a $_________ (_________ dollars) Fractional Undivided
Interest in Midway Airlines 1998-1B-O Pass Through Trust (the "Trust") created
pursuant to a Pass Through Trust Agreement, dated as of August 13, 1998 (the
"Agreement"), between The First National Bank of Maryland (the "Trustee") and
Midway Airlines Corporation, a corporation incorporated under Delaware law (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 "8.14%
Midway Airlines [Initial/Exchange] Pass Through Certificates Series 1998-1B-O"
(herein called the "Certificates"). This Certificate is issued under and is
subject to the terms, provisions, and conditions of the Agreement. By virtue of
its acceptance hereof the Certificateholder of this Certificate assents to and
agrees to be bound by the provisions of the Agreement and the Intercreditor
Agreement. 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, among other things, a security interest in the 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 assets or property other than the Trust Property.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from and to the extent of funds then available to the
Trustee,
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* To be included on the face of each Global Certificate.
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there will be distributed on each January 2 and July 2 (a "Regular Distribution
Date"), commencing on January 2, 1999, 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 and the Intercreditor Agreement, in the event that Special Payments on
the Equipment Notes are received by the Trustee, from funds then available to
the Trustee, there shall be distributed on the applicable Special Distribution
Date, to the Person in whose name this Certificate is registered at the close of
business on the 15th day preceding the Special Distribution Date, an amount in
respect of such Special Payments on the Equipment Notes, the receipt of which
has been confirmed by the Trustee, equal to the product of the percentage
interest in the Trust evidenced by this Certificate and an amount equal to the
sum of such Special Payments so received. If a Regular Distribution Date or
Special Distribution Date is not a Business Day, distribution shall be made on
the immediately following Business Day with the same force and effect as if made
on such Regular Distribution Date or Special Distribution Date and no interest
shall accrue during the intervening period. The Trustee shall mail notice of
each Special Payment and the Special Distribution Date therefor to the
Certificateholder of this Certificate.
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 AGREEMENT AND, UNTIL THE TRANSFER, THIS CERTIFICATE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS. THE RELATED PASS THROUGH TRUST
AGREEMENT AND, FROM AND AFTER THE TRANSFER, THIS CERTIFICATE SHALL BE GOVERNED
AND 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.
Reference is hereby made to the further provisions of this
Certificate set forth in the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
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.
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IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: ____________ __, 1998 MIDWAY AIRLINES
1998-1B-O PASS THROUGH TRUST
By: The First National Bank of
Maryland, as Trustee
By:
--------------------------
Name:
Title:
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[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred
to in the within-mentioned Agreement.
The First National Bank of Maryland,
as Trustee
By:
----------------------------------
Authorized Officer
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[REVERSE OF CERTIFICATE]
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
of their affiliates. 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 Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein 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, in the Borough of Manhattan, the City of New York,
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.
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Under certain circumstances set forth in Section 11.01 of the
Agreement, all of the Trustee's right, title and interest to the Trust Property
may be assigned, transferred and delivered to the Related Trustee of the Related
Trust pursuant to the Assignment and Assumption Agreement. Upon the
effectiveness of such assignment and Assumption Agreement (the "Transfer"), the
Trust shall be terminated, the Certificateholders shall receive beneficial
interests in the Related Trust in exchange for their interests in the Trust
equal to their respective beneficial interests in the Trust, the Certificates
representing Fractional Undivided Interests in the Trust shall be deemed for all
purposes of the Agreement and the Related Pass Through Trust Agreement to be
certificates representing the same fractional undivided interests in the Related
Trust and its trust property. Each Certificateholder, by its acceptance of this
Certificate or a beneficial interest herein, agrees to be bound by the
Assignment and Assumption Agreement and subject to the terms of the Related Pass
Through Trust Agreement as a certificateholder thereunder. From and after the
Transfer, unless and to the extent the context otherwise requires, references
herein to the Trust, the Agreement and the Trustee shall constitute references
to the Related Trust, the Related Pass Through Trust Agreement and trustee of
the Related Trust, respectively.
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $100,000 Fractional Undivided
Interest and integral multiples of $1,000 in excess thereof. 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 by the Holder 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.
A-9
<PAGE>
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
_____________________________
_____________________________
please print or typewrite name and address including zip code of assignee
_____________________________
the within Certificate and all rights thereunder, hereby irrevocably
constituting and appointing
_____________________________
attorney to transfer said Certificate on the books of the Trustee with full
power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT PERMANENT OFFSHORE GLOBAL AND
OFFSHORE PHYSICAL CERTIFICATES]
In connection with any transfer of this Certificate occurring prior
to __________, the undersigned confirms that without utilizing any general
solicitation or general advertising that:
[Check One]
[_] (a) this Certificate is being transferred in compliance with the
exemption from registration under the Securities Act of 1933, as
amended, provided by Rule 144A thereunder.
or
[_] (b) this Certificate is being transferred other than in accordance with
(a) above and documents are being furnished that comply with the
conditions of transfer set forth in this Certificate and the
Agreement.
A-10
<PAGE>
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Certificate in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 3.06 of the Agreement
shall have been satisfied.
Date: [Name of Transferor]
-------------- ----------------------------------------
NOTE: The signature must correspond with
the name as written upon the face of the
within-mentioned instrument in every
particular, without alteration or any
change whatsoever.
Signature Guarantee: ___________________
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Certificate for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated: _____________ ________________________________________
NOTE: To be executed by an executive
officer.
A-11
<PAGE>
Exhibit B
FORM OF CERTIFICATE FOR UNLEGENDED CERTIFICATES
[Date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1B-O Pass Through Trust (the "Trust"), 8.14%
Midway Airlines Pass Through Certificates Series 1998-1B-O (the
"Certificates")
Dear Sirs:
This letter relates to U.S. $__________ Fractional Undivided
Interest of Certificates represented by a Certificate (the "Legended
Certificate") which bears a legend outlining restrictions upon transfer of such
Legended Certificate. Pursuant to Section 3.01 of the Pass Through Trust
Agreement relating to the Certificates dated as of August 13, 1998 (the "Trust
Agreement"), between Midway Airlines Corporation ("Midway") and you, we hereby
certify that we are (or we will hold such securities on behalf of) a person
outside the United States to whom the Certificates could be transferred in
accordance with Rule 904 of Regulation S promulgated under the U.S. Securities
Act of 1933, as amended. Accordingly, you are hereby requested to exchange the
legended certificate for an unlegended certificate representing an identical
principal amount of Certificates, all in the manner provided for in the Trust
Agreement.
You and Midway are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Certificateholder]
By:
--------------------------
Authorized Signature
B-1
<PAGE>
Exhibit C
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
[date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1B-O Pass Through Trust (the "Trust"), 8.14%
Midway Airlines Pass Through Certificates Series 1998-1B-O (the
"Certificates")
Sirs:
In connection with our proposed sale of $_______ Fractional Undivided Interest
of the Certificates, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the Securities Act of 1933, as amended,
and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a person in the
United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
C-1
<PAGE>
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You, Midway Airlines Corporation are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof to
any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
----------------------------------
Authorized Signature
C-2
<PAGE>
Exhibit D
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
[date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1B-O Pass Through Trust (the "Trust"), 8.14%
Midway Airlines Pass Through Certificates Series 1998-1B-O (the
"Certificates")
Dear Sirs:
In connection with our proposed purchase of $_______________
aggregate principal amount of the Certificates, we confirm that:
1. We understand that any subsequent transfer of the Certificates is
subject to certain restrictions and conditions set forth in the Pass
Through Trust Agreement dated as of August 13, 1998 relating to the
Certificates (the "Pass Through Trust Agreement") and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the
Certificates except in compliance with, such restrictions and conditions
and the Securities Act of 1933, as amended (the "Securities Act").
2. We are purchasing Certificates having an aggregate principal
amount of not less than $100,000 and each account (if any) for which we
are purchasing Certificates is purchasing Certificates having an aggregate
principal amount of not less than $100,000.
3. We understand that the Certificates have not been registered
under the Securities Act, and that the Certificates may not be offered or
sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Certificate, we will do so
only (A) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (B) to an
institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes to you and Midway Airlines Corporation a signed letter
substantially in the form of this letter, (C) outside the United States in
D-1
<PAGE>
accordance with Rule 904 of Regulation S under the Securities Act, (D)
pursuant to the exemption from registration provided by Rule 144 under the
Securities Act, or (E) pursuant to an effective registration statement
under the Securities Act, and we further agree to provide to any person
purchasing any of the Certificates from us a notice advising such
purchaser that resales of the Notes are restricted as stated herein. We
further understand that the Certificates purchased by us will bear a
legend to the foregoing effect.
4. We understand that, on any proposed resale of any Certificates,
we will be required to furnish to you, Midway Airlines Corporation
("Midway") such certifications, legal opinions and other information as
you, Midway may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that the
Certificates purchased by us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Certificates and we and any accounts for which we are acting are each able
to bear the economic risk of our or its investment.
6. We are acquiring the Certificates purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You and Midway are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By:
----------------------------------
Authorized Signature
D-2
<PAGE>
Exhibit E
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
Midway Airlines Pass Through Trust 1998-1B
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated _________, 199_ (the
"Assignment Agreement"), between The First National Bank of Maryland, a national
banking association, not in its individual capacity except as expressly provided
herein, but solely as trustee under the Pass Through Trust Agreement dated as of
August 13, 1998 (as amended or modified from time to time, the "Agreement"), in
respect of the Midway Airlines Pass Through Trust 1998-1B-O (the "Assignor"),
and The First National Bank of Maryland, a national banking association, not in
its individual capacity except as expressly provided herein, but solely as
trustee under the Agreement (the "New Agreement") in respect of the Midway
Airlines Pass Through Trust 1998-1B-S (the "Assignee").
W I T N E S S E T H:
WHEREAS, the parties hereto desire to effect on the date hereof (the
"Transfer Date" (a) the transfer by the Assignor to the Assignee of all of the
right, title and interest of the Assignor in, under and with respect to, among
other things, the Trust Property and each of the documents listed in Schedule I
hereto (the "Scheduled Documents") and (b) the assumption by the Assignee of the
obligations of the Assignor (i) under the Scheduled Documents and (ii) in
respect of the Certificates issued under the Agreement; and
WHEREAS, the Scheduled Documents permit such transfer upon
satisfaction of certain conditions heretofore or concurrently herewith being
complied with;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto do hereby agree as
follows (capitalized terms used herein without definition having the meaning
ascribed thereto in the Agreement):
1. Assignment. The Assignor does hereby sell, assign, convey,
transfer and set over unto the Assignee as of the Transfer Date all of its
present and future right, title and interest in, under and with respect to the
Trust Property and the Scheduled Documents and each other contract, agreement,
document or instrument relating to the Trust Property or the Scheduled Documents
(such other contracts, agreements, documents or instruments, together with the
Scheduled Documents, to be referred to as the "Assigned Documents"), and any
proceeds therefrom, together with all documents and instruments evidencing any
of such right, title and interest.
1
<PAGE>
2. Assumption. The Assignee hereby assumes for the benefit of the
Assignor and each of the parties listed in Schedule II hereto (collectively, the
"Beneficiaries") all of the duties and obligations of the Assignor, whenever
accrued, pursuant to the Assigned Documents and hereby confirms that it shall be
deemed a party to each of the Assigned Documents to which the Assignor is a
party and shall be bound by all the terms thereof (including the agreements and
obligations of the Assignor set forth therein) as if therein named as the
Assignor. Further, the Assignee hereby assumes for the benefit of the Assignor
and the Beneficiaries all of the duties and obligations of the Assignor under
the Outstanding Certificates and hereby confirms that the Certificates
representing Fractional Undivided Interests under the Agreement shall be deemed
for all purposes of the Agreement and the New Agreement equal to their
respective beneficial interests in the trust created under the Agreement.
3. Effectiveness. This Assignment Agreement shall be effective upon
the execution and delivery hereof by the parties hereto, and each
Certificateholder, by its acceptance of its Applicable Certificate or a
beneficial interest therein, agrees to be bound by the terms of this Assignment
Agreement.
4. Payments. The Assignor hereby covenants and agrees to pay over to
the Assignee, if and when received following the Transfer Date, any amounts
(including any sums payable as interest in respect thereof) paid to or for the
benefit of the Assignor that, under Section 1 hereof, belong to the Assignee.
5. Further Assurances. The Assignor shall, at any time and from time
to time, upon the request of the Assignee, promptly and duly execute and deliver
any and all such further instruments and documents and take such further action
ad the Assignee may reasonably request to obtain the full benefits of this
Assignment Agreement and of the right and powers herein granted. The Assignor
agrees to deliver any Certificates, and all Trust Property, if any, then in the
physical possession of the Assignor, to the Assignee.
6. Representation and Warranties. (a) The Assignee represents and
warrants to the Assignor and each of the Beneficiaries that:
(i) 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 obligations of the "Pass Through Trustee" under the
Assigned Documents; and
(ii) on and as of the date hereof, the representations and
warranties of the Assignee set forth in Section 7.15 of the New Agreement
are true and correct.
(b) The Assignor represents and warrants to the Assignee that:
2
<PAGE>
(i) it is duly incorporated, validly existing and in good standing
under the laws of the State of Maryland and the United States pertaining
to its trust and fiduciary powers to execute and deliver this Assignment
Agreement;
(ii) the execution and delivery by it of this Assignment Agreement
and the performance by it of its obligations hereunder have been duly
authorized by it and will not violate its articles of association or
by-laws or the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it is bound; and
(iii) this Assignment Agreement constitutes the legal, valid and
binding obligations of it enforceable against it in accordance with its
terms, except and 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.
7. GOVERNING LAW. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
8. Counterparts. This Assignment Agreement may be executed in any
number of counterparts, all of which together shall constitute a single
instrument. It shall not be necessary that any counterpart be signed by both
parties so long as each party shall sign at least one counterpart.
9. Third Party Beneficiaries. The Assignee hereby agrees, for the
benefit of the Beneficiaries, that is representations,, warranties and covenants
contained herein are also intended to be for the benefit of each Beneficiary,
and each Beneficiary shall be deemed to be an express third party beneficiary
with respect thereto, entitled to enforce directly and in its own name any
rights or claims it may have against such party as such beneficiary.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto, through their respective
officers thereunto duly authorized, have duly executed this Assignment Agreement
as of the day and year first above written.
ASSIGNOR:
THE FIRST NATIONAL BANK OF MARYLAND, not in its
individual capacity except as expressly provided
herein, but solely as trustee under the Pass
Through Trust Agreement and Trust Supplement in
respect of the Midway Airlines Pass
Through Trust 1998-1B-O
By: __________________________________________
Title:
ASSIGNEE:
THE FIRST NATIONAL BANK OF MARYLAND, not in its
individual capacity except as expressly provided
herein, but solely as trustee under the Pass
Through Trust Agreement and Trust Supplement in
respect of the Midway Airlines Pass
Through Trust 1998-1B-S
By: __________________________________________
Title:
4
<PAGE>
SCHEDULE 1
Schedule of Assigned Documents
(1) Intercreditor Agreement dated as of August 13, 1998 among the
Trustee, the Other Trustees, the Liquidity Providers, the liquidity provider, if
any, relating to the Certificates issued under (and as defined in) each of the
Other Pass Through Trust Agreements and the Subordination Agent.
(2) Escrow and Paying Agent Agreement (Class B) dated as of August
13, 1998 among the Escrow Agent, the Underwriters, the Trustee and the Paying
Agent.
(3) Note Purchase Agreement dated as of August 13, 1998 among the
Company, the Trustee, the Other Trustees, the Depositary, the Escrow Agent, the
Paying Agent and the Subordination Agent.
(4) Deposit Agreement (Class B) dated as of August 13, 1998 between
the Escrow Agent and the Depositary.
(5) Each of the Operative Agreements (as defined in the
Participation Agreement for each Aircraft) in effect as of the Transfer Date.
<PAGE>
SCHEDULE 2
Schedule of Beneficiaries
The First National Bank of Maryland, not in its individual capacity but solely
as Subordination Agent
The First National Bank of Maryland, not in its individual capacity but solely
as Paying Agent
ABN AMRO Bank N.V., acting through its Chicago branch, as Liquidity Provider
Midway Airlines Corporation
Morgan Stanley & Co. Incorporated, as Initial Purchaser
Credit Suisse First Boston Corporation, as Initial Purchaser
First Union Trust Company, National Association, as Escrow Agent
Each of the other parties to the Assigned Documents
- - --------------------------------------------------------------------------------
PASS THROUGH TRUST AGREEMENT
Dated as of August 13, 1998
among
MIDWAY AIRLINES CORPORATION
and
THE FIRST NATIONAL BANK OF MARYLAND
as Trustee
Midway Airlines 1998-1C-S Pass Through Trust
8.92% 1998-1C-S Initial Pass Through Certificates
8.92% 1998-1C-S Exchange Pass Through Certificates
- - --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS........................................................2
Section 1.01. Definitions..........................................2
Section 1.02. Compliance Certificates and Opinions................14
Section 1.03. Form of Documents Delivered to Trustee..............15
Section 1.04. Acts of Certificateholders..........................15
ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES................................17
Section 2.01. Acquisition of Trust Property.......................17
Section 2.02. [Reserved]..........................................18
Section 2.03. The Trustee.........................................18
Section 2.04. Acceptance by Trustee...............................18
Section 2.05. Limitation of Powers................................18
ARTICLE III THE CERTIFICATES................................................19
Section 3.01. Title, Form, Denomination and Execution
of Certificates....................................19
Section 3.02. Restrictive Legends.................................21
Section 3.03. Authentication of Certificates......................23
Section 3.04. Transfer and Exchange...............................23
Section 3.05. Book-Entry Provisions for U.S. Global
Certificate and Offshore Global Certificates.......24
Section 3.06. Special Transfer Provisions.........................25
Section 3.07. Mutilated, Destroyed, Lost or Stolen Certificates...28
Section 3.08. Persons Deemed Owners...............................28
Section 3.09. Cancellation........................................29
Section 3.10. Limitation of Liability for Payments................29
Section 3.11. Temporary Certificates..............................29
Section 3.12. ERISA Restrictive Legend............................29
ARTICLE IV DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS...............................................30
Section 4.01. Certificate Account and Special Payments Account....30
Section 4.02. Distributions from Certificate Account and
Special Payments Account...........................30
Section 4.03. Statements to Certificateholders....................32
Section 4.04. Investment of Special Payment Moneys................33
-i-
<PAGE>
ARTICLE V THE COMPANY.......................................................34
Section 5.01. Maintenance of Corporate Existence..................34
Section 5.02. Consolidation, Merger, Etc..........................34
ARTICLE VI DEFAULT..........................................................35
Section 6.01. Events of Default...................................35
Section 6.02. Incidents of Sale of Equipment Notes................37
Section 6.03. Judicial Proceedings Instituted by Trustee;
Trustee May Bring Suit.............................38
Section 6.04. Control by Certificateholders.......................38
Section 6.05. Waiver of Past Defaults.............................39
Section 6.06. Right of Certificateholders to Receive Payments
Not to Be Impaired.................................39
Section 6.07. Certificateholders May Not Bring Suit Except
Under Certain Conditions...........................39
Section 6.08. Remedies Cumulative.................................40
Section 6.09. Undertaking for Costs...............................40
ARTICLE VII THE TRUSTEE.....................................................41
Section 7.01. Certain Duties and Responsibilities.................41
Section 7.02. Notice of Defaults..................................41
Section 7.03. Certain Rights of Trustee...........................41
Section 7.04. Not Responsible for Recitals or Issuance of
Certificates.......................................43
Section 7.05. May Hold Certificates...............................43
Section 7.06. Money Held in Trust.................................43
Section 7.07. Compensation and Reimbursement......................43
Section 7.08. Corporate Trustee Required; Eligibility.............45
Section 7.09. Resignation and Removal; Appointment of
Successor..........................................45
Section 7.10. Acceptance of Appointment by Successor..............47
Section 7.11. Merger, Conversion, Consolidation or
Succession to Business.............................47
Section 7.12. Maintenance of Agencies.............................47
Section 7.13. Money for Certificate Payments to Be Held
in Trust...........................................49
Section 7.14. Registration of Equipment Notes in Name of
Subordination Agent.................................49
Section 7.15. Representations and Warranties of Trustee...........49
Section 7.16. Withholding Taxes; Information Reporting............50
Section 7.17. Trustee's Liens.....................................51
Section 7.18. Preferential Collection of Claims...................51
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<PAGE>
ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE...............51
Section 8.01. The Company to Furnish Trustee with Names and
Addresses of Certificateholders.....................51
Section 8.02. Preservation of Information; Communications
to Certificateholders..............................51
Section 8.03. Reports by Trustee..................................52
Section 8.04. Reports by the Company..............................52
ARTICLE IX SUPPLEMENTAL AGREEMENTS..........................................53
Section 9.01. Supplemental Agreements Without Consent of
Certificateholders..................................53
Section 9.02. Supplemental Agreements with Consent of
Certificateholders.................................54
Section 9.03. Documents Affecting Immunity or Indemnity...........55
Section 9.04. Execution of Supplemental Agreements................55
Section 9.05. Effect of Supplemental Agreements...................55
Section 9.06. Conformity with Trust Indenture Act.................55
Section 9.07. Reference in Certificates to Supplemental
Agreements.........................................56
ARTICLE X AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS..................56
Section 10.01. Amendments and Supplement to Indentures and
Other Note Documents...............................56
ARTICLE XI TERMINATION OF TRUST.............................................57
Section 11.01. Termination of the Trust............................57
ARTICLE XII MISCELLANEOUS PROVISIONS........................................58
Section 12.01. Limitation on Rights of Certificateholders..........58
Section 12.02. Certificates Nonassessable and Fully Paid...........58
Section 12.03. Notices.............................................58
Section 12.04. Governing Law.......................................60
Section 12.05. Severability of Provisions..........................60
Section 12.06. Effect of Headings and Table of Contents............60
Section 12.07. Successors and Assigns..............................60
Section 12.08. Benefits of Agreement...............................60
Section 12.09. Legal Holidays......................................60
Section 12.10. Counterparts........................................60
Section 12.11. Communication by Certificateholders with Other
Certificateholders.................................60
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<PAGE>
Section 12.12. Intention of Parties................................61
Section 12.13. Trust Indenture Act Controls........................61
EXHIBIT LIST
Exhibit A Form of Certificate
Exhibit B Form of Certificate for Unlegended Certificates
Exhibit C Form of Certificate to be Delivered in connection with
Transfers Pursuant to Regulation S
Exhibit D Form of Certificate to be Delivered in connection with
Transfers to Non-QIB Accredited Investors
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<PAGE>
PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of August 13, 1998,
among MIDWAY AIRLINES CORPORATION, a Delaware corporation (the "Company"), and
THE FIRST NATIONAL BANK OF MARYLAND, a national banking association, as Trustee,
is made with respect to the formation of Midway Airlines 1998-1C-S Pass Through
Trust and the issuance of 8.92% Midway Airlines 1998-1C-S Pass Through
Certificates representing fractional undivided interests in the Trust.
WITNESSETH:
WHEREAS, the Company has obtained commitments from Bombardier for
the delivery of certain Aircraft;
WHEREAS, as of the Transfer Date (as defined below), the Company
will have financed the acquisition of all or a portion of such Aircraft either
(i) through separate leveraged lease transactions, in which case the Company
leases such Aircraft (collectively, the "Leased Aircraft") or (ii) through
separate secured loan transactions, in which case the Company owns such Aircraft
(collectively, the "Owned Aircraft");
WHEREAS, as of the Transfer Date in the case of each Leased
Aircraft, each Owner Trustee, acting on behalf of the corresponding Owner
Participant, will have issued pursuant to an Indenture, on a non-recourse basis,
Equipment Notes in order to finance a portion of its purchase price of such
Leased Aircraft;
WHEREAS, as of the Transfer Date, in the case of each Owned
Aircraft, the Company will have issued pursuant to an Indenture, on a resource
basis, Equipment Notes to finance a portion of the purchase price of such Owned
Aircraft;
WHEREAS, as of the Transfer Date, the Related Trustee will assign,
transfer and deliver all of such trustee's right, title and interest to the
trust property held by the Related Trustee to the Trustee pursuant to the
Assignment and Assumption Agreement (as defined below);
WHEREAS, the Trustee, effective only, but automatically, upon
execution and delivery of the Assignment and Assumption Agreement, will be
deemed to have declared the creation of the Midway Airlines Pass Through Trust
1998-1C-S (the "Trust") for the benefit of the Certificateholders, and each
Holder of Certificates outstanding as of the Transfer Date, as the grantors of
the Trust, by their respective acceptances of such Certificates, will join in
the creation of this Trust with the Trustee;
WHEREAS, all Certificates deemed issued by the Trust will evidence
fractional undivided interests in the Trust and will convey no rights, benefits
or
<PAGE>
interests in respect of any property other than the Trust Property except for
those Certificates to which an Escrow Receipt (as defined below) has been
affixed;
WHEREAS, upon execution and delivery of the Assignment and
Assumption Agreement, all of the conditions and requirements necessary to make
this Trust Agreement, 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 Agreement in the form and with the terms hereof have been
in all respects duly authorized; and
WHEREAS, upon issuance of the Exchange Certificates, if any, or the
effectiveness of the Shelf Registration Statement, this Agreement, as amended or
supplemented from time to time, will be subject to the provisions of the Trust
Indenture Act of 1939, and shall, to the extent applicable, be governed by such
provisions;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, 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 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 other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference herein have the meanings
assigned to them therein;
(3) all references in this Agreement to designated "Articles",
"Sections", "Subsections" and other subdivisions are to the designated
Articles, Sections, Subsections and other subdivisions of this Agreement;
(4) 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, Subsection or other subdivision; and
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(5) unless the context otherwise requires, whenever the words
"including", "include" or "includes" are used herein, it shall be deemed
to be followed by the phrase "without limitation".
Act: With respect to any Certificateholder has the meaning specified
in Section 1.04.
Affiliate: Means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person. For 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.
Agent Members: Has the meaning specified in Section 3.05(a).
Aircraft: Means each of the New Aircraft in respect of which a
Participation Agreement is entered into in accordance with the Note
Purchase Agreement.
Assignment and Assumption Agreement: Means the assignment and
assumption agreement substantially in the form of Exhibit E to the Related
Trust Agreement executed and delivered in accordance with Section 11.01 of
the Related Trust Agreement.
Authorized Agent: Means any Paying Agent or Registrar for the
Certificates.
Avoidable Tax: Means a state or local tax (i) upon (w) the Trust,
(x) the Trust Property, (y) Certificateholders or (z) the Trustee for
which the Trustee is entitled to seek reimbursement from the Trust
Property, 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 if the Company or any Owner Trustee
shall agree to pay, and shall pay, such tax.
Book-Entry Certificates: With respect to the Certificates, means a
beneficial interest in the Certificates, ownership and transfers of which
shall be made through book entries as described in Section 3.04.
Business Day: Means any day other than a Saturday, a Sunday or a day
on which commercial banks are required or authorized to close in
Baltimore, Maryland, New York, New York, Charlotte, North Carolina or, so
long as any Certificate is outstanding, the city and state in which the
Trustee or any Loan Trustee maintains its Corporate Trust Office or
receives and disburses funds.
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Cedel: Means Cedel Bank societe anonyme.
Certificate: Means any of the Initial Certificates or Exchange
Certificates issued by the Related Trust and that are "Outstanding" (as
defined in the Related Pass Through Trust Agreement) as of the Transfer
Date (the "Transfer Date Certificates") and any Certificates issued in
exchange therefor or replacement thereof pursuant to this Agreement.
Certificate Account: Means the account or accounts created and
maintained pursuant to Section 4.01(a).
Certificateholder or Holder: Means the Person in whose name a
Certificate is registered in the Register.
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.
Code: Means the United States Internal Revenue Code of 1986, as
amended.
Company: Means Midway Airlines Corporation, a Delaware corporation,
or its successor in interest.
Controlling Party: Means the party entitled to act as such pursuant
to the terms of the Intercreditor Agreement.
Corporate Trust Office: With respect to the Trustee or any Loan
Trustee, means the office of such trustee in the city at which at any
particular time its corporate trust business shall be principally
administered.
Delivery Notice: Has the meaning specified in the Note Purchase
Agreement.
Delivery Period Termination Date: Has the meaning specified in the
Related Pass Through Trust Agreement.
Deposits: Has the meaning specified in the Deposit Agreement.
Deposit Agreement: Means the Deposit Agreement dated as of August
13, 1998 relating to the Certificates between the Depositary and the
Escrow Agent,
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as the same may be amended, supplemented or otherwise modified from time
to time in accordance with its terms.
Depositary: Means First Union National Bank.
DTC: Means The Depository Trust Company, its nominees and their
respective successors.
Direction: Has the meaning specified in Section 1.04(c).
Distribution Date: Means each Regular Distribution Date or Special
Distribution Date.
Equipment Notes: Means the Equipment Notes issued pursuant to the
Indentures.
ERISA: Means the Employee Retirement Income Security Act of 1974, as
amended.
Escrow Agent: Means, initially, First Union Trust Company, National
Association, and any replacement or successor therefor appointed in
accordance with the Escrow Agreement.
Escrow Agreement: Means the Escrow and Paying Agent Agreement dated
as of August 13, 1998 relating to the Certificates, among the Escrow
Agent, the Escrow Paying Agent, the Trustee and the Initial Purchasers, as
the same may be amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Escrow Paying Agent: Means the Person acting as paying agent under
the Escrow Agreement.
Escrow Receipt: Means the receipt substantially in the form annexed
to the Escrow Agreement representing a fractional undivided interest in
the funds held in escrow thereunder.
Euroclear: Means the Euroclear System.
Exchange Certificates: Means the pass through certificates
substantially in the form of Exhibit A hereto issued in exchange for the
Initial Certificates pursuant to the Registration Rights Agreement and
authenticated hereunder.
Exchange Offer: Means the exchange offer which may be made pursuant
to the Registration Rights Agreement to exchange Initial Certificates for
Exchange Certificates.
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Exchange Offer Registration Statement: Means the registration
statement that, pursuant to the Registration Rights Agreement, is filed by
the Company with the SEC with respect to the exchange of Initial
Certificates for Exchange Certificates.
Event of Default: Means the occurrence of an Indenture Default under
any Indenture pursuant to which Equipment Notes held by the Trust were
issued.
Final Maturity Date: Means July, 2, 2009.
Final Withdrawal: Has the meaning specified in the Escrow Agreement.
Final Withdrawal Date: Has the meaning specified in the Escrow
Agreement.
Fractional Undivided Interest: Means the fractional undivided
interest in the Trust that is evidenced by a Certificate.
Global Certificates: Has the meaning assigned to such term in
Section 3.01.
Indenture: Means each of the separate trust indenture and security
agreements relating to the Aircraft, each as specified or described in a
Delivery Notice delivered pursuant to the Note Purchase Agreement or the
related Participation Agreement in each case as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
its terms.
Indenture Default: With respect to any Indenture, means any
Indenture Event of Default (as such term is defined in such Indenture)
thereunder.
Initial Certificates: Means the certificates issued and
authenticated hereunder substantially in the form of Exhibit A hereto
other than the Exchange Certificates.
Initial Purchasers: Means Morgan Stanley & Co. Incorporated and
Credit Suisse First Boston Corporation.
Initial Regular Distribution Date: Means the first Regular
Distribution Date on which a Scheduled Payment is to be made.
Institutional Accredited Investor: Means an institutional investor
that is an "accredited investor" within the meaning set forth in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act.
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Intercreditor Agreement: Means the Intercreditor Agreement dated
August 13, 1998 among the Trustee, the Other Trustees, the Liquidity
Provider, the liquidity providers, if any, relating to the Certificates
issued under (and as defined in) the Other Pass Through Trust Agreements,
and The First National Bank of Maryland, as Subordination Agent
thereunder, as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Issuance Date: Means the date of the issuance of the Initial
Certificates.
Lease: Means, with respect to each Leased Aircraft, the 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.
Leased Aircraft: Has the meaning given to such term in the recitals
hereto.
Letter of Representations: Means the agreement dated the Issuance
Date among the Company, the Trustee and the initial Clearing Agency.
Liquidity Facility: Means the Irrevocable Revolving Credit Agreement
dated August 13, 1998 relating to the Certificates, between the Liquidity
Provider and the Subordination Agent, as amended, replaced, supplemented
or otherwise modified from time to time in accordance with its terms and
the terms of the Intercreditor Agreement.
Liquidity Provider: Means, initially, ABN AMRO Bank N.V., acting
through its Chicago branch, and any replacement or successor therefor
appointed in accordance with the Liquidity Facility and the Intercreditor
Agreement.
Loan 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 Loan
Trustee as such trustee; and Loan Trustees means all of the Loan Trustees
under the Indentures.
New Aircraft: Has the meaning specified in the Note Purchase
Agreement.
Non-U.S. Person: Means a Person that is not a U.S. Person, as
defined in Regulation S.
Note Documents: With respect to any Equipment Note, means (i) the
Indenture and the Participation Agreement relating to such Equipment Note,
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and (ii) in the case of any Equipment Note related to a Leased Aircraft,
also includes the Lease relating to such Leased Aircraft.
Note Purchase Agreement. Means the Note Purchase Agreement dated as
of August 13, 1998 among the Trustee, the Other Trustees, the Company, the
Escrow Agent, the Escrow Paying Agent and the Subordination Agent,
providing for, among other things, the purchase of Equipment Notes by the
Trustee on behalf of the Trust, as the same may be amended, supplemented
or otherwise modified from time to time, in accordance with its terms.
Officer's Certificate: Means a certificate signed, (a) in the case
of the Company, by (i) 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 a Loan
Trustee, a Responsible Officer of the Trustee or such Owner Trustee or
such Loan Trustee, as the case may be.
Offshore Certificates Exchange Date: Has the meaning specified in
Section 3.01.
Offshore Global Certificates: Has the meaning assigned to such term
in Section 3.01.
Offshore Physical Certificates: Has the meaning assigned to such
term in Section 3.01.
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 or (ii) such other counsel
designated by the Company and reasonably acceptable to the Trustee and (b)
in the case of any Owner Trustee or any Loan Trustee may be such counsel
as may be designated by any of them whether or not such counsel is an
employee of any of them, and who shall be reasonably acceptable to the
Trustee.
Other Pass Through Trust Agreement: Means each of the three other
Midway Airlines 1998-1 Pass Through Trust Agreements relating to,
respectively, Midway Airlines 1998-1A-S Pass Through Trust, Midway
Airlines 1998-1B-S Pass Through Trust and Midway Airlines 1998-1D-S Pass
Through Trust, each dated the date hereof; and Other Pass Through Trust
Agreements means all such agreements.
Other Trust: Means each of the Midway Airlines Pass Through Trust
1998-1A-S, the Midway Airlines Pass Through Trust 1998-1B-S and the Midway
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Airlines Pass Through Trust 1998-1D-S, each created on the date hereof;
and Other Trusts means all such trusts.
Other Trustee: Means the trustee under each of the Other Pass
Through Trust Agreements, and any successor or other trustee appointed as
provided therein; and Other Trustees means all such trustees.
Outstanding: With respect to Certificates, means, as of the date of
determination, all Certificates theretofore authenticated and delivered
under this Agreement, except:
(i) Certificates theretofore cancelled by the Registrar or
delivered to the Trustee or the Registrar for cancellation;
(ii) All of the Certificates if money in the full amount
required to make the final distribution with respect thereto
pursuant to Section 11.01 hereof has been theretofore deposited with
the Trustee in trust for the Holders of such Certificates as
provided in Section 4.01 pending distribution of such money to such
Certificateholders pursuant to such final distribution payment; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been authenticated and delivered pursuant to this
Agreement.
Owned Aircraft: Has the meaning given to such term in the recitals
hereto.
Owner Participant: With respect to any Equipment Note relating to a
Leased Aircraft, means the "Owner Participant" 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 relating to a
Leased Aircraft, means the "Owner Trustee", 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 Indentures.
Participation Agreement: Means each Participation Agreement to be
entered into by the Trustee pursuant to the Note Purchase Agreement, as
the same may be amended, supplemented or otherwise modified in accordance
with its terms.
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Paying Agent: Means the paying agent maintained and appointed for
the Certificates pursuant to Section 7.12.
Permanent Offshore Global Certificates: Has the meaning specified in
Section 3.01.
Permitted Investments: Means obligations of the United States of
America or agencies or instrumentalities thereof for the payment of which
the full faith and credit of the United States of America is pledged,
maturing in not more than 60 days or such lesser time as is necessary for
payment of any Special Payments on a Special Distribution Date or any
mutual fund the portfolio of which is limited to such obligations,
including any proprietary mutual fund of The First National Bank of
Maryland for which such bank or an affiliate is investment advisor or to
which such bank provides other services and receives reasonable
compensation for such services.
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.
Physical Certificates: Has the meaning specified in Section 3.01.
Plan Transferee: Means any Plan or any entity that is using the
assets of any Plan to purchase or hold its interest in a 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.
Pool Balance: Means, as of any date, (i) the original aggregate face
amount of the Certificates less (ii) the aggregate amount of all payments
made in respect of such Certificates or in respect of Deposits 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 as of any Distribution Date shall be computed after giving effect
to any special distribution with respect to unused Deposits, payment of
principal, if any, on the Equipment Notes or other Trust Property held in
the Trust and the distribution thereof to be made on such Distribution
Date.
Pool Factor: Means, as of any date, the quotient (rounded to the
seventh decimal place) computed by dividing (i) the Pool Balance as at
such date by (ii) the original aggregate face amount of the Certificates.
The Pool Factor as of any Distribution Date shall be computed after giving
effect to any special distribution with respect to unused Deposits,
payment of principal, if any, on the Equipment Notes or other Trust
Property and the distribution thereof to be made on such Distribution
Date.
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Private Placement Legend: Has the meaning specified in Section 3.02.
Purchase Agreement: Means the Purchase Agreement dated August 6,
1998 between the Company and the Initial Purchasers.
QIB: Means a qualified institutional buyer as defined in Rule 144A.
Record Date: Means (i) for Scheduled Payments to be distributed on
any Regular Distribution Date, other than the final distribution, 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, the 15th day
(whether or not a Business Day) preceding such Special Distribution Date.
Register and Registrar: Mean the register maintained and the
registrar appointed pursuant to Sections 3.04 and 7.12.
Registration Rights Agreement: Means the Registration Rights
Agreement, dated as of August 13, 1998, among the Initial Purchasers, the
Trustee, the Other Trustees and the Company, as amended, supplemented or
otherwise modified from time to time in accordance with its terms.
Regular Distribution Date: With respect to distributions of
Scheduled Payments in respect of the Certificates, means each date
designated as a Regular Distribution Date in this Agreement, until payment
of all the Scheduled Payments to be made under the Equipment Notes held in
the Trust have been made; 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.
Regulation S: Means Regulation S under the Securities Act or any
successor regulation thereto.
Related Other Pass Through Trust Agreements: Means the "Other
Agreements" as defined in the Related Pass Through Trust Agreement.
Related Other Trustees: Means the "Other Trustees" as defined in the
Related Pass Through Trust Agreement.
Related Pass Through Trust Agreement: Means the Pass Through Trust
Agreement 1998-1C-O dated the date hereof relating to the Midway Airlines
Pass Through Trust 1998-1C-O and entered into by the Company and the
Trustee.
Related Trust: Means the Midway Pass Through Trust 1998-1C-O, to be
formed under the Related Pass Through Trust Agreement.
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Related Trustee: Means the trustee under the Related Pass Through
Trust Agreement.
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 Agreement.
Responsible Officer: With respect to the Trustee, any Loan Trustee
and any Owner Trustee, means any officer in the Corporate Trust Division
of the Trustee, Loan 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.
Rule 144A: Means Rule 144A under the Securities Act and any
successor regulation thereto.
Scheduled Payment: With respect to any Equipment Note, means any
payment of principal and interest on such Equipment Note (other than any
such payment which is not in fact received by the Trustee or any
Subordination Agent within five days of the date on which such payment is
scheduled to be made) or any payment of interest on the Certificates with
funds drawn under the Liquidity Facility 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, as
amended, 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.
Securities Act: Means the United States Securities Act of 1933, as
amended from time to time, or any successor thereto.
Shelf Registration Statement: Means the shelf registration statement
which may be required to be filed by the Company with the SEC pursuant to
any Registration Rights Agreement, other than an Exchange Offer
Registration Statement.
Special Distribution Date: Means each date on which a Special
Payment is to be distributed as specified in this Agreement; provided,
however, that, if any
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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) or Special Redemption Premium.
Special Payments Account: Means the account or accounts created and
maintained pursuant to Section 4.01(b).
Special Redemption Premium: Means the premium payable by the Company
in respect of the Final Withdrawal pursuant to the Note Purchase
Agreement.
Specified Investments: Means (i) obligations of, or guaranteed by,
the United States Government or agencies thereof, (ii) open market
commercial paper of any corporation incorporated under the laws of the
United States of America or any State thereof rated at least P-2 or its
equivalent by Moody's Investors Service, Inc. or at least A-2 or its
equivalent by Standard & Poor's Ratings Group, (iii) certificates of
deposit issued by commercial banks organized under the laws of the United
States or of any political subdivision thereof having a combined capital
and surplus in excess of $500,000,000 which banks or their holding
companies have a rating of A or its equivalent by Moody's Investors
Service, Inc. or Standard & Poor's Ratings Group; provided, however, that
the aggregate amount at any one time so invested in certificates of
deposit issued by any one bank shall not exceed 5% of such bank's capital
and surplus, (iv) U.S. dollar denominated offshore certificates of deposit
issued by, or offshore time deposits with, any commercial bank described
in (iii) or any subsidiary thereof, (v) repurchase agreements with any
financial institution having combined capital and surplus of at least
$500,000,000 with any of the obligations described in clauses (i) through
(iv) as collateral and (vi) any mutual fund the portfolio of which is
limited to investments of the types specified in the preceding clauses (i)
through (v), including any proprietary mutual fund of The First National
Bank of Maryland for which such bank or an affiliate is investment advisor
or to which such bank provides other services and receives reasonable
compensation for such services; 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.
Subordination Agent: Has the meaning specified in the Intercreditor
Agreement.
Temporary Offshore Global Certificates: Has the meaning specified in
Section 3.01.
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Transfer Date: Means the moment of execution and delivery of the
Assignment and Assumption Agreement by each of the parties thereto.
Transfer Date Certificate: Has the meaning specified in the
definition of "Certificates".
Triggering Event: Has the meaning assigned to such term in the
Intercreditor Agreement.
Trust: Means the trust created by this Agreement, the estate of
which consists of the Trust Property.
Trust Indenture Act: Except as otherwise provided in Section 9.06,
means the United States Trust Indenture Act of 1939 as in force at the
date hereof.
Trust Property: Means (i) subject to the Intercreditor Agreement,
the Equipment Notes held as the property of the Trust, 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, subject to the Intercreditor Agreement, any
proceeds from the sale by the Trustee pursuant to Section 6.02 of any
Equipment Note and (iii) all rights of the Trust and the Trustee, on
behalf of the Trust, under the Intercreditor Agreement, the Escrow
Agreement, the Note Purchase Agreement and the Liquidity Facilities,
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 Facilities,
provided that rights with respect to the Deposits or under the Escrow
Agreement, except for the right to direct withdrawals for the purchase of
Equipment Notes to be held herein, will not constitute Trust Property.
Trustee: Means The First National Bank of Maryland, or its successor
in interest, and any successor or other trustee appointed as provided
herein.
Trustee's Lien: Has the meaning specified in Section 7.17.
U.S. Global Certificate: Has the meaning specified in Section 3.01.
U.S. Physical Certificates: Has the meaning specified in Section
3.01.
Section 1.02. Compliance Certificates and Opinions. Upon any
application or request by the Company, any Owner Trustee or any Loan Trustee to
the Trustee to take any action under any provision of this Agreement, the
Company, such Owner Trustee or such Loan Trustee, as the case may be, shall
furnish to the Trustee (i) an Officer's Certificate stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in this Agreement
relating to the proposed action have been complied with and (ii) an Opinion of
Counsel stating that in the opinion of such counsel
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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 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 Agreement (other than a certificate
provided pursuant to Section 8.04(d)) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions in this
Agreement relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and 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 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 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,
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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 Loan 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 this
Agreement and conclusive in favor of the Trustee, the Company and any Loan
Trustee, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument acknowledged to him
the execution thereof, or by an affidavit of a witness to such execution sworn
to before any such notary or such other officer and where such execution is by
an officer of a corporation or association or a member of a partnership, on
behalf of such corporation, association or partnership, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other reasonable manner
which the Trustee deems sufficient.
(c) In determining whether the Certificateholders of the requisite
Fractional Undivided Interests of Certificates Outstanding have given any
direction, consent or waiver (a "Direction") under this Agreement, Certificates
owned by the Company, any Owner Trustee, any Owner Participant or any Affiliate
of any such Person thereof 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 the
Trustee in fact knows to be so owned shall be so disregarded. Notwithstanding
the foregoing, (i) if any such Person owns 100% of the Certificates Outstanding,
such Certificates shall not be so disregarded as aforesaid, and (ii) if any
amount of Certificates 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
Owner Trustee, any Owner Participant or any Affiliate of any such Person.
(d) For all purposes of this Agreement, all Initial Certificates and
all Exchange Certificates shall vote and take all other actions of
Certificateholders together as one series of Certificates.
(e) The Company may at its option, by delivery of an Officer's
Certificate to the Trustee, set a record date to determine the
Certificateholders entitled to give any consent, request, demand, authorization,
direction, notice, waiver or other 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,
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request, demand, authorization, direction, notice, waiver or other Act may be
given before or after such record date, but only the Certificateholders of
record 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 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 shall be
computed as of such record date; provided that no such consent, request, demand,
authorization, direction, notice, waiver or other Act by the Certificateholders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Agreement not later than one year after such
record date.
(f) 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.
(g) Except as otherwise provided in Section 1.04(c), Certificates
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.
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Acquisition of Trust Property. (a) The Trustee is
hereby irrevocably authorized and directed to execute and deliver the Assignment
and Assumption Agreement on the date specified in Section 11.01 of the Related
Trust Supplement, subject only to the satisfaction of the conditions set forth
in said Section 11.01. This Agreement (except only for the immediately preceding
sentence hereof, which is effective upon execution and delivery hereof) shall
become effective upon the execution and delivery of the Assignment and
Assumption Agreement by the Trustee and the Related Trustee, automatically and
without any further signature or action on the part of the Company and the
Trustee, and shall thereupon constitute the legal, valid and binding obligation
of the parties hereto enforceable against each of the parties hereto in
accordance with its terms. Upon such execution and delivery of the Assignment
and Assumption Agreement, the Related Trust shall be terminated, the
Certificateholders shall receive beneficial interests in the Trust in exchange
for their interests in the Related Trust equal to their respective beneficial
interests in the Related Trust and the "Outstanding" (as defined in the Related
Pass Through Trust Agreement) pass through certificates representing fractional
undivided interests in the Related Trust shall be deemed for all purposes of
this Agreement, without further signature or action of any party or
Certificateholder, to be Certificates representing the same Fractional Undivided
Interests in the Trust and Trust Property. By acceptance
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of its Certificate, each Certificateholder consents to and ratifies such
assignment, transfer and delivery of the trust property of the Related Trust to
the Trustee upon the execution and delivery of the Assignment and Assumption
Agreement. Except as provided in Sections 3.04, 3.05, 3.07 and 3.11, the Trustee
shall not execute, authenticate or deliver Certificates in excess of the
aggregate amount specified in this paragraph.
(b) The Trustee, upon the execution and delivery of the Assignment
and Assumption Agreement, acknowledges its acceptance of all right, title and
interest in and to the Trust Property and declares that the Trustee holds and
will hold such right, title and interest for the benefit of all then present and
future Certificateholders, upon the trusts herein set forth. By the acceptance
of each Certificate issued to it under the Related Pass Through Trust Agreement
and deemed issued under this Agreement, each Holder of any such Certificate as
grantor of the Trust thereby joins in the creation and declaration of the Trust.
Section 2.02. [Reserved]
Section 2.03. The Trustee. Subject to Section 7.15, the Trustee
shall not be responsible in any manner whatsoever for or in respect of the
validity or sufficiency of this Agreement, the Deposit Agreement or the Escrow
Agreement or the due execution hereof or thereof by the Company or the other
parties thereto (other than the Trustee), or for or in respect of the recitals
and statements contained herein or therein, all of which recitals and statements
are made solely by the Company.
Section 2.04. Acceptance by Trustee. The Trustee, upon the execution
and delivery of this Agreement, acknowledges its acceptance of all right, title
and interest in and to the Trust Property acquired pursuant to Section 2.01
hereof and the Note Purchase Agreement and declares that the Trustee holds and
will hold such right, title and interest, together with all other property
constituting the Trust Property, for the benefit of all then present and future
Certificateholders, upon the trusts herein set forth. Subject to Section 7.14,
the Trustee shall take all actions reasonably necessary to effect the
registration of all such Equipment Notes in the name of the Subordination Agent.
By its payment for and acceptance of each Certificate issued to it under this
Agreement, each initial Certificateholder as grantor of the Trust thereby joins
in the creation and declaration of the Trust.
Section 2.05. Limitation of Powers. The Trust is constituted solely
for the purpose of making the investment in the Equipment Notes, and, except as
set forth herein, 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 any Aircraft (as
defined in the respective Indentures) by bidding such Equipment Notes or
otherwise, or taking any action with respect to any such Aircraft once
acquired).
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ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution of
Certificates. (a) The Initial Certificates shall be known as the "8.92%
1998-1C-S Initial Pass Through Certificates" and the Exchange Certificates shall
be known as the "8.92% 1998-1C-S Exchange Pass Through Certificates", in each
case, of the Trust. Each Certificate will represent a fractional undivided
interest in the Trust and shall be substantially in the form set forth as
Exhibit A hereto, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Agreement and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Certificates, as evidenced by their execution of 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. At the Escrow Agent's request under the Escrow Agreement, the
Trustee shall affix the corresponding Escrow Receipt to each Certificate. In any
event, any transfer or exchange of any Certificate shall also effect a transfer
or exchange of the related Escrow Receipt. Prior to the Final Withdrawal Date,
no transfer or exchange of any Certificate shall be permitted unless the
corresponding Escrow Receipt is attached thereto and also is so transferred or
exchanged. By acceptance of any Certificate to which an Escrow Receipt is
attached, each Holder of such a Certificate acknowledges and accepts the
restrictions on transfer of the Escrow Receipt set forth herein and in the
Escrow Agreement.
(b) The Initial Certificates shall be issued only in fully
registered form without coupons and only in denominations of $100,000 or
integral multiples of $1,000 in excess thereof, except that one Certificate may
be issued in a denomination of less than $100,000. The Exchange Certificates
will be issued in denominations of $1,000 or integral multiples thereof. Each
Certificate shall be dated the date of its authentication. The aggregate
Fractional Undivided Interest of Certificates shall not at any time exceed
$20,528,000.
(c) Initial Certificates offered and sold in reliance on Rule 144A
shall be issued initially in the form of a single permanent global Certificate
in registered form, substantially in the form set forth as Exhibit A hereto (the
"U.S. Global Certificate"), duly executed and authenticated by the Trustee as
hereinafter provided. The U.S. Global Certificate will be registered in the name
of a nominee for DTC and deposited with the Trustee, as custodian for DTC. The
aggregate principal amount of the U.S. Global Certificate may from time to time
be increased or decreased by adjustments made on the records of the Depositary
or its nominee, or of the Trustee, as custodian for DTC or its nominee, as
hereinafter provided.
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(d) Initial Certificates offered and sold in offshore transactions
in reliance on Regulation S shall be issued initially in the form of a single
temporary global Certificate in registered form, substantially in the form set
forth as Exhibit A hereto (the "Temporary Offshore Global Certificate") duly
executed and authenticated by the Trustee as hereinafter provided. The Temporary
Offshore Global Certificate will be registered in the name of a nominee of DTC
for credit to the account of the Agent Members acting as depositaries for
Euroclear and Cedel and deposited with the Trustee as custodian for DTC. At any
time on or after September 23, 1998 (the "Offshore Certificates Exchange Date"),
upon receipt by the Trustee of a certificate substantially in the form of
Exhibit B hereto, a single permanent global Certificate in registered form
substantially in the form set forth in Exhibit A (the "Permanent Offshore Global
Certificate"; and together with the Temporary Offshore Global Certificate, the
"Offshore Global Certificates"), duly executed and authenticated by the Trustee
as hereinafter provided, shall be registered in the name of a nominee for DTC
and deposited with the Trustee, as custodian for DTC, and the Registrar shall
reflect on its books and records the date of such transfer and a decrease in the
principal amount of any Temporary Offshore Global Certificate in an amount equal
to the principal amount of the beneficial interest in such Temporary Offshore
Global Certificate transferred. The U.S. Global Certificate and the Offshore
Global Certificates are sometimes referred to as the "Global Certificates".
(e) Initial Certificates offered and sold to Institutional
Accredited Investors shall be issued in the form of permanent certificated
Certificates in registered form in substantially the form set forth as Exhibit A
hereto (the "U.S. Physical Certificates"). Certificates issued pursuant to
Section 3.05(b) in exchange for interests in any Offshore Global Certificate
shall be in the form of permanent certificated Certificates in registered form
substantially in the form set forth in Exhibit A (the "Offshore Physical
Certificates"). The Offshore Physical Certificates and U.S. Physical
Certificates are sometimes collectively herein referred to as the "Physical
Certificates".
(f) The Exchange Certificates shall be issued in the form of one or
more global Certificates substantially in the form of Exhibit A hereto (each, a
"Global Exchange Certificate"), except that (i) the Private Placement Legend
(hereinafter defined) shall be omitted. Such Global Exchange Certificates shall
be in registered form and be registered in the name of DTC and deposited with
the Trustee, at its Corporate Trust Office, as custodian DTC. The aggregate
principal amount of any Global Exchange Certificate may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for DTC for such Global Exchange Certificate, which adjustments shall
be conclusive as to the aggregate principal amount of any such Global Exchange
Certificates. Subject to clause (i) of the first sentence of this Section
3.01(f), the terms hereof applicable to Global Certificates shall apply to the
Global Exchange Certificates, mutatis mutandis.
(g) The definitive Certificates shall be in registered form and
shall be typed, printed, lithographed or engraved or produced by any combination
of these
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methods or may be produced in any other manner, all as determined by the
officers executing such Certificates, as evidenced by their execution of such
Certificates.
Section 3.02. Restrictive Legends. (a) Subject to Section 3.06, each
Global Certificate (other than the Permanent Offshore Global Certificate) and
each U.S. Physical Certificate shall bear the following legend (the "Private
Placement Legend") on the face thereof:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY
MIDWAY AIRLINES CORPORATION ("MIDWAY") OR ANY AFFILIATE OF MIDWAY, RESELL
OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO MIDWAY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATES
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE
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ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
CERTIFICATE WAS HELD BY MIDWAY OR AN AFFILIATE OF MIDWAY, THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND MIDWAY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
(b) Each Global Certificate shall also bear the following legend on
the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE 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 HEREON 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.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST
AGREEMENT REFERRED TO HEREIN.
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Section 3.03. Authentication of Certificates. (a) The Trustee shall
duly execute, authenticate and deliver Certificates in authorized denominations
equalling in the aggregate the aggregate principal amount of the Equipment Notes
to be purchased by the Trustee pursuant to the Participation Agreements and
evidencing the entire ownership of the Trust.
(b) No Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose, unless there appears on
such Certificate a certificate of authentication substantially in the form
provided for herein executed by the Trustee by the manual signature of one of
its authorized signatories, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.
Section 3.04. Transfer and Exchange. The Trustee shall cause to be
kept at the office or agency to be maintained by it in accordance with the
provisions of Section 7.12 of this Agreement a register (the "Register") for the
Certificates in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of the Certificates
and of transfers and exchanges of the Certificates as herein provided. The
Trustee shall initially be the registrar (the "Registrar") for the purpose of
registering the Certificates and transfers and exchanges of the Certificates as
herein provided. A Certificateholder may transfer or exchange a Certificate by
written application to the Registrar stating the name of the proposed transferee
and otherwise complying with the terms of this Agreement, including providing a
written certificate or other evidence of compliance with any restrictions on
transfer; provided that no exchanges of Initial Certificates for Exchange
Certificates shall occur until an Exchange Offer Registration Statement shall
have been declared effective by the SEC (notice of which shall be provided to
the Trustee by the Company). No such transfer shall be effected until, and such
transferee shall succeed to the rights of a Certificateholder only upon, final
acceptance and registration of the transfer by the Registrar in the Register.
Prior to the registration of any transfer by a Certificateholder as provided
herein, the Trustee shall treat the person in whose name the Certificate is
registered as the owner thereof for all purposes, and the Trustee shall not be
affected by notice to the contrary. Furthermore, DTC shall, by acceptance of a
Global Certificate, agree that transfers of beneficial interests in such Global
Certificate may be effected only through a book-entry system maintained by the
Depositary (or its agent), and that ownership of a beneficial interest in the
Certificate shall be required to be reflected in a book entry. When Certificates
are presented to the Registrar with a request to register the transfer or to
exchange them for an equal face amount of Certificates of other authorized
denominations, the Registrar shall register the transfer or make the exchange as
requested if its requirements for such transactions are met. To permit
registrations of transfers and exchanges in accordance with the terms,
conditions and restrictions hereof, the Trustee shall execute and authenticate
Certificates at the Registrar's request. No service charge shall be made for any
registration of transfer or exchange of the Certificates, but the Trustee may
require payment by the transferor of a sum sufficient to cover any transfer tax
or similar governmental charge payable in connection therewith.
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Section 3.05. Book-Entry Provisions for U.S. Global Certificate and
Offshore Global Certificates. (a) Members of, or participants in, DTC ("Agent
Members") shall have no rights under this Agreement with respect to any Global
Certificate held on their behalf by DTC, or the Trustee as its custodian, and
DTC may be treated by the Trustee and any agent of the Trustee as the absolute
owner of such Global Certificate for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Trustee or any agent of the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by DTC or shall impair, as between DTC and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a holder of any Certificate. Upon the issuance of any Global
Certificate, the Registrar or its duly appointed agent shall record a nominee of
DTC as the registered holder of such Global Certificate.
(b) Transfers of any Global Certificate shall be limited to
transfers of such Global Certificate in whole, but not in part, to nominees of
DTC, its successor or such successor's nominees. Beneficial interests in the
U.S. Global Certificate and any Offshore Global Certificate may be transferred
in accordance with the rules and procedures of DTC and the provisions of Section
3.06. Beneficial interests in the U.S. Global Certificate or an Offshore Global
Certificate shall be delivered to all beneficial owners in the form of U.S.
Physical Certificates or Offshore Physical Certificates, as the case may be, if
(i) the Company notifies the Trustee in writing that DTC is unwilling or unable
to discharge properly its responsibilities as DTC for the U.S. Global
Certificate or such Offshore Global Certificate, as the case may be, and the
Company is unable to locate a qualified successor depositary within 90 days of
such notice or (ii) after the occurrence of an Event of Default, beneficial
owners of the U.S. Global Certificate or Offshore Global Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in the Trust, by Act of such Certificateholders delivered to the Company and the
Trustee, advise the Company, the Trustee and DTC through its Clearing Agency
Participants in writing that the continuation of a book-entry system through DTC
is no longer in the best interests of the Certificateholders, then the Trustee
shall notify all owners of beneficial interests in the U.S. Global Certificate
or an Offshore Global Certificate, through DTC, of the occurrence of any such
event and the availability of definitive Certificates.
(c) Any beneficial interest in one of the Global Certificates that
is transferred to a Person who takes delivery in the form of an interest in the
other Global Certificate will, upon such transfer, cease to be an interest in
such Global Certificate and become an interest in the other Global Certificate
and, accordingly, will thereafter be subject to all transfer restrictions, if
any, and other procedures applicable to beneficial interests in such other
Global Certificate for as long as it remains such an interest.
(d) [Intentionally omitted.]
(e) In connection with the transfer of the entire U.S. Global
Certificate or an entire Offshore Global Certificate to the beneficial owners
thereof pursuant to
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paragraph (b) of this Section 3.05, such U.S. Global Certificate or Offshore
Global Certificate, as the case may be, shall be deemed to be surrendered to the
Trustee for cancellation, and the Trustee shall execute, authenticate and
deliver, to each beneficial owner identified by DTC in exchange for its
beneficial interest in such U.S. Global Certificate or Offshore Global
Certificate, as the case may be, an equal aggregate principal amount of U.S.
Physical Certificates or Offshore Physical Certificates, as the case may be, of
authorized denominations.
(f) Any U.S. Physical Certificate delivered in exchange for an
interest in the U.S. Global Certificate pursuant to paragraph (b) of this
Section 3.05 shall, except as otherwise provided by paragraph (f) of Section
3.06, bear the Private Placement Legend.
(g) Any Offshore Physical Certificate delivered in exchange for an
interest in an Offshore Global Certificate pursuant to paragraph (b) of this
Section shall, except as otherwise provided by paragraph (f) of Section 3.06,
bear the applicable legend regarding transfer restrictions set forth in Section
3.02(a).
(h) The registered holder of the U.S. Global Certificate or any
Offshore Global Certificate may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Agreement or the Certificates.
Section 3.06. Special Transfer Provisions. Unless and until (i) an
Initial Certificate is sold under an effective Shelf Registration Statement or
(ii) an Initial Certificate is exchanged for an Exchange Certificate pursuant to
an effective Exchange Offer Registration Statement, in each case pursuant to the
terms of the Registration Rights Agreement, the following provisions shall apply
to the Certificates:
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Certificate to any Institutional Accredited Investor
which is not a QIB (excluding transfers to or by Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Certificate,
whether or not such Certificate bears the Private Placement Legend, if (x)
the requested transfer is at least two years after the later of the
original issue date of the Certificates and the last date on which such
Certificate was held by the Company or any affiliate thereof or (y) the
proposed transferee has delivered to the Registrar a letter substantially
in the form of Exhibit D hereto and the aggregate principal amount of the
Certificates being transferred is at least $100,000.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Certificate, upon receipt by the
Registrar of (x) the documents, if any, required by paragraph (i) and (y)
instructions given in accordance with DTC's and the Registrar's
procedures, the Registrar shall reflect
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on its books and records the date of the transfer and a decrease in the
principal amount of such U.S. Global Certificate in an amount equal to the
principal amount of the beneficial interest in such U.S. Global
Certificate to be transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver to the transferor or at its
direction, one or more U.S. Physical Certificates of like tenor and
amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of an Initial Certificate
to a QIB (excluding Non-U.S. Persons):
(i) If the Certificate to be transferred consists of U.S. Physical
Certificates or an interest in any Temporary Offshore Global Certificate,
the Registrar shall register the transfer if such transfer is being made
by a proposed transferor who has checked the box provided for on the form
of Initial Certificate stating, or has otherwise advised the Trustee and
the Registrar in writing, that the sale has been made in compliance with
the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Initial Certificate stating, or
has otherwise advised the Trustee and the Registrar in writing, that it is
purchasing the Initial Certificate for its own account or an account with
respect to which it exercises sole investment discretion and that it, or
the Person on whose behalf it is acting with respect to any such account,
is a QIB within the meaning of Rule 144A, and is aware that the sale to it
is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Trust and/or the Company as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
(ii) Upon receipt by the Registrar of the documents referred to in
clause (i) above and instructions given in accordance with DTC's and the
Registrar's procedures therefor, the Registrar shall reflect on its books
and records the date of such transfer and an increase in the principal
amount of the U.S. Global Certificate in an amount equal to the principal
amount of the U.S. Physical Certificates or interests in the Temporary
Offshore Global Certificate, as the case may be, being transferred, and
the Trustee shall cancel such Physical Certificates or decrease the amount
of such Temporary Offshore Global Certificate so transferred.
(c) [Intentionally omitted.]
(d) Transfers of Interests in the Permanent Offshore Global
Certificate or Offshore Physical Certificates. The Registrar shall register any
transfer of interests in the Permanent Offshore Global Certificate or Offshore
Physical Certificates without requiring any additional certification.
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(e) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any registration of any transfer of an
Initial Certificate to a Non-U.S. Person:
(i) Prior to the Offshore Certificates Exchange Date, the Registrar
shall register any proposed transfer of an Initial Certificate to a
Non-U.S. Person upon receipt of a certificate substantially in the form
set forth as Exhibit C hereto from the proposed transferor.
(ii) On and after the Offshore Certificates Exchange Date, the
Registrar shall register any proposed transfer to any Non-U.S. Person if
the Certificate to be transferred is a U.S. Physical Certificate or an
interest in the U.S. Global Certificate, upon receipt of a certificate
substantially in the form of Exhibit C from the proposed transferor. The
Registrar shall promptly send a copy of such certificate to the Company.
(iii) Upon receipt by the Registrar of (x) the documents, if any,
required by paragraph (ii) and (y) instructions in accordance with the
Depositary's and the Registrar's procedures, the Registrar shall reflect
on its books and records the date of such transfer and a decrease in the
principal amount of such U.S. Global Certificate in an amount equal to the
principal amount of the beneficial interest in such U.S. Global
Certificate to be transferred, and (B) upon receipt by the Registrar of
instructions given in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and an increase in the principal amount of the Offshore Global Certificate
in an amount equal to the principal amount of the U.S. Physical
Certificate or the U.S. Global Certificate, as the case may be, to be
transferred, and the Trustee shall cancel the Physical Certificate, if
any, so transferred or decrease the amount of such U.S. Global
Certificate.
(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Certificates not bearing the Private Placement Legend, the
Registrar shall deliver Certificates that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Certificates bearing the
Private Placement Legend, the Registrar shall deliver only Certificates that
bear the Private Placement Legend unless either (i) the circumstances
contemplated by paragraph (a)(i)(x) or (e)(ii) of this Section 3.06 exist or
(ii) there is delivered to the Registrar an Opinion of Counsel to the effect
that neither such legend nor the related restrictions on transfer are required
in order to maintain compliance with the provisions of the Securities Act.
(g) General. By its acceptance of any Certificate bearing the
Private Placement Legend, each Holder of such a Certificate acknowledges the
restrictions on transfer of such Certificate set forth in this Agreement and
agrees that it will transfer such Certificate only as provided in this
Agreement. The Registrar shall not register a transfer of any Certificate unless
such transfer complies with the restrictions on transfer of such Certificate set
forth in this Agreement. In connection with any
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transfer of Certificates, each Certificateholder agrees by its acceptance of the
Certificates to furnish the Registrar or the Trustee such certifications, legal
opinions or other information as either of them may reasonably require to
confirm that such transfer is being made pursuant to an exemption from, or a
transaction not subject to, the registration requirements of the Securities Act;
provided that neither the Trustee nor the Registrar shall be required to
determine the sufficiency of any such certifications, legal opinions or other
information.
Until such time as no Certificates remain Outstanding, the Registrar
shall retain copies of all letters, notices and other written communications
received pursuant to Section 3.05 or this Section 3.06. The Trustee, if not the
Registrar at such time, shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Registrar.
Section 3.07. 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, in authorized denominations and of like Fractional Undivided
Interest and bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Certificate under this
Section 3.07, 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 3.07 shall
constitute conclusive evidence of the appropriate Fractional Undivided Interest
in the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Trustee, the Registrar and any
Paying Agent 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 Article IV and for all
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other purposes whatsoever, and none of the Trustee, the Registrar or any Paying
Agent shall be affected by any notice to the contrary.
Section 3.09. Cancellation. All Certificates surrendered for payment
or transfer or exchange shall, if surrendered to the Trustee or any agent of the
Trustee other than the Registrar, be delivered to the Registrar for cancellation
and shall promptly be cancelled by it. No Certificates shall be authenticated in
lieu of or in exchange for any Certificates cancelled as provided in this
Section, except as expressly permitted by this Agreement. All cancelled
Certificates held by the Registrar shall be destroyed and a certification of
their destruction delivered to the Trustee.
Section 3.10. Limitation of Liability for Payments. All payments and
distributions made to Certificateholders 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 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 to the extent available for distribution to such
Certificateholder as provided in this Agreement.
Section 3.11. Temporary Certificates. Until definitive Certificates
are ready for delivery, the Trustee shall authenticate temporary Certificates.
Temporary Certificates shall be substantially in the form of definitive
Certificates but may have insertions, substitutions, omissions and other
variations determined to be appropriate by the officers executing the temporary
Certificates, as evidenced by their execution of such temporary Certificates. If
temporary Certificates are issued, the Trustee will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
office or agency of the Trustee designated for such purpose pursuant to Section
7.12, without charge to the Certificateholder. Upon surrender for cancellation
of any one or more temporary Certificates, the Trustee shall execute,
authenticate and deliver in exchange therefor a like face amount of definitive
Certificates of authorized denominations. Until so exchanged, the temporary
Certificates shall be entitled to the same benefits under this Agreement as
definitive Certificates.
Section 3.12. ERISA Restrictive Legend. All Certificates issued
pursuant to this Agreement shall bear a legend to the following effect (the
"ERISA Legend") unless the Company and the Trustee determine otherwise
consistent with applicable law:
"BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS FOR THE BENEFIT OF
THE COMPANY AND EACH OWNER PARTICIPANT THAT (A) IT IS NOT A PLAN TRANSFEREE (AS
DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR (B) ONE OR MORE PROHIBITED
TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS APPLIES SUCH THAT THE USE OF
PLAN ASSETS TO PURCHASE AND HOLD THIS PASS THROUGH CERTIFICATE WILL
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NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975
OF THE CODE. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF
THE FOREGOING RESTRICTIONS."
By acceptance of any Certificate bearing the ERISA Legend, each
Holder of such a Certificate acknowledges for the benefit of the Company and
each Owner Participant the restrictions on transfer of such Certificate set
forth in this Agreement and agrees that it will transfer such Certificate only
as provided in this Agreement. The Registrar shall not register a transfer of
any Certificate unless such transfer complies with the restrictions on transfer,
if any, of such Certificate set forth in this Agreement.
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 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, 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 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 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 Loan Trustee to which an
Equipment Note relates such Equipment Note on the date of its stated final
maturity or, in the case of any Equipment Note which is to be redeemed in whole
pursuant to the relevant Indenture, on the applicable redemption date under such
Indenture.
Section 4.02. Distributions from Certificate Account and Special
Payments Account. (a) On each Regular Distribution Date or as soon thereafter as
the Trustee has confirmed receipt of the payment of the Scheduled Payments due
on such date, the
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Trustee shall distribute out of the Certificate Account the entire amount
deposited therein pursuant to Section 4.01(a). There shall be so distributed to
each Certificateholder of record 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
Fractional Undivided Interest in the Trust held by such Certificateholder) of
the total amount in the Certificate Account, except that, with respect to
Certificates registered on the Record Date in the name of the nominee of the
Depositary (initially, such nominee to be Cede & Co.), such distribution shall
be made by wire transfer in immediately available funds to the account
designated by such nominee.
(b) On each Special Distribution Date with respect to any Special
Payment or as soon thereafter as the Trustee has confirmed receipt of any
Special Payments, the Trustee shall distribute out of the 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 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 Trust held by such Certificateholder) of the aggregate amount in
the Special Payments Account on account of such Special Payment, except that,
with respect to Certificates registered on the Record Date in the name of the
nominee of the Depositary (initially, such nominee to be Cede & Co.), such
distribution shall be made by wire transfer in immediately available funds to
the account designated by such nominee.
(c) The Trustee shall, at the expense of the Company, cause notice
of each Special Payment to be mailed to each Certificateholder at his address as
it appears in the Register. In the event of redemption, prepayment or purchase
of Equipment Notes held in the Trust, such notice shall be mailed not less than
15 days prior to the date any 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 (which notice, in the case of a Special Redemption Premium,
shall include a copy of the notice delivered by the Escrow Paying Agent under
Section 2.06 of the Escrow Agreement). Notices mailed by the Trustee shall set
forth:
(i) the Special Distribution Date and the Record Date therefor
(except as otherwise provided in Section 11.01),
(ii) the amount of the Special Payment for each $1,000 face amount
Certificate (taking into account any payment to be made by the Company
pursuant to Section 2.02) and the amount thereof constituting principal,
premium, if any, and interest,
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(iii) the reason for the Special Payment, and
(iv) if the Special Distribution Date is the same date as a Regular
Distribution Date, the total amount to be received on such date for each
$1,000 face amount Certificate.
If the amount of (x) premium, if any, payable upon the redemption, prepayment or
purchase of an Equipment Note or (y) Special Redemption Premium has not been
calculated at the time 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 such premium or Special Redemption Premium, as the case may
be, received will also be distributed.
If any redemption of the Equipment Notes held in the Trust is
cancelled, the Trustee, as soon as possible after learning thereof, shall cause
notice thereof to be mailed to each Certificateholder at its address as it
appears on the Register.
Section 4.03. Statements to Certificateholders. (a) On each
Distribution Date, the Trustee will include with each distribution to
Certificateholders of a Scheduled Payment or Special Payment, as the case may
be, a statement setting forth the information provided below (in the case of a
Special Payment, including any Special Redemption Premium, reflecting in part
the information provided by the Escrow Paying Agent under the Escrow Agreement).
Such statement shall set forth (per $1,000 face amount Certificate as to (ii),
(iii), (iv) and (v) below) the following information:
(i) the aggregate amount of funds distributed on such Distribution
Date under the Agreement and under the Escrow Agreement, indicating the
amount allocable to each source;
(ii) the amount of such distribution under the Agreement allocable
to principal and the amount allocable to premium (including the Special
Redemption Premium), if any;
(iii) the amount of such distribution under the Agreement allocable
to interest;
(iv) the amount of such distribution under the Escrow Agreement
allocable to interest;
(v) the amount of such distribution under the Escrow Agreement
allocable to Deposits; and
(vi) the Pool Balance and the Pool Factor.
With respect to the Certificates registered in the name of a
Clearing Agency or its nominee, on the record date prior to each Distribution
Date, the Trustee
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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 Trustee will mail to each such Clearing
Agency Participant the statement described above and will make available
additional copies as requested by such Clearing Agency Participant for
forwarding to holders of Certificates.
(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), (a)(ii), (a)(iii), (a)(iv) and (a)(v)
above with respect to the 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 a Clearing Agency or its nominee, such report and such other items shall be
prepared on the basis of information supplied to the Trustee 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.
(c) Utilizing information provided by Midway, promptly following (i)
the Delivery Period Termination Date, if there has been any change in the
information set forth in clauses (x), (y) and (z) below from that set forth in
page 65 of the Offering Memorandum, and (ii) any early redemption or purchase
of, or any default in the prepayment of principal or interest in respect of, any
of the Equipment Notes held in the Trust, or any Final Withdrawal, the Trustee
shall furnish to Certificateholders of record on such date a statement setting
forth (x) the expected Pool Balances for each subsequent Regular Distribution
Date following the Delivery Period Termination Date, (y) the related Pool
Factors for such Regular Distribution Dates and (z) the expected principal
distribution schedule of the Equipment Notes, in the aggregate, held as Trust
Property at the date of such notice. With respect to the Certificates registered
in the name of a Clearing Agency, on the Delivery Period Termination Date, the
Trustee will request from such Clearing Agency a securities position listing
setting forth the names of all Clearing Agency Participants reflected on such
Clearing Agency's books as holding interests in the Certificates on such date.
The Trust 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.
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
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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 gross negligence (or simple negligence in the handling of
funds) 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 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 (i) organized and validly existing under the laws of the United States
of America or any state thereof or the District of Columbia, (ii) a
"citizen of the United States" (as defined in Section 40102(a)(15) of
Title 49 of the United States Code) and (iii) a United States certificated
air carrier, if and so long as such status is a condition of entitlement
to the benefits of Section 1110 of the Bankruptcy Reform Act of 1978, as
amended (11 U.S.C. ss. 1110), with respect to the Aircraft;
(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 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 this Agreement, the Other Pass Through Trust Agreements, the
Participation Agreements, and each other Note Document to be performed or
observed by the Company;
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(c) immediately after giving effect to such transaction, no Event of
Default (as defined in any Lease or any Indenture relating to an Owned
Aircraft), shall have occurred and be continuing; and
(d) the Company shall have delivered to the Trustee an Officer's
Certificate of the Company and an Opinion of Counsel of the Company
reasonably satisfactory to the Trustee, each stating that such
consolidation, merger, conveyance, transfer or lease and the assumption
agreement mentioned in clause (b) above comply with this Section 5.02 and
that all conditions precedent herein provided for relating to such
transaction have been complied with.
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 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 this Agreement or any Financing Document 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 the Intercreditor
Agreement.
(b) Purchase Rights of Certificateholders.
(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
Section 6.01(b)(i) of 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,
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but not less than all, of the Class A Certificates and the Class B
Certificates pro rata based on the 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 the Class B Certificates pursuant
to this Section 6.01(b)(i).
(ii) By its acceptance of its Certificate, each Certificateholder
agrees that at any time after the occurrence and during the continuation
of a Triggering Event, each Class D Certificateholder shall have the right
(which shall not expire upon any purchase of the Class A Certificates
pursuant to Section 6.01(b)(i) of the Class B Trust Agreement or the
purchase of the Class A Certificates and the Class B Certificates pursuant
to clause (A) above) to purchase all, but not less than all, of the
Certificates, the Class A Certificates and the Class B Certificates upon
ten days' written notice to the Trustee, the Class A Trustee, the Class B
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 Class D Certificateholder to purchase all, but not less than
all, of the Certificates, the Class A Certificates and the Class B
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
Certificates, the Class A Certificates and the Class B Certificates
pursuant to this Section 6.01(b).
The purchase price with respect to the Certificates shall be equal
to the Pool Balance of the Certificates, 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, the Intercreditor Agreement, the Escrow Agreement or any Note
Document or on or in respect of the Certificates; provided, however, that (i) if
such purchase occurs after the record date specified in Section 2.03(b) of the
Escrow Agreement relating to the distribution of unused Deposits and accrued and
unpaid interest thereunder, such purchase price shall be reduced by the
aggregate amount of unused Deposits and interest to be distributed under the
Escrow Agreement (which deducted amounts shall remain distributable to, and may
be retained by the Certificateholder as of such record date) and (ii) if such
purchase occurs after a Record Date, such purchase price shall be reduced by the
amount to be distributed hereunder on the related Distribution date (which
deducted amounts shall remain distributable to, and may be retained by, the
Certificateholder as of such Record Date); provided further that no such
purchase of Certificates shall be effective unless the purchaser shall certify
to the Trustee that contemporaneously with
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such purchase, such purchaser is purchasing, pursuant to the terms of this
Agreement and the Other Pass Through Trust Agreements, the Certificates, the
Class A Certificates and the Class B Certificates which are senior to the Class
of Certificates (as defined in the Intercreditor Agreement) held by such
purchaser. Each payment of the purchase price of the Certificates 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 agrees by its
acceptance of its Certificate that it will, subject to Section 3.04 hereof, upon
payment from such Class D Certificateholder(s) of the purchase price set forth
in the first sentence of this paragraph, 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, the Escrow Agreement,
the Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility, the
Note Documents and all Certificates and Escrow Receipts 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, the Escrow Agreement,
the Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility and
the Note Documents. The Certificates 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 (whether in the form of Physical
Certificates or beneficial interests in Global Certificates) 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 the
Certificates and (ii) if the purchaser shall so request, such Certificateholder
will comply with all the provisions of Section 3.04 hereof to enable new
Certificates 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.
As used in this Section 6.01(b), the terms "Certificates," "Class",
"Class A Certificate", "Class A Certificateholder", "Class A Trust", "Class A
Trustee", "Class B Certificate", "Class B Certificateholder", "Class B Trust",
"Class B Trustee", "Class D Certificate", "Class D Certificateholder", "Class D
Trust" and "Class D Trustee", shall have the respective meanings assigned to
such terms in the Intercreditor Agreement.
Section 6.02. Incidents of Sale of Equipment Notes. Upon any sale of
all or any part of the Equipment Notes made either under the power of sale given
under this Agreement or otherwise for the enforcement of this Agreement, the
following shall be applicable:
(1) Certificateholders and Trustee May Purchase Equipment Notes. Any
Certificateholder, the Trustee in its individual or any other capacity or
any other Person may bid for and purchase any of the Equipment Notes, and
upon compliance with the terms of sale, may hold, retain, possess and
dispose of such Equipment Notes in their own absolute right without
further accountability.
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(2) Receipt of Trustee Shall Discharge Purchaser. The receipt of the
Trustee or of the officer making such sale shall be a sufficient discharge
to any purchaser for his purchase money, and, after paying such purchase
money and receiving such receipt, such purchaser or its personal
representative or assigns shall not be obliged to see to the application
of such purchase money, or be in any way answerable for any loss,
misapplication or non-application thereof.
(3) Application of Moneys Received upon Sale. Any moneys received by
the Trustee from the Subordination Agent pursuant to the Intercreditor
Agreement upon any sale made either under the power of sale given by this
Agreement or otherwise for the enforcement of this Agreement shall 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 of the principal of,
premium, if any, or interest on any Equipment Note, or if there shall be any
failure to pay Rent (as defined in the relevant Lease) under any Lease when due
and payable, then the Trustee, in its own name and as trustee of an express
trust, as holder of such Equipment Notes, to the extent permitted by and in
accordance with the terms of the Intercreditor Agreement and the Financing
Documents (subject to the rights of the applicable Owner Trustee or Owner
Participant to cure any such failure in accordance with Section 8.03 of any
applicable Indenture relating to a Leased Aircraft), shall be entitled and
empowered to institute any suits, actions or proceedings at law, in equity or
otherwise, for the collection of the sums so due and unpaid on such Equipment
Notes or under such Lease and may prosecute any such claim or proceeding to
judgment or final decree with respect to the whole amount of any such sums so
due and unpaid.
Section 6.04. Control by Certificateholders. Subject to Section 6.03
and the Intercreditor Agreement, the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the 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 the Trust or pursuant to the terms of the Intercreditor Agreement, or
exercising any trust or power conferred on the Trustee under this Agreement or
the Intercreditor Agreement, including any right of the Trustee as Controlling
Party under the Intercreditor Agreement or as holder of the Equipment Notes,
provided that
(1) such Direction shall not 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 not taking part in
such Direction, and
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(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 the Intercreditor
Agreement, the Certificateholders holding Certificates 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 Loan 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 Loan
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, 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 or X cannot be modified or amended without the consent of each
Certificateholder holding an Outstanding Certificate affected thereby.
Upon any such waiver, such default shall cease to exist with respect
to the Certificates 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 to the relevant Loan Trustee shall be annulled
with respect thereto; but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon. Upon any
such waiver, the Trustee shall vote the Equipment Notes issued under the
relevant Indenture to waive the corresponding Indenture Default.
Section 6.06. Right of Certificateholders to Receive Payments Not to
Be Impaired. Anything in this Agreement to the contrary notwithstanding,
including, without limitation, Section 6.07 hereof, but subject to the
Intercreditor Agreement, the right of any Certificateholder to receive
distributions of payments required pursuant to Section 4.02 hereof on the
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 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
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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) Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than 25% of the 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 7.03(e);
(3) the Trustee shall have refused or neglected to institute such an
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 shall have
been given to the Trustee during such 60-day period by Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating
not less than a majority in interest in the Trust.
It is understood and intended that no one or more of the
Certificateholders shall have any right in any manner whatsoever hereunder or
under the Certificates to (i) surrender, impair, waive, affect, disturb or
prejudice any property in the Trust Property or the lien of any Indenture on any
property subject thereto, or the rights of the Certificateholders or the holders
of the Equipment Notes, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Certificateholder 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 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 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.
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ARTICLE VII
THE TRUSTEE
Section 7.01. Certain Duties and Responsibilities. (a) Except during
the continuance of an Event of Default, the Trustee undertakes to perform only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Trustee.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of its
own affairs.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own gross negligence (or simple negligence in the
handling of funds) or wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section; and
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts.
(d) Whether or not herein expressly so provided, every provision of
this Trust Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
Section 7.02. 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, the Owner Trustees, the Owner Participants, the
Loan Trustees and the Certificateholders 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, premium, if
any, or interest on any Equipment Note or any other Trust Property, 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. For the purpose of
this Section, the term "default" means any event that is, or after notice or
lapse of time or both would become, an Event of Default.
Section 7.03. Certain Rights of Trustee. Subject to the provisions
of Section 315 of the Trust Indenture Act:
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(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 the
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
Officer's Certificate of the Company, any Owner Trustee or any Loan
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 the Intercreditor
Agreement at the request or direction of any of the Certificateholders
pursuant to this Agreement or the 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, 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 the Intercreditor Agreement or perform any duties under this
Agreement or the 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 the Intercreditor Agreement;
(h) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction of the Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in
interest in the Trust relating to the time, method and place of conducting
any proceeding for any remedy available to the
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Trustee, or exercising any trust or power conferred upon the Trustee,
under this Agreement or the Intercreditor Agreement; and
(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.
Section 7.04. Not Responsible for Recitals or Issuance of
Certificates. The recitals contained herein and in the Certificates, 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 7.15, the Trustee makes no representations as to the validity
or sufficiency of this Agreement, any Participation Agreement, the Escrow
Agreement, the Deposit Agreement, any Equipment Notes, the Certificates or any
other Note Document, except that the Trustee hereby represents and warrants that
this Agreement has been, and the Intercreditor Agreement, each Note Document and
each Certificate will be, executed, authenticated and delivered by one of its
officers who is duly authorized to execute, authenticate and deliver such
document on its behalf.
Section 7.05. 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, if
applicable, may otherwise deal with the Company, the Owner Trustees or the Loan
Trustees with the same rights it would have if it were not Trustee, Paying
Agent, Registrar or such other agent.
Section 7.06. Money Held in Trust. Money held by the Trustee or the
Paying Agent in trust hereunder need not be segregated from other funds except
to the extent required herein or by law and neither the Trustee nor the Paying
Agent shall have any liability for interest upon any such moneys except as
provided for herein.
Section 7.07. Compensation and Reimbursement. The Company agrees:
(1) to pay, or cause to be paid, to the Trustee from time to time
compensation (as set out in a separate fee agreement between the Trustee
and the Company) 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 herein, 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 Agreement or the
Intercreditor Agreement (including the reasonable compensation and the
expenses and
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disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its own 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 7.15;
(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 gross negligence (or
simple negligence in the handling of funds), 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 7.15. 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 (which consent shall not be
unreasonably withheld) and the Company will pay the reasonable fees and
expenses of such counsel. The Company need not pay for any settlement made
without its consent; and
(4) to indemnify, or cause to be indemnified, the Trustee, solely in
its individual capacity, for, and to hold it harmless against, any tax
(except to the extent the Trustee is reimbursed therefor pursuant to the
next paragraph, provided that no indemnification shall be available with
respect to any tax attributable to the Trustee's compensation for serving
as such) incurred without negligence, willful misconduct or bad faith, on
its part, arising out of or in connection with the acceptance or
administration of this Trust, including any costs and expenses incurred in
contesting the imposition of any such tax. The Trustee, in its individual
capacity, shall notify the Company promptly of any claim for any tax for
which it may seek indemnity. The Trustee shall permit the Company to
contest the imposition of such tax and the Trustee, in its individual
capacity, shall cooperate in the defense. The Trustee, in its individual
capacity, may have separate counsel with the consent of the Company (which
consent shall not be unreasonably withheld) 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 upon, the Trust Property for any tax incurred
without gross negligence (or simple negligence in the handling of funds), 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. If the Trustee
reimburses itself from the Trust Property of such Trust for any such tax, it
will mail a brief report within 30 days
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setting forth the circumstances thereof to all Certificateholders as their names
and addresses appear in the Register.
Section 7.08. Corporate Trustee Required; Eligibility. There shall
at all times be a Trustee hereunder 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 $75,000,000 (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 and having a combined capital
and surplus of at least $75,000,000). If such corporation publishes reports of
conditions at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section 7.08, 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 7.08 to act as Trustee, the
Trustee shall resign immediately as Trustee in the manner and with the effect
specified in Section 7.09.
Section 7.09. Resignation and Removal; Appointment of Successor. (a)
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 7.10.
(b) The Trustee may resign at any time as trustee by giving prior
written notice thereof to the Company, the Authorized Agents, the Owner Trustees
and the Loan Trustees. In addition, upon the occurrence of an Event of Default,
in the event the Trustee shall not have received instructions from the
Certificateholders or the Certificateholders with respect to any Other Trust,
the Trustee shall resign. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Company, the Authorized Agents, the Owner
Trustees, the Loan 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 by Act of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Trustee, the Company, the Owner Trustees and the Loan Trustees.
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(d) If at any time:
(1) the Trustee shall fail to comply with Section 310 of the Trust
Indenture Act, if applicable, after written request therefor by the
Company or by any Certificateholder who has been a bona fide
Certificateholder for at least six months; or
(2) the Trustee shall cease to be eligible under Section 7.08 and
shall fail to resign after written request therefor by the Company or by
any such Certificateholder; or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any case, (i) the Company may remove the Trustee or (ii) any
Certificateholder who has been a bona fide Certificateholder for at least six
months may, on behalf of itself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
(e) If a Responsible Officer of the Trustee shall obtain actual
knowledge of an Avoidable Tax 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 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 in a jurisdiction where there
are no Avoidable Taxes.
(f) If the Trustee shall resign, be removed or become incapable of
acting as trustee or if a vacancy shall occur in the office of the Trustee for
any cause, the Company shall promptly appoint a successor Trustee. If, within 90
days after such resignation, removal or incapability, or other occurrence of
such vacancy, a successor Trustee shall be appointed by Act of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Company, the Owner Trustees, the Loan Trustees and the retiring
Trustee, and the Company approves such appointment, which approval shall not be
unreasonably withheld, then the successor Trustee so appointed shall, forthwith
upon its acceptance of such appointment, become the successor Trustee and
supersede the successor Trustee appointed as provided above. If no successor
Trustee shall have been so appointed as provided above and accepted appointment
in the manner hereinafter provided, any Certificateholder 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
appointment of a successor Trustee.
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(g) The successor Trustee 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 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 7.10. Acceptance of Appointment by Successor. Every
successor Trustee appointed hereunder shall execute and deliver to the Company,
the Authorized Agents, the Owner Trustees and the Loan Trustees and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee 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 Trust Property held
by such retiring Trustee hereunder, subject nevertheless to its lien, if any,
provided for in Section 7.07 and the retiring Trustee shall thereupon be
released from further liability hereunder. 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.
No institution shall accept its appointment as a Trustee hereunder
unless at the time of such acceptance such institution shall be qualified and
eligible under this Article VII.
Section 7.11. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Certificates shall have been
executed or authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such execution or authentication and deliver the Certificates so
executed or authenticated with the same effect as if such successor Trustee had
itself executed or authenticated such Certificates.
Section 7.12. Maintenance of Agencies. (a) There shall at all times
be maintained an office or agency where Certificates 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 may be served.
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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. Each such Authorized Agent shall be
a bank or trust company, shall be a corporation organized and doing business
under the laws of the United States or any state, with a combined capital and
surplus of at least $75,000,000, or a corporation having a combined capital and
surplus in excess of $5,000,000, the obligations of which are guaranteed by a
corporation organized and doing business under the laws of the United States or
any state, with a combined capital and surplus of at least $75,000,000, and
shall be authorized under such laws to exercise corporate trust powers, subject
to supervision by federal or state authorities. The Trustee shall initially be
the Paying Agent and, as provided in Section 3.04, Registrar hereunder with
respect to the Certificates. 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, the Owner Trustees and the
Loan 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, the Owner Trustees and the Loan Trustees; and in each case the Trustee
shall mail notice of such appointment to all Certificateholders as their names
and addresses appear on the Register.
(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.
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Section 7.13. 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 7.14. Registration of Equipment Notes in Name of
Subordination Agent. The Trustee agrees that all Equipment Notes to be purchased
by the Trust shall be issued in the name of the Subordination Agent or its
nominee and held by the Subordination Agent in trust for the benefit of the
Certificateholders, or, if not so held, the 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 7.15. Representations and Warranties of Trustee. The Trustee
hereby represents and warrants that:
(a) the Trustee has full power, authority and legal right to receive
the Trust Property assigned by the Related Trustee, assume the obligations
under, and perform, the Assignment and Assumption Agreement, this
Agreement, the Intercreditor Agreement, the Escrow Agreement and the Note
Documents and has taken all necessary action to authorize such receipt,
assumption and performance by it of this Agreement, the Intercreditor
Agreement, the Escrow Agreement and the Note Documents to which it is a
party;
(b) the receipt of the Trust Property under the Assignment and
Assumption Agreement and the performance by the Trustee of the Assignment
and Assumption Agreement, this Agreement, the Intercreditor Agreement, the
Escrow Agreement and the Note Documents (i) will not violate any provision
of any United States law or Maryland law or any order, writ, judgement, or
decree of any court, arbitrator or governmental authority of the United
States or the State of Maryland applicable to the Trustee or any of its
assets, (ii) will not violate any provision of the articles or by-laws of
the Trustee, or (iii) will not violate any provision of, or constitute,
with or without notice or lapse of time, a default under, or result in the
creation or imposition of any lien on any properties included in the Trust
Property pursuant to the provisions of any mortgage, indenture, contract,
agreement or other undertaking to which it is a party, which violation,
default or lien could reasonably be expected to have an
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adverse effect on the Trustee's performance or ability to perform its
duties hereunder or thereunder or on the transactions contemplated herein
or therein;
(c) the receipt of the Trust Property under the Assignment and
Assumption Agreement and the performance by the Trustee of the Assignment
and Assumption Agreement, this Agreement, the Intercreditor Agreement, the
Escrow Agreement and the Note Documents 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 the United Sates where it is located regulating the banking and
corporate trust activities of the Trustee; and
(d) the Assignment and Assumption Agreement has been duly executed
and delivered by the Trustee and this Agreement, the Intercreditor
Agreement, the Escrow Agreement and the Note Documents have been, or will
be, as applicable, duly executed and delivered by the Trustee and
constitute, or will constitute, as applicable, the legal, valid and
binding agreements of the Trustee, enforceable against it in accordance
with their respective terms; provided, however, 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 7.16. Withholding Taxes; Information Reporting. (a) The
Trustee, as trustee of the 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
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 present or future taxes or similar charges are required to be withheld with
respect to any amounts payable in respect of the Certificates, to withhold such
amounts and timely pay the same to the appropriate authority in the name of and
on behalf of the Certificateholders, 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 appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Certificateholders may reasonably request from time
to time. The Trustee agrees to file any other information reports as may be
required to be filed by it under United States law.
(b) The Trustee may satisfy certain of its obligations with respect
to this Agreement by retaining, at the expense of the Company, a firm of
independent public accountants (the "Accountants") which shall (i) be
responsible for all tax filing requirements and (ii) perform the obligations of
the Trustee in respect of tax filing requirements. The Trustee shall be deemed
to have discharged its tax filing obligations under this Agreement upon its
retention of the Accountants, and, if the Trustee shall have selected in the
Accountants in good faith and without gross negligence, the
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Trustee shall not have any liability with respect to the default or misconduct
of the Accountants.
(c) The Trustee, at the request (and expense) of the Company, will
make such United States federal income tax elections as may be necessary to
prevent the Trust from being classified for federal income tax purposes as an
association taxable as a corporation.
Section 7.17. Trustee's Liens. The Trustee in its individual
capacity agrees that it will 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 which is attributable to the
Trustee either (i) in its individual capacity and which is unrelated to the
transactions contemplated by this Agreement, the Intercreditor Agreement, the
Note Purchase Agreement or the Note Documents, or (ii) as Trustee hereunder or
in its individual capacity and which arises out of acts or omissions which are
not contemplated by this Agreement.
Section 7.18. 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 or cause to be
furnished 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, 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, 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 7.12.
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 contained
in the most recent list furnished to the Trustee as provided in Section 7.12 or
Section 8.01, as the case may be, and the names and addresses of
Certificateholders received by the Trustee in
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its capacity as Registrar, if so acting. The Trustee may destroy any list
furnished to it as provided in Section 7.12 or Section 8.01, as the case may be,
upon receipt of a new list so furnished.
Section 8.03. Reports by Trustee. Within 60 days after May 15 of
each year commencing with the first full year following the issuance of the
Certificates, the Trustee shall transmit to the Certificateholders, 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;
(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; and
(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
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determined without regard to any period of grace or requirement of notice
provided under this Agreement).
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 (and at the sole cost and expense of the Company), enter into one or
more agreements supplemental hereto or, if applicable, to the Escrow Agreement,
the Deposit Agreement, the Note Purchase Agreement, the Intercreditor Agreement
or the Liquidity Facility in form and substance satisfactory to the Trustee, for
any of the following purposes:
(1) 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 in the Note Purchase Agreement; or
(2) to add to the covenants of the Company for the benefit of the
Certificateholders, or to surrender any right or power in this Agreement
or in the Note Purchase Agreement conferred upon the Company; or
(3) to correct or supplement any provision in this Agreement, the
Escrow Agreement, the Deposit Agreement, the Note Purchase Agreement, the
Intercreditor Agreement or the Liquidity Facility which may be defective
or inconsistent with any other provision of this Agreement, the Deposit
Agreement, the Escrow Agreement, the Note Purchase Agreement, the
Intercreditor Agreement or any Liquidity Facility, as applicable, or to
cure any ambiguity or to modify any other provisions with respect to
matters or questions arising under this Agreement, the Escrow Agreement,
the Note Purchase Agreement, the Deposit Agreement, the Intercreditor
Agreement or the Liquidity Facility, provided that any such action shall
not materially adversely affect the interests of the Certificateholders;
or
(4) as provided in the Intercreditor Agreement, to give effect to or
provide for a Replacement Liquidity Facility or to comply with any
requirement of the Commission, any applicable law, rules or regulations of
any exchange or quotation system on which the Certificates are listed, or
any regulatory body;
(5) to modify, eliminate or add to the provisions of this Agreement,
the Deposit Agreement, the Escrow Agreement, the Intercreditor Agreement,
the Note Purchase Agreement or the Liquidity Facility to such extent as
shall be necessary to qualify or continue the qualification of this
Agreement under the Trust Indenture Act, or any similar federal statute
enacted after the execution
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of this Agreement, and to add to this Agreement, the Deposit Agreement,
the Escrow Agreement, the Intercreditor Agreement, the Note Purchase
Agreement or the Liquidity Facility such provisions as may be expressly
permitted by the Trust Indenture Act; and
(6) to evidence and provide for the acceptance of appointment under
this Agreement, the Deposit Agreement, the Escrow Agreement, the
Intercreditor Agreement, the Note Purchase Agreement or the Liquidity
Facility of a successor Trustee and to add or change any of the provisions
of this Agreement, the Deposit Agreement, the Escrow Agreement, the
Intercreditor Agreement, the Note Purchase Agreement or the Liquidity
Facility as shall be necessary to provide for or facilitate the
administration of the Trust under this Agreement by more than one Trustee,
provided that in each case, such modification or supplement 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 9.02. Supplemental Agreements with Consent of
Certificateholders. With the consent of the Certificateholders holding
Certificates evidencing Fractional Undivided Interests aggregating not less than
a majority in interest in the Trust, by Act of said Certificateholders delivered
to the Company and the Trustee, the Company may, and the Trustee (subject to
Section 9.03) shall, at the sole cost and expense of the Company, 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, the Deposit Agreement, the Escrow Agreement, the Intercreditor
Agreement, the Liquidity Facility or the Note Purchase Agreement to the extent
applicable to such Certificateholders or of modifying in any manner the rights
and obligations of such Certificateholders under this Agreement, the Deposit
Agreement, the Escrow Agreement, the Intercreditor Agreement, the Liquidity
Facility or the Note Purchase 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 (or, with respect to the Deposits, the
Receiptholders) of payments on the Deposits or Equipment Notes held in the
Trust or distributions that are required to be made herein on any
Certificate, or change any date of payment of any Certificate, or change
the place of payment where, or the coin or currency in which, any
Certificate is 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 included in the
Trust Property except as permitted by this Agreement, or otherwise deprive
such
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Certificateholder of the benefit of the ownership of the Equipment Notes
in the Trust; or
(3) alter the priority of distributions specified in the
Intercreditor Agreement in a manner materially adverse to the interests of
the Certificateholders;
(4) modify any of the provisions of this Section 9.02 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 affected thereby;
(5) modify any of the provisions relating to the rights of the
Certificateholders in respect of the waiver of Events of Default or
receipt of payment; or
(6) adversely affect the status of this 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.
It shall not be necessary for any Act of 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 Agreement, the Trustee may in its
discretion decline to execute such document.
Section 9.04. Execution of Supplemental Agreements. In executing, or
accepting the additional trusts created by, any supplemental agreement permitted
by this Article or the modifications thereby of the trusts created by this
Agreement, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental agreement is authorized or permitted by this Agreement.
Section 9.05. Effect of Supplemental Agreements. Upon the execution
of any agreement supplemental to this Agreement under this Article, this
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every
Certificateholder theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
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.
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Section 9.07. Reference in Certificates to Supplemental Agreements.
Certificates authenticated and delivered after the execution of any supplemental
agreement 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 after
proper presentation and demand.
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01 Amendments and Supplement to Indentures and Other Note
Documents. In the event that the Trustee, as holder (or beneficial owner through
the Subordination Agent) of any Equipment Note in trust for the benefit of the
Certificateholders or as Controlling Party, receives a request for a consent to
any amendment, modification, waiver or supplement under any Indenture or other
Note Document or other related document, the Trustee shall forthwith send a
notice of such proposed amendment, modification, waiver or supplement to each
Certificateholder registered on the Register as of the date of such notice. The
Trustee shall request from the Certificateholders a Direction as to (a) whether
or not to take or refrain from taking (or to direct the Subordination Agent to
take or refrain from taking) any action which a holder of such Equipment Note or
the Controlling Party has the option to direct, (b) whether or not to give or
execute (or to direct the Subordination Agent to give or execute) any waivers,
consents, amendments, modifications or supplements as a holder of such Equipment
Note or as Controlling Party and (c) how to vote or direct the Subordination
Agent 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 (or in directing the Subordination Agent in any of
the foregoing), (i) other than as Controlling Party, 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 (x) the aggregate face amount of all Certificates
actually voted in favor of or for giving consent to such action by such
direction of Certificateholders to (y) the aggregate face amount of all
outstanding Certificates of the Trust and (ii) as the Controlling Party, the
Trustee shall vote as directed in such Certificateholder direction by the
Certificateholders evidencing fractional undivided interests aggregating not
less than a majority in interest in the Trust. 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 prior to two Business Days before the Trustee
directs such action or casts such vote or gives such consent. Notwithstanding
the foregoing, but subject to Section 6.04 and the Intercreditor Agreement, the
Trustee may, in its own discretion and at its own direction, consent and notify
the relevant Loan Trustee of such consent (or direct the Subordination Agent to
consent and notify the relevant Loan Trustee of such consent) to any amendment,
modification, waiver or supplement under the
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relevant Indenture or any other Note Document or other related document, if an
Event of Default hereunder shall have occurred and be continuing, or if such
amendment, modification or waiver will not materially adversely affect the
interests of the Certificateholders.
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust. The respective obligations
and responsibilities of the Company and the Trustee with respect to the Trust
shall terminate upon distribution to all Certificateholders 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; provided,
however, that in no event shall the Trust continue beyond one hundred ten (110)
years following the date of the execution of this Agreement.
Notice of any termination, specifying the Distribution Date upon
which the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be mailed promptly by
the Trustee to Certificateholders not earlier than the 60th day and not later
than the 15th day next preceding such final Distribution Date specifying (A) the
Distribution Date upon which the proposed final payment of the Certificates will
be made upon presentation and surrender of Certificates at the office or agency
of the Trustee therein specified, (B) the amount of any such proposed final
payment, and (c) that the Record Date otherwise applicable to such Distribution
Date is not applicable, payments being made only upon presentation and surrender
of the Certificates at the office or agency of the Trustee therein specified,
(B) the amount of any such proposed final payment, and (c) that the Record Date
otherwise applicable to such Distribution Date is not applicable, payments being
made only upon presentation and surrender of the Certificates 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. Upon
presentation and surrender of the Certificates in accordance with such notice,
the Trustee shall cause to be distributed to Certificateholders such final
payments.
In the event that all of the Certificateholders 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 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 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
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applicable law) after the final distribution date with respect thereto, the
Trustee shall pay to each Loan Trustee the appropriate amount of money relating
to such Loan Trustee and shall give written notice thereof to the related Owner
Trustees, the Owner Participants and the Company.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the 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. Certificates Nonassessable and Fully Paid. Except as
set forth in the last sentence of this Section 12.02, Certificateholders shall
not be personally liable for obligations of the Trust, the Fractional Undivided
Interests represented by the Certificates shall be nonassessable for any losses
or expenses of the Trust or for any reason whatsoever, and Certificates, upon
authentication thereof by the Trustee pursuant to Section 3.03, are and shall be
deemed fully paid. No Certificateholder shall have any right (except as
expressly provided herein) to vote or in any manner otherwise control the
operation and management of the Trust Property, the Trust, or the obligations of
the parties hereto, nor shall anything set forth herein, or contained in the
terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association.
Neither the existence of the Trust nor any provision herein is intended to or
shall limit the liability the Certificateholders would otherwise incur if the
Certificateholders owned Trust Property as co-owners, or incurred any
obligations of the Trust, directly rather than through the Trust.
Section 12.03. Notices. (a) Unless otherwise specifically provided
herein, all notices required under the terms and provisions of this Agreement
shall be in English and in writing, and any such notice may be given by United
States mail, courier service or telecopy, and any such notice shall be effective
when delivered or received or,
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if mailed, three days after deposit in the United States mail with proper
postage for ordinary mail prepaid,
if to the Company, to:
Midway Airlines Corporation
300 W. Morgan Street, Suite 1200
Durham, North Carolina 27701
Attention: General Counsel
Facsimile: (919) 956-7568
Telephone: (919) 956-4810
if to the Trustee, to:
The First National Bank of Maryland
25 South Charles Street
Mail Code 101-591
Baltimore, Maryland 21201
Attention: Corporate Trust Department
Facsimile: (410) 244-4236
Telephone: (410) 244-4626
(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 shall be
mailed by first-class mail to the addresses for Certificateholders shown on the
Register kept by the Registrar. 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.
(d) If a notice or communication is mailed in the manner provided
above within the time prescribed, it is conclusively presumed to have been duly
given, whether or not the addressee receives it.
(e) If the Company mails a notice or communication to the
Certificateholders, it shall mail a copy to the Trustee and to the Paying Agent
at the same time.
(f) 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.
(g) 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 Loan Trustee.
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Section 12.04. Governing Law. THIS AGREEMENT AND THE CERTIFICATES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
Section 12.05. 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 the Trust, or of the
Certificates or the rights of the Certificateholders thereof.
Section 12.06. 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 12.07. 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 assigns, whether so
expressed or not.
Section 12.08. Benefits of Agreement. Nothing in this Agreement or
in the Certificates, express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder, and the Certificateholders,
any benefit or any legal or equitable right, remedy or claim under this
Agreement.
Section 12.09. Legal Holidays. In any case where any Regular
Distribution Date or Special Distribution Date relating to any Certificate shall
not be a Business Day, 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 12.10. 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 12.11. Communication by Certificateholders with Other
Certificateholders. Certificateholders may communicate with other
Certificateholders with respect to their rights under this Agreement or the
Certificates pursuant to Section 312(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 12.12. Intention of Parties. The parties hereto intend that
the Trust be classified for U.S. federal income tax purposes as a grantor trust
under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as
amended, and not as a trust or association taxable as a corporation or as a
partnership. Each Certificateholder, by its acceptance of its Certificate or a
beneficial interest therein, agrees to treat the Trust as a grantor trust for
all U.S. federal, state and local income tax purposes. The powers granted and
obligations undertaken pursuant to this Agreement shall be so construed so as to
further such intent.
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Section 12.13. Trust Indenture Act Controls. Upon the qualification
of this Agreement under the Trust Indenture Act, this Agreement shall be subject
to the provisions of the Trust Indenture Act and shall, to the extent
applicable, be governed by such provisions. If any provision of this Agreement
limits, qualifies or conflicts with another provision which is required to be
included in this Agreement by the Trust Indenture Act, the required provision
shall control.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first written above.
MIDWAY AIRLINES CORPORATION
By: /s/ Jonathan S. Waller
------------------------------------
Name: Jonathan S. Waller
Title: Senior Vice President
General Counsel
THE FIRST NATIONAL BANK OF
MARYLAND, as Trustee
By: /s/ Robert D. Brown
------------------------------------
Name: Robert D. Brown
Title: Assistant Vice President
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Exhibit A
FORM OF CERTIFICATE
REGISTERED
No. ______________
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY
MIDWAY AIRLINES CORPORATION ("MIDWAY") OR ANY AFFILIATE OF MIDWAY, RESELL
OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO MIDWAY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
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<PAGE>
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
CERTIFICATE WAS HELD BY MIDWAY OR ANY AFFILIATE OF MIDWAY, THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND MIDWAY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.]*
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS FOR THE BENEFIT OF MIDWAY
AIRLINES CORPORATION AND EACH OWNER PARTICIPANT THAT (A) IT IS NOT A PLAN
TRANSFEREE (AS DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR (B) ONE OR
MORE PROHIBITED TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS APPLIES
SUCH THAT THE USE OF PLAN ASSETS TO PURCHASE AND HOLD THIS PASS THROUGH
CERTIFICATE WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER
ERISA OR SECTION 4975 OF THE CODE. THE PASS THROUGH TRUST AGREEMENT
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
- - ----------
* Not to be included on the face of the Permanent Offshore Global
Certificate.
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<PAGE>
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE 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 HEREON 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.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST
AGREEMENT REFERRED TO HEREIN.]*
- - ----------
* To be included on the face of each Global Certificate.
A-3
<PAGE>
[GLOBAL CERTIFICATE]*
MIDWAY AIRLINES 1998-1C-S PASS THROUGH TRUST
8.92% Midway Airlines [Initial/Exchange] Pass Through Certificate
Series 1998-1C-S
Final Expected Distribution Date: January 2, 2008
evidencing a fractional undivided interest in a trust, the property of which
includes certain equipment notes each secured by an Aircraft leased to or owned
by Midway Airlines Corporation.
$____________ Fractional Undivided Interest
representing .______% of the Trust per $1,000 face amount
THIS CERTIFIES THAT _______________, for value received, is the
registered owner of a $__________ (_________ dollars) Fractional Undivided
Interest in Midway Airlines 1998-1C-S Pass Through Trust (the "Trust") created
pursuant to a Pass Through Trust Agreement, dated as of August 13, 1998 (the
"Agreement"), between The First National Bank of Maryland (the "Trustee") and
Midway Airlines Corporation, a corporation incorporated under Delaware law (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 "8.92%
Midway Airlines [Initial/Exchange] Pass Through Certificates Series 1998-1C-S"
(herein called the "Certificates"). This Certificate is issued under and is
subject to the terms, provisions, and conditions of the Agreement. By virtue of
its acceptance hereof the Certificateholder of this Certificate assents to and
agrees to be bound by the provisions of the Agreement and the Intercreditor
Agreement. 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, among other things, a security interest in the 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 assets or property other than the Trust Property.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from and to the extent of funds then available to the
Trustee,
- - ----------
* To be included on the face of each Global Certificate.
A-4
<PAGE>
there will be distributed on each January 2 and July 2 (a "Regular Distribution
Date"), commencing on January 2, 1999, 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 and the Intercreditor Agreement, in the event that Special Payments on
the Equipment Notes are received by the Trustee, from funds then available to
the Trustee, there shall be distributed on the applicable Special Distribution
Date, to the Person in whose name this Certificate is registered at the close of
business on the 15th day preceding the Special Distribution Date, an amount in
respect of such Special Payments on the Equipment Notes, the receipt of which
has been confirmed by the Trustee, equal to the product of the percentage
interest in the Trust evidenced by this Certificate and an amount equal to the
sum of such Special Payments so received. If a Regular Distribution Date or
Special Distribution Date is not a Business Day, distribution shall be made on
the immediately following Business Day with the same force and effect as if made
on such Regular Distribution Date or Special Distribution Date and no interest
shall accrue during the intervening period. The Trustee shall mail notice of
each Special Payment and the Special Distribution Date therefor to the
Certificateholder of this Certificate.
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 AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND
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.
Reference is hereby made to the further provisions of this
Certificate set forth in the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
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.
A-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: ____________ __, 1998 MIDWAY AIRLINES
1998-1C-S PASS THROUGH TRUST
By: The First National Bank of
Maryland, as Trustee
By: __________________________
Name:
Title:
A-6
<PAGE>
[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred
to in the within-mentioned Agreement.
The First National Bank of Maryland,
as Trustee
By: ________________________________
Authorized Officer
A-7
<PAGE>
[REVERSE OF CERTIFICATE]
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
of their affiliates. 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 Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein 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, in the Borough of Manhattan, the City of New York,
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.
A-8
<PAGE>
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $100,000 Fractional Undivided
Interest and integral multiples of $1,000 in excess thereof. 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 by the Holder 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.
A-9
<PAGE>
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
__________________________
__________________________
please print or typewrite name and address including zip code of assignee
__________________________
the within Certificate and all rights thereunder, hereby irrevocably
constituting and appointing
__________________________
attorney to transfer said Certificate on the books of the Trustee with full
power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT PERMANENT OFFSHORE GLOBAL AND
OFFSHORE PHYSICAL CERTIFICATES]
In connection with any transfer of this Certificate occurring prior
to __________, the undersigned confirms that without utilizing any general
solicitation or general advertising that:
[Check One]
[_] (a) this Certificate is being transferred in compliance with the
exemption from registration under the Securities Act of 1933, as
amended, provided by Rule 144A thereunder.
or
[_] (b) this Certificate is being transferred other than in accordance with
(a) above and documents are being furnished that comply with the
conditions of transfer set forth in this Certificate and the
Agreement.
A-10
<PAGE>
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Certificate in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 3.06 of the Agreement
shall have been satisfied.
Date: [Name of Transferor]
----------------- -----------------------------------
NOTE: The signature must correspond
with the name as written upon the
face of the within-mentioned
instrument in every particular,
without alteration or any change
whatsoever.
Signature Guarantee:_________________________
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Certificate for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated: ________________ ___________________________________
NOTE: To be executed by an
executive officer.
A-11
<PAGE>
Exhibit B
FORM OF CERTIFICATE FOR UNLEGENDED CERTIFICATES
[Date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1C-S Pass Through Trust (the "Trust"), 8.92%
Midway Airlines Pass Through Certificates Series 1998-1C-S (the
"Certificates")
Dear Sirs:
This letter relates to U.S. $__________ Fractional Undivided
Interest of Certificates represented by a Certificate (the "Legended
Certificate") which bears a legend outlining restrictions upon transfer of such
Legended Certificate. Pursuant to Section 3.01 of the Pass Through Trust
Agreement relating to the Certificates dated as of August 13, 1998 (the "Trust
Agreement"), between Midway Airlines Corporation ("Midway") and you, we hereby
certify that we are (or we will hold such securities on behalf of) a person
outside the United States to whom the Certificates could be transferred in
accordance with Rule 904 of Regulation S promulgated under the U.S. Securities
Act of 1933, as amended. Accordingly, you are hereby requested to exchange the
legended certificate for an unlegended certificate representing an identical
principal amount of Certificates, all in the manner provided for in the Trust
Agreement.
You and Midway are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Certificateholder]
By: _____________________________
Authorized Signature
B-1
<PAGE>
Exhibit C
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
[date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1C-S Pass Through Trust (the "Trust"), 8.92%
Midway Airlines Pass Through Certificates Series 1998-1C-S (the
"Certificates")
Sirs:
In connection with our proposed sale of $_______ Fractional Undivided Interest
of the Certificates, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the Securities Act of 1933, as amended,
and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a person in the
United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
C-1
<PAGE>
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You, Midway Airlines Corporation are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof to
any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By: __________________________________
Authorized Signature
C-2
<PAGE>
Exhibit D
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
[date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1C-S Pass Through Trust (the "Trust"), 8.92%
Midway Airlines Pass Through Certificates Series 1998-1C-S (the
"Certificates")
Dear Sirs:
In connection with our proposed purchase of $_______________
aggregate principal amount of the Certificates, we confirm that:
1. We understand that any subsequent transfer of the Certificates is
subject to certain restrictions and conditions set forth in the Pass
Through Trust Agreement dated as of August 13, 1998 relating to the
Certificates (the "Pass Through Trust Agreement") and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the
Certificates except in compliance with, such restrictions and conditions
and the Securities Act of 1933, as amended (the "Securities Act").
2. We are purchasing Certificates having an aggregate principal
amount of not less than $100,000 and each account (if any) for which we
are purchasing Certificates is purchasing Certificates having an aggregate
principal amount of not less than $100,000.
3. We understand that the Certificates have not been registered
under the Securities Act, and that the Certificates may not be offered or
sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Certificate, we will do so
only (A) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (B) to an
institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes to you and Midway Airlines Corporation a signed letter
substantially in the form of this letter, (C) outside the United States in
D-1
<PAGE>
accordance with Rule 904 of Regulation S under the Securities Act, (D)
pursuant to the exemption from registration provided by Rule 144 under the
Securities Act, or (E) pursuant to an effective registration statement
under the Securities Act, and we further agree to provide to any person
purchasing any of the Certificates from us a notice advising such
purchaser that resales of the Notes are restricted as stated herein. We
further understand that the Certificates purchased by us will bear a
legend to the foregoing effect.
4. We understand that, on any proposed resale of any Certificates,
we will be required to furnish to you, Midway Airlines Corporation
("Midway") such certifications, legal opinions and other information as
you, Midway may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that the
Certificates purchased by us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Certificates and we and any accounts for which we are acting are each able
to bear the economic risk of our or its investment.
6. We are acquiring the Certificates purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You and Midway are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By: __________________________________
Authorized Signature
D-2
- - --------------------------------------------------------------------------------
PASS THROUGH TRUST AGREEMENT
Dated as of August 13, 1998
among
MIDWAY AIRLINES CORPORATION
and
THE FIRST NATIONAL BANK OF MARYLAND
as Trustee
Midway Airlines 1998-1C-O Pass Through Trust
8.92% 1998-1C-O Initial Pass Through Certificates
8.92% 1998-1C-O Exchange Pass Through Certificates
- - --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS...................................................... 3
Section 1.01. Definitions........................................... 3
Section 1.02. Compliance Certificates and Opinions.................. 15
Section 1.03. Form of Documents Delivered to Trustee................ 16
Section 1.04. Acts of Certificateholders............................ 16
ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES............................... 18
Section 2.01. Delivery of Documents; Delivery Date.................. 18
Section 2.02. Withdrawal of Deposits................................ 19
Section 2.03. The Trustee........................................... 19
Section 2.04. Acceptance by Trustee................................. 19
Section 2.05. Limitation of Powers.................................. 20
ARTICLE III THE CERTIFICATES............................................... 20
Section 3.01. Title, Form, Denomination and Execution of
Certificates.......................................... 20
Section 3.02. Restrictive Legends................................... 22
Section 3.03. Authentication of Certificates........................ 24
Section 3.04. Transfer and Exchange................................. 24
Section 3.05. Book-Entry Provisions for U.S. Global
Certificate and Offshore Global Certificates.......... 25
Section 3.06. Special Transfer Provisions........................... 26
Section 3.07. Mutilated, Destroyed, Lost or Stolen
Certificates.......................................... 29
Section 3.08. Persons Deemed Owners................................. 30
Section 3.09. Cancellation.......................................... 30
Section 3.10. Limitation of Liability for Payments.................. 30
Section 3.11. Temporary Certificates................................ 30
Section 3.12. ERISA Restrictive Legend.............................. 30
ARTICLE IV DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS................. 31
Section 4.01. Certificate Account and Special Payments
Account............................................... 31
Section 4.02. Distributions from Certificate Account and
Special Payments Account.............................. 32
Section 4.03. Statements to Certificateholders...................... 33
Section 4.04. Investment of Special Payment Moneys.................. 35
i
<PAGE>
ARTICLE V THE COMPANY...................................................... 35
Section 5.01. Maintenance of Corporate Existence.................... 35
Section 5.02. Consolidation, Merger, Etc............................ 35
ARTICLE VI DEFAULT......................................................... 36
Section 6.01. Events of Default..................................... 36
Section 6.02. Incidents of Sale of Equipment Notes.................. 39
Section 6.03. Judicial Proceedings Instituted by Trustee;
Trustee May Bring Suit................................ 39
Section 6.04. Control by Certificateholders......................... 39
Section 6.05. Waiver of Past Defaults............................... 40
Section 6.06. Right of Certificateholders to Receive
Payments Not to Be Impaired........................... 41
Section 6.07. Certificateholders May Not Bring Suit Except
Under Certain Conditions.............................. 41
Section 6.08. Remedies Cumulative................................... 41
Section 6.09. Undertaking for Costs................................. 42
ARTICLE VII THE TRUSTEE.................................................... 42
Section 7.01. Certain Duties and Responsibilities................... 42
Section 7.02. Notice of Defaults.................................... 42
Section 7.03. Certain Rights of Trustee............................. 43
Section 7.04. Not Responsible for Recitals or Issuance of
Certificates.......................................... 44
Section 7.05. May Hold Certificates................................. 44
Section 7.06. Money Held in Trust................................... 44
Section 7.07. Compensation and Reimbursement........................ 45
Section 7.08. Corporate Trustee Required; Eligibility............... 46
Section 7.09. Resignation and Removal; Appointment of
Successor............................................. 46
Section 7.10. Acceptance of Appointment by Successor................ 48
Section 7.11. Merger, Conversion, Consolidation or
Succession to Business................................ 48
Section 7.12. Maintenance of Agencies............................... 49
Section 7.13. Money for Certificate Payments to Be Held in
Trust................................................. 50
Section 7.14. Registration of Equipment Notes in Name of
Subordination Agent................................... 50
Section 7.15. Representations and Warranties of Trustee............. 50
Section 7.16. Withholding Taxes; Information Reporting.............. 51
Section 7.17. Trustee's Liens....................................... 52
Section 7.18. Preferential Collection of Claims..................... 52
ii
<PAGE>
ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE.............. 52
Section 8.01. The Company to Furnish Trustee with Names
and Addresses of Certificateholders................... 52
Section 8.02. Preservation of Information; Communications
to Certificateholders................................. 53
Section 8.03. Reports by Trustee.................................... 53
Section 8.04. Reports by the Company................................ 53
ARTICLE IX SUPPLEMENTAL AGREEMENTS......................................... 54
Section 9.01. Supplemental Agreements Without Consent of
Certificateholders.................................... 54
Section 9.02. Supplemental Agreements with Consent of
Certificateholders.................................... 55
Section 9.03. Documents Affecting Immunity or Indemnity............. 56
Section 9.04. Execution of Supplemental Agreements.................. 56
Section 9.05. Effect of Supplemental Agreements..................... 57
Section 9.06. Conformity with Trust Indenture Act................... 57
Section 9.07. Reference in Certificates to Supplemental
Agreements............................................ 57
ARTICLE X AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS................. 57
Section 10.01 Amendments and Supplement to Indentures
and Other Note Documents.............................. 57
ARTICLE XI TERMINATION OF TRUST............................................ 58
Section 11.01. Termination of the Trust.............................. 58
ARTICLE XII MISCELLANEOUS PROVISIONS....................................... 61
Section 12.01. Limitation on Rights of Certificateholders............ 61
Section 12.02. Certificates Nonassessable and Fully Paid............. 61
Section 12.03. Notices............................................... 61
Section 12.04. Governing Law......................................... 62
Section 12.05. Severability of Provisions............................ 62
Section 12.06. Effect of Headings and Table of Contents.............. 63
Section 12.07. Successors and Assigns................................ 63
Section 12.08. Benefits of Agreement................................. 63
Section 12.09. Legal Holidays........................................ 63
Section 12.10. Counterparts.......................................... 63
iii
<PAGE>
Section 12.11. Communication by Certificateholders with
Other Certificateholders.............................. 63
Section 12.12. Intention of Parties.................................. 63
Section 12.13. Trust Indenture Act Controls.......................... 63
iv
<PAGE>
EXHIBIT LIST
Exhibit A Form of Certificate
Exhibit B Form of Certificate for Unlegended Certificates
Exhibit C Form of Certificate to be Delivered in connection with
Transfers Pursuant to Regulation S
Exhibit D Form of Certificate to be Delivered in connection with
Transfers to Non-QIB Accredited Investors
Exhibit E Form of Assignment and Assumption Agreement
v
<PAGE>
PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of August 13, 1998,
among MIDWAY AIRLINES CORPORATION, a Delaware corporation (the "Company"), and
THE FIRST NATIONAL BANK OF MARYLAND, a national banking association, as Trustee,
is made with respect to the formation of Midway Airlines 1998-1C-O Pass Through
Trust and the issuance of 8.92% Midway Airlines 1998-1C-O Pass Through
Certificates representing fractional undivided interests in the Trust.
WITNESSETH:
WHEREAS, the Company has obtained commitments from Bombardier for
the delivery of certain Aircraft;
WHEREAS, the Company intends to finance the acquisition of each such
Aircraft either (i) through separate leveraged lease transactions, in which case
the Company will lease such Aircraft (collectively, the "Leased Aircraft") or
(ii) through separate secured loan transactions, in which case the Company will
own such Aircraft (collectively, the "Owned Aircraft");
WHEREAS, in the case of each Leased Aircraft, each Owner Trustee,
acting on behalf of the corresponding Owner Participant, will issue pursuant to
an Indenture, on a non-recourse basis, Equipment Notes in order to finance a
portion of its purchase price of such Leased Aircraft;
WHEREAS, in the case of each Owned Aircraft, the Company will issue
pursuant to an Indenture, on a recourse basis, Equipment Notes to finance a
portion of the purchase price of such Owned Aircraft;
WHEREAS, the Trustee, upon execution and delivery of this Agreement,
hereby declares the creation of this Trust (the "1998-1C-O Trust") for the
benefit of the Certificateholders, and the initial Certificateholders, as the
grantors of the 1998-1C-O Trust, by their respective acceptances of the
Certificates, join in the creation of this 1998-1C-O Trust with the Trustee;
WHEREAS, all Certificates to be issued by the Trust will evidence
fractional undivided interests in the Trust and will convey no rights, benefits
or interests in respect of any property other than the Trust Property except for
those Certificates to which an Escrow Receipt has been affixed;
WHEREAS, the Escrow Agent and the Initial Purchasers have
contemporaneously herewith entered into an Escrow Agreement with the Escrow
Agent pursuant to which the Initial Purchasers have delivered to the Escrow
Agent the
<PAGE>
proceeds from the sale of the Certificates and have irrevocably instructed the
Escrow Agent to withdraw and pay funds from such proceeds upon request and
proper certification by the Trustee to purchase Equipment Notes as the Aircraft
are delivered by Bombardier from time to time prior to the Delivery Period
Termination Date;
WHEREAS, the Escrow Agent on behalf of the Certificateholders has
contemporaneously herewith entered into a Deposit Agreement with the Depositary
under which the Deposits referred to therein will be made and from which it will
withdraw funds to allow the Trustee to purchase Equipment Notes from time to
time prior to the Delivery Period Termination Date;
WHEREAS, pursuant to the terms and conditions of this Agreement and
the Note Purchase Agreement, upon or shortly following the delivery of an
Aircraft, the Trustee on behalf of the 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 Certificates issued
hereunder and shall hold such Equipment Notes in trust for the benefit of the
Certificateholders;
WHEREAS, all of the conditions and requirements necessary to make
this Agreement, when duly executed and delivered, a valid, binding and legal
instrument, enforceable in accordance with its terms and for the purposes herein
expressed, have been done, performed and fulfilled, and the execution and
delivery of this Agreement in the form and with the terms hereof have been in
all respects duly authorized;
WHEREAS, to facilitate the sale of Equipment Notes to, and the
purchase of Equipment Notes by, the Trustee on behalf of the 1998-1C-O Trust the
Company as the "issuer", as such term is defined in and solely for purposes of
the Securities Act of 1933, as amended, of the Certificates to be issued
pursuant hereto 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 Agreement 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;
and
WHEREAS, upon issuance of the Exchange Certificates, if any, or the
effectiveness of the Shelf Registration Statement, this Agreement, as amended or
supplemented from time to time, will be subject to the provisions of the Trust
Indenture Act of 1939, and shall, to the extent applicable, be governed by such
provisions;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and valuable consideration the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.01. 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 other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference herein have the meanings
assigned to them therein;
(3) all references in this Agreement to designated "Articles",
"Sections", "Subsections" and other subdivisions are to the designated
Articles, Sections, Subsections and other subdivisions of this Agreement;
(4) 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, Subsection or other subdivision; and
(5) unless the context otherwise requires, whenever the words
"including", "include" or "includes" are used herein, it shall be deemed
to be followed by the phrase "without limitation".
Act: With respect to any Certificateholder has the meaning specified
in Section 1.04.
Affiliate: Means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person. For 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.
Agent Members: Has the meaning specified in Section 3.05(a).
Aircraft: Means each of the New Aircraft in respect of which a
Participation Agreement is entered into in accordance with the Note
Purchase Agreement.
Applicable Delivery Date: Has the meaning specified in Section
2.01(b).
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Applicable Participation Agreement: Has the meaning specified in
Section 2.01(b).
Assignment and Assumption Agreement: Means the assignment and
assumption agreement substantially in the form of Exhibit E hereto
executed and delivered in accordance with Section 11.01.
Authorized Agent: Means any Paying Agent or Registrar for the
Certificates.
Avoidable Tax: Means a state or local tax (i) upon (w) the Trust,
(x) the Trust Property, (y) Certificateholders or (z) the Trustee for
which the Trustee is entitled to seek reimbursement from the Trust
Property, 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 if the Company or any Owner Trustee
shall agree to pay, and shall pay, such tax.
Book-Entry Certificates: With respect to the Certificates, means a
beneficial interest in the Certificates, ownership and transfers of which
shall be made through book entries as described in Section 3.04.
Business Day: Means any day other than a Saturday, a Sunday or a day
on which commercial banks are required or authorized to close in
Baltimore, Maryland, New York, New York, Charlotte, North Carolina or, so
long as any Certificate is outstanding, the city and state in which the
Trustee or any Loan Trustee maintains its Corporate Trust Office or
receives and disburses funds.
Cedel: Means Cedel Bank societe anonyme.
Certificate: Means any one of the Initial Certificates or Exchange
Certificates and any such Certificates issued in exchange therefor or
replacement thereof, executed and authenticated by the Trustee.
Certificate Account: Means the account or accounts created and
maintained pursuant to Section 4.01(a).
Certificateholder or Holder: Means the Person in whose name a
Certificate is registered in the Register.
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.
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Code: Means the United States Internal Revenue Code of 1986, as
amended.
Company: Means Midway Airlines Corporation, a Delaware corporation,
or its successor in interest.
Controlling Party: Means the party entitled to act as such pursuant
to the terms of the Intercreditor Agreement.
Corporate Trust Office: With respect to the Trustee or any Loan
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: Means the earlier of (a) the Delivery Period
Termination Date and (b) the date on which a Triggering Event occurs.
Delivery Date: Has the meaning specified in the Note Purchase
Agreement.
Delivery Notice: Has the meaning specified in the Note Purchase
Agreement.
Delivery Period Termination Date: Means the earlier of (a) September
30, 1999 (provided that, if a labor strike occurs at the Manufacturer
prior to such date, such date shall be extended by adding thereto the
number of days that such strike has continued in effect), and (b) the date
on which Equipment Notes issued have been purchased by the Trust and the
Other Trusts in accordance with the Note Purchase Agreement.
Deposits: Has the meaning specified in the Deposit Agreement.
Deposit Agreement: Means the Deposit Agreement dated as of August
13, 1998 relating to the Certificates between the Depositary and the
Escrow Agent, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
Depositary: Means First Union National Bank.
DTC: Means The Depository Trust Company, its nominees and their
respective successors.
Direction: Has the meaning specified in Section 1.04(c).
Distribution Date: Means each Regular Distribution Date or Special
Distribution Date.
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Equipment Notes: Means the Equipment Notes issued pursuant to the
Indentures.
ERISA: Means the Employee Retirement Income Security Act of 1974, as
amended.
Escrow Agent: Means, initially, First Union Trust Company, National
Association, and any replacement or successor therefor appointed in
accordance with the Escrow Agreement.
Escrow Agreement: Means the Escrow and Paying Agent Agreement dated
as of August 13, 1998 relating to the Certificates, among the Escrow
Agent, the Escrow Paying Agent, the Trustee and the Initial Purchasers, as
the same may be amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Escrow Paying Agent: Means the Person acting as paying agent under
the Escrow Agreement.
Escrow Receipt: Means the receipt substantially in the form annexed
to the Escrow Agreement representing a fractional undivided interest in
the funds held in escrow thereunder.
Euroclear: Means the Euroclear System.
Exchange Certificates: Means the pass through certificates
substantially in the form of Exhibit A hereto issued in exchange for the
Initial Certificates pursuant to the Registration Rights Agreement and
authenticated hereunder.
Exchange Offer: Means the exchange offer which may be made pursuant
to the Registration Rights Agreement to exchange Initial Certificates for
Exchange Certificates.
Exchange Offer Registration Statement: Means the registration
statement that, pursuant to the Registration Rights Agreement, is filed by
the Company with the SEC with respect to the exchange of Initial
Certificates for Exchange Certificates.
Event of Default: Means the occurrence of an Indenture Default under
any Indenture pursuant to which Equipment Notes held by the Trust were
issued.
Final Maturity Date: Means July 2, 2009.
Final Withdrawal: Has the meaning specified in the Escrow Agreement.
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Final Withdrawal Date: Has the meaning specified in the Escrow
Agreement.
Final Withdrawal Notice: Has the meaning specified in Section 2.02.
Fractional Undivided Interest: Means the fractional undivided
interest in the Trust that is evidenced by a Certificate.
Global Certificates: Has the meaning assigned to such term in
Section 3.01.
Indenture: Means each of the separate trust indenture and security
agreements relating to the Aircraft, each as specified or described in a
Delivery Notice delivered pursuant to the Note Purchase Agreement or the
related Participation Agreement in each case as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
its terms.
Indenture Default: With respect to any Indenture, means any
Indenture Event of Default (as such term is defined in such Indenture)
thereunder.
Initial Certificates: Means the certificates issued and
authenticated hereunder substantially in the form of Exhibit A hereto
other than the Exchange Certificates.
Initial Purchasers: Means Morgan Stanley & Co. Incorporated and
Credit Suisse First Boston Corporation.
Initial Regular Distribution Date: Means the first Regular
Distribution Date on which a Scheduled Payment is to be made.
Institutional Accredited Investor: Means an institutional investor
that is an "accredited investor" within the meaning set forth in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act.
Intercreditor Agreement: Means the Intercreditor Agreement dated
August 13, 1998 among the Trustee, the Other Trustees, the Liquidity
Provider, the liquidity providers, if any, relating to the Certificates
issued under (and as defined in) the Other Pass Through Trust Agreements,
and The First National Bank of Maryland, as Subordination Agent
thereunder, as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Issuance Date: Means the date of the issuance of the Initial
Certificates.
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Lease: Means, with respect to each Leased Aircraft, the 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.
Leased Aircraft: Has the meaning given to such term in the recitals
hereto.
Letter of Representations: Means the agreement dated the Issuance
Date among the Company, the Trustee and the initial Clearing Agency.
Liquidity Facility: Means the Irrevocable Revolving Credit Agreement
dated August 13, 1998 relating to the Certificates, between the Liquidity
Provider and the Subordination Agent, as amended, replaced, supplemented
or otherwise modified from time to time in accordance with its terms and
the terms of the Intercreditor Agreement.
Liquidity Provider: Means, initially, ABN AMRO Bank N.V., acting
through its Chicago branch, and any replacement or successor therefor
appointed in accordance with the Liquidity Facility and the Intercreditor
Agreement.
Loan 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 Loan
Trustee as such trustee; and Loan Trustees means all of the Loan Trustees
under the Indentures.
New Aircraft: Has the meaning specified in the Note Purchase
Agreement.
Non-U.S. Person: Means a Person that is not a U.S. Person, as
defined in Regulation S.
Note Documents: With respect to any Equipment Note, means (i) the
Indenture and the Participation Agreement relating to such Equipment Note,
and (ii) in the case of any Equipment Note related to a Leased Aircraft,
also includes the Lease relating to such Leased Aircraft.
Note Purchase Agreement. Means the Note Purchase Agreement dated as
of August 13, 1998 among the Trustee, the Other Trustees, the Company, the
Escrow Agent, the Escrow Paying Agent and the Subordination Agent,
providing for, among other things, the purchase of Equipment Notes by the
Trustee on behalf of the Trust, as the same may be amended, supplemented
or otherwise modified from time to time, in accordance with its terms.
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Notice of Purchase Withdrawal: Has the meaning specified in the
Deposit Agreement.
Officer's Certificate: Means a certificate signed, (a) in the case
of the Company, by (i) 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 a Loan
Trustee, a Responsible Officer of the Trustee or such Owner Trustee or
such Loan Trustee, as the case may be.
Offshore Certificates Exchange Date: Has the meaning specified in
Section 3.01.
Offshore Global Certificates: Has the meaning assigned to such term
in Section 3.01.
Offshore Physical Certificates: Has the meaning assigned to such
term in Section 3.01.
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 or (ii) such other counsel
designated by the Company and reasonably acceptable to the Trustee and (b)
in the case of any Owner Trustee or any Loan Trustee may be such counsel
as may be designated by any of them whether or not such counsel is an
employee of any of them, and who shall be reasonably acceptable to the
Trustee.
Other Pass Through Trust Agreement: Means each of the three other
Midway Airlines 1998-1 Pass Through Trust Agreements relating to,
respectively, Midway Airlines 1998-1A-O Pass Through Trust, Midway
Airlines 1998-1B-O Pass Through Trust and Midway Airlines 1998-1D-O Pass
Through Trust, each dated the date hereof; and Other Pass Through Trust
Agreements means all such agreements.
Other Trust: Means each of the Midway Airlines Pass Through Trust
1998-1A-O, the Midway Airlines Pass Through Trust 1998-1B-O and the Midway
Airlines Pass Through Trust 1998-1D-O, each created on the date hereof;
and Other Trusts means all such trusts.
Other Trustee: Means the trustee under each of the Other Pass
Through Trust Agreements, and any successor or other trustee appointed as
provided therein; and Other Trustees means all such trustees.
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Outstanding: With respect to Certificates, means, as of the date of
determination, all Certificates theretofore authenticated and delivered
under this Agreement, except:
(i) Certificates theretofore cancelled by the Registrar or
delivered to the Trustee or the Registrar for cancellation;
(ii) All of the Certificates if money in the full amount
required to make the final distribution with respect thereto
pursuant to Section 11.01 hereof has been theretofore deposited with
the Trustee in trust for the Holders of such Certificates as
provided in Section 4.01 pending distribution of such money to such
Certificateholders pursuant to such final distribution payment; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been authenticated and delivered pursuant to this
Agreement.
Owned Aircraft: Has the meaning given to such term in the recitals
hereto.
Owner Participant: With respect to any Equipment Note relating to a
Leased Aircraft, means the "Owner Participant" 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 relating to a
Leased Aircraft, means the "Owner Trustee", 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 Indentures.
Participation Agreement: Means each Participation Agreement to be
entered into by the Trustee pursuant to the Note Purchase Agreement, as
the same may be amended, supplemented or otherwise modified in accordance
with its terms.
Paying Agent: Means the paying agent maintained and appointed for
the Certificates pursuant to Section 7.12.
Permanent Offshore Global Certificates: Has the meaning specified in
Section 3.01.
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Permitted Investments: Means obligations of the United States of
America or agencies or instrumentalities thereof for the payment of which
the full faith and credit of the United States of America is pledged,
maturing in not more than 60 days or such lesser time as is necessary for
payment of any Special Payments on a Special Distribution Date or any
mutual fund the portfolio of which is limited to such obligations,
including any proprietary mutual fund of The First National Bank of
Maryland for which such bank or an affiliate is investment advisor or to
which such bank provides other services and receives reasonable
compensation for such services.
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.
Physical Certificates: Has the meaning specified in Section 3.01.
Plan Transferee: Means any Plan or any entity that is using the
assets of any Plan to purchase or hold its interest in a 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.
Pool Balance: Means, as of any date, (i) the original aggregate face
amount of the Certificates less (ii) the aggregate amount of all payments
made in respect of such Certificates or in respect of Deposits 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 as of any Distribution Date shall be computed after giving effect
to any special distribution with respect to unused Deposits, payment of
principal, if any, on the Equipment Notes or other Trust Property held in
the Trust and the distribution thereof to be made on such Distribution
Date.
Pool Factor: Means, as of any date, the quotient (rounded to the
seventh decimal place) computed by dividing (i) the Pool Balance as at
such date by (ii) the original aggregate face amount of the Certificates.
The Pool Factor as of any Distribution Date shall be computed after giving
effect to any special distribution with respect to unused Deposits,
payment of principal, if any, on the Equipment Notes or other Trust
Property and the distribution thereof to be made on such Distribution
Date.
Private Placement Legend: Has the meaning specified in Section 3.02.
Purchase Agreement: Means the Purchase Agreement dated August 6,
1998 between the Company and the Initial Purchasers.
QIB: Means a qualified institutional buyer as defined in Rule 144A.
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Record Date: Means (i) for Scheduled Payments to be distributed on
any Regular Distribution Date, other than the final distribution, 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, the 15th day
(whether or not a Business Day) preceding such Special Distribution Date.
Register and Registrar: Mean the register maintained and the
registrar appointed pursuant to Sections 3.04 and 7.12.
Registration Rights Agreement: Means the Registration Rights
Agreement, dated as of August 13, 1998, among the Initial Purchasers, the
Trustee, the Other Trustees and the Company, as amended, supplemented or
otherwise modified from time to time in accordance with its terms.
Regular Distribution Date: With respect to distributions of
Scheduled Payments in respect of the Certificates, means each date
designated as a Regular Distribution Date in this Agreement, until payment
of all the Scheduled Payments to be made under the Equipment Notes held in
the Trust have been made; 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.
Regulation S: Means Regulation S under the Securities Act or any
successor regulation thereto.
Related Pass Through Trust Agreement: Means the Pass Through Trust
Agreement 1998-1C-S dated the date hereof relating to the Midway Airlines
Pass Through Trust 1998-1C-S and entered into by the Company and the
Trustee, which agreement becomes effective upon the execution and delivery
of the Assignment and Assumption Agreement pursuant to Section 7.01.
Related Trust: Means the Midway Pass Through Trust 1998-1C-S, to be
formed under the Related Pass Through Trust Agreement.
Related Trustee: Means the trustee under the Related Pass Through
Trust Agreement.
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 Agreement.
Responsible Officer: With respect to the Trustee, any Loan Trustee
and any Owner Trustee, means any officer in the Corporate Trust Division
of the Trustee, Loan Trustee or Owner Trustee or any other officer
customarily performing functions similar to those performed by the persons
who at the time
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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.
Rule 144A: Means Rule 144A under the Securities Act and any
successor regulation thereto.
Scheduled Payment: With respect to any Equipment Note, means any
payment of principal and interest on such Equipment Note (other than any
such payment which is not in fact received by the Trustee or any
Subordination Agent within five days of the date on which such payment is
scheduled to be made) or any payment of interest on the Certificates with
funds drawn under the Liquidity Facility 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, as
amended, 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.
Securities Act: Means the United States Securities Act of 1933, as
amended from time to time, or any successor thereto.
Shelf Registration Statement: Means the shelf registration statement
which may be required to be filed by the Company with the SEC pursuant to
any Registration Rights Agreement, other than an Exchange Offer
Registration Statement.
Special Distribution Date: Means each date on which a Special
Payment is to be distributed as specified in 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) or Special Redemption Premium.
Special Payments Account: Means the account or accounts created and
maintained pursuant to Section 4.01(b).
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Special Redemption Premium: Means the premium payable by the Company
in respect of the Final Withdrawal pursuant to the Note Purchase
Agreement.
Specified Investments: Means (i) obligations of, or guaranteed by,
the United States Government or agencies thereof, (ii) open market
commercial paper of any corporation incorporated under the laws of the
United States of America or any State thereof rated at least P-2 or its
equivalent by Moody's Investors Service, Inc. or at least A-2 or its
equivalent by Standard & Poor's Ratings Group, (iii) certificates of
deposit issued by commercial banks organized under the laws of the United
States or of any political subdivision thereof having a combined capital
and surplus in excess of $500,000,000 which banks or their holding
companies have a rating of A or its equivalent by Moody's Investors
Service, Inc. or Standard & Poor's Ratings Group; provided, however, that
the aggregate amount at any one time so invested in certificates of
deposit issued by any one bank shall not exceed 5% of such bank's capital
and surplus, (iv) U.S. dollar denominated offshore certificates of deposit
issued by, or offshore time deposits with, any commercial bank described
in (iii) or any subsidiary thereof, (v) repurchase agreements with any
financial institution having combined capital and surplus of at least
$500,000,000 with any of the obligations described in clauses (i) through
(iv) as collateral and (vi) any mutual fund the portfolio of which is
limited to investments of the types specified in the preceding clauses (i)
through (v), including any proprietary mutual fund of The First National
Bank of Maryland for which such bank or an affiliate is investment advisor
or to which such bank provides other services and receives reasonable
compensation for such services; 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.
Subordination Agent: Has the meaning specified in the Intercreditor
Agreement.
Temporary Offshore Global Certificates: Has the meaning specified in
Section 3.01.
Transfer Date: Has the meaning specified in Section 11.01.
Triggering Event: Has the meaning assigned to such term in the
Intercreditor Agreement.
Trust: Means the trust created by this Agreement, the estate of
which consists of the Trust Property.
Trust Indenture Act: Except as otherwise provided in Section 9.06,
means the United States Trust Indenture Act of 1939 as in force at the
date hereof.
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Trust Property: Means (i) subject to the Intercreditor Agreement,
the Equipment Notes held as the property of the Trust, 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, subject to the Intercreditor Agreement, any
proceeds from the sale by the Trustee pursuant to Section 6.02 of any
Equipment Note and (iii) all rights of the Trust and the Trustee, on
behalf of the Trust, under the Intercreditor Agreement, the Escrow
Agreement, the Note Purchase Agreement and the Liquidity Facilities,
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 Facilities,
provided that rights with respect to the Deposits or under the Escrow
Agreement, except for the right to direct withdrawals for the purchase of
Equipment Notes to be held herein, will not constitute Trust Property.
Trustee: Means The First National Bank of Maryland, or its successor
in interest, and any successor or other trustee appointed as provided
herein.
Trustee's Lien: Has the meaning specified in Section 7.17.
U.S. Global Certificate: Has the meaning specified in Section 3.01.
U.S. Physical Certificates: Has the meaning specified in Section
3.01.
Section 1.02. Compliance Certificates and Opinions. Upon any
application or request by the Company, any Owner Trustee or any Loan Trustee to
the Trustee to take any action under any provision of this Agreement, the
Company, such Owner Trustee or such Loan Trustee, as the case may be, shall
furnish to the Trustee (i) an Officer's Certificate stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in this Agreement
relating to the proposed action have been complied with and (ii) 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 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 Agreement (other than a certificate
provided pursuant to Section 8.04(d)) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions in this
Agreement relating thereto;
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(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and 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 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 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 Loan
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 this Agreement and conclusive in favor of the
Trustee, the Company and any Loan Trustee, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument acknowledged to him
the execution
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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 Outstanding have given any
direction, consent or waiver (a "Direction") under this Agreement, Certificates
owned by the Company, any Owner Trustee, any Owner Participant or any Affiliate
of any such Person thereof 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 the
Trustee in fact knows to be so owned shall be so disregarded. Notwithstanding
the foregoing, (i) if any such Person owns 100% of the Certificates Outstanding,
such Certificates shall not be so disregarded as aforesaid, and (ii) if any
amount of Certificates 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
Owner Trustee, any Owner Participant or any Affiliate of any such Person.
(d) For all purposes of this Agreement, all Initial Certificates and
all Exchange Certificates shall vote and take all other actions of
Certificateholders together as one series of Certificates.
(e) The Company may at its option, by delivery of an Officer's
Certificate to the Trustee, set a record date to determine the
Certificateholders entitled to give any consent, request, demand, authorization,
direction, notice, waiver or other 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 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 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 shall be computed as of such
record date; provided that no such consent, request, demand, authorization,
direction, notice, waiver or other Act by the Certificateholders on such record
date shall be deemed effective unless it shall become effective pursuant to the
provisions of this Agreement not later than one year after such record date.
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(f) 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.
(g) Except as otherwise provided in Section 1.04(c), Certificates
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.
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Delivery of Documents; Delivery Date. (a) The Trustee
is hereby directed (i) to execute and deliver the Intercreditor Agreement, the
Escrow Agreement and the Note Purchase Agreement on or prior to the Issuance
Date, each in the form delivered to the Trustee by the Company and (ii) subject
to the respective terms thereof, to perform its obligations thereunder. Upon
request of the Company and the satisfaction or waiver of the closing conditions
specified in the Purchase Agreement, the Trustee shall execute, deliver,
authenticate, issue and sell Certificates in authorized denominations equalling
in the aggregate the amount set forth, with respect to the Trust, in Schedule I
to the Purchase Agreement evidencing the entire ownership interest in the Trust,
which amount equals the maximum aggregate principal amount of Equipment Notes
which may be purchased by the Trustee pursuant to the Note Purchase Agreement.
Except as provided in Sections 3.04, 3.05, 3.07 and 3.11, the Trustee shall not
execute, authenticate or deliver Certificates in excess of the aggregate amount
specified in this paragraph.
(b) On or after the Issuance Date, the Company may deliver from time
to time to the Trustee a Delivery Notice relating to one or more Equipment
Notes. After receipt of a Delivery Notice and in any case no later than one
Business Day prior to a Delivery Date as to which such Delivery Notices relates
(the "Applicable Delivery Date"), the Trustee shall (as and when specified in
the Delivery Notice) instruct the Escrow Agent to provide a Notice of Purchase
Withdrawal to the Depositary requesting (A) the withdrawal of one or more
Deposits on the Applicable Delivery Date in accordance with and to the extent
permitted by the terms of the Escrow Agreement and the Deposit Agreement and (B)
the payment of all, or a portion, of such Deposit or Deposits in an amount equal
in the aggregate to the purchase price of such Equipment Notes to or on behalf
of the Owner Trustee or the Company, as the case may be, issuing such Equipment
Notes, all as shall be described in the Delivery Notice. The Trustee shall (as
and when specified in such Delivery Notice), subject to the conditions set forth
in Section 2 of the Note Purchase Agreement, enter into and perform its
obligations under the Participation Agreement specified in such Delivery Notice
(the
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"Applicable Participation Agreement") and cause such certificates, documents and
legal opinions relating to the Trustee to be duly delivered as required by the
Applicable Participation Agreement. If at any time prior to the Applicable
Delivery Date, the Trustee receives a notice of postponement pursuant to Section
1(e) or 1(f) of the Note Purchase Agreement, then the Trustee shall give the
Depositary (with a copy to the Escrow Agent) a notice of cancellation of such
Notice of Purchase Withdrawal relating to such Deposit or Deposits on such
Applicable Delivery Date. Upon satisfaction of the conditions specified in the
Note Purchase Agreement and the Applicable Participation Agreement, the Trustee
shall purchase the applicable Equipment Notes with the proceeds of the
withdrawals of one or more Deposits made on the Applicable Delivery Date in
accordance with the terms of the Deposit Agreement and the Escrow Agreement. The
purchase price of such Equipment Notes shall equal the principal amount of such
Equipment Notes. Amounts withdrawn from such Deposit or Deposits in excess of
the purchase price of the Equipment Notes or to the extent not applied on the
Applicable Delivery Date to the purchase price of the Equipment Notes, shall be
redeposited by the Trustee with the Depositary on the Applicable Delivery Date
in accordance with the terms of the Deposit Agreement.
Section 2.02. Withdrawal of Deposits. If any Deposits remain
outstanding on the Business Day next succeeding the Cut-off Date, (i)(A) the
Trustee shall give the Escrow Agent notice that the Trustee's obligation to
purchase Equipment Notes under the Note Purchase Agreement has terminated and
instruct the Escrow Agent to provide a notice of Final Withdrawal to the
Depositary substantially in the form of Exhibit B to the Deposit Agreement (the
"Final Withdrawal Notice") and (B) the Trustee will make a demand upon the
Company under the Note Purchase Agreement for an amount equal to the Special
Redemption Premium, such payment to be made on the Final Withdrawal Date.
Section 2.03. The Trustee. Subject to Section 7.15, the Trustee
shall not be responsible in any manner whatsoever for or in respect of the
validity or sufficiency of this Agreement, the Deposit Agreement or the Escrow
Agreement or the due execution hereof or thereof by the Company or the other
parties thereto (other than the Trustee), or for or in respect of the recitals
and statements contained herein or therein, all of which recitals and statements
are made solely by the Company.
Section 2.04. Acceptance by Trustee. The Trustee, upon the execution
and delivery of this Agreement, acknowledges its acceptance of all right, title
and interest in and to the Trust Property acquired pursuant to Section 2.01
hereof and the Note Purchase Agreement and declares that the Trustee holds and
will hold such right, title and interest, together with all other property
constituting the Trust Property, for the benefit of all then present and future
Certificateholders, upon the trusts herein set forth. Subject to Section 7.14,
the Trustee shall take all actions reasonably necessary to effect the
registration of all such Equipment Notes in the name of the Subordination Agent.
By its payment for and acceptance of each Certificate issued to it under this
Agreement, each initial Certificateholder as grantor of the Trust thereby joins
in the creation and declaration of the Trust.
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Section 2.05. Limitation of Powers. The Trust is constituted solely
for the purpose of making the investment in the Equipment Notes, and, except as
set forth herein, 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 any Aircraft (as
defined in the respective 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. Title, Form, Denomination and Execution of
Certificates. (a) The Initial Certificates shall be known as the "7.14%
1998-1C-O Initial Pass Through Certificates" and the Exchange Certificates shall
be known as the "7.14% 1998-1C-O Exchange Pass Through Certificates", in each
case, of the Trust. Each Certificate will represent a fractional undivided
interest in the Trust and shall be substantially in the form set forth as
Exhibit A hereto, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Agreement and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Certificates, as evidenced by their execution of 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. At the Escrow Agent's request under the Escrow Agreement, the
Trustee shall affix the corresponding Escrow Receipt to each Certificate. In any
event, any transfer or exchange of any Certificate shall also effect a transfer
or exchange of the related Escrow Receipt. Prior to the Final Withdrawal Date,
no transfer or exchange of any Certificate shall be permitted unless the
corresponding Escrow Receipt is attached thereto and also is so transferred or
exchanged. By acceptance of any Certificate to which an Escrow Receipt is
attached, each Holder of such a Certificate acknowledges and accepts the
restrictions on transfer of the Escrow Receipt set forth herein and in the
Escrow Agreement.
(b) The Initial Certificates shall be issued only in fully
registered form without coupons and only in denominations of $100,000 or
integral multiples of $1,000 in excess thereof, except that one Certificate may
be issued in a denomination of less than $100,000. The Exchange Certificates
will be issued in denominations of $1,000 or integral multiples thereof. Each
Certificate shall be dated the date of its authentication. The aggregate
Fractional Undivided Interest of Certificates shall not at any time exceed
$20,528,000.
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(c) Initial Certificates offered and sold in reliance on Rule 144A
shall be issued initially in the form of a single permanent global Certificate
in registered form, substantially in the form set forth as Exhibit A hereto (the
"U.S. Global Certificate"), duly executed and authenticated by the Trustee as
hereinafter provided. The U.S. Global Certificate will be registered in the name
of a nominee for DTC and deposited with the Trustee, as custodian for DTC. The
aggregate principal amount of the U.S. Global Certificate may from time to time
be increased or decreased by adjustments made on the records of the Depositary
or its nominee, or of the Trustee, as custodian for DTC or its nominee, as
hereinafter provided.
(d) Initial Certificates offered and sold in offshore transactions
in reliance on Regulation S shall be issued initially in the form of a single
temporary global Certificate in registered form, substantially in the form set
forth as Exhibit A hereto (the "Temporary Offshore Global Certificate") duly
executed and authenticated by the Trustee as hereinafter provided. The Temporary
Offshore Global Certificate will be registered in the name of a nominee of DTC
for credit to the account of the Agent Members acting as depositaries for
Euroclear and Cedel and deposited with the Trustee as custodian for DTC. At any
time on or after September 23, 1998 (the "Offshore Certificates Exchange Date"),
upon receipt by the Trustee of a certificate substantially in the form of
Exhibit B hereto, a single permanent global Certificate in registered form
substantially in the form set forth in Exhibit A (the "Permanent Offshore Global
Certificate"; and together with the Temporary Offshore Global Certificate, the
"Offshore Global Certificates"), duly executed and authenticated by the Trustee
as hereinafter provided, shall be registered in the name of a nominee for DTC
and deposited with the Trustee, as custodian for DTC, and the Registrar shall
reflect on its books and records the date of such transfer and a decrease in the
principal amount of any Temporary Offshore Global Certificate in an amount equal
to the principal amount of the beneficial interest in such Temporary Offshore
Global Certificate transferred. The U.S. Global Certificate and the Offshore
Global Certificates are sometimes referred to as the "Global Certificates".
(e) Initial Certificates offered and sold to Institutional
Accredited Investors shall be issued in the form of permanent certificated
Certificates in registered form in substantially the form set forth as Exhibit A
hereto (the "U.S. Physical Certificates"). Certificates issued pursuant to
Section 3.05(b) in exchange for interests in any Offshore Global Certificate
shall be in the form of permanent certificated Certificates in registered form
substantially in the form set forth in Exhibit A (the "Offshore Physical
Certificates"). The Offshore Physical Certificates and U.S. Physical
Certificates are sometimes collectively herein referred to as the "Physical
Certificates".
(f) The Exchange Certificates shall be issued in the form of one or
more global Certificates substantially in the form of Exhibit A hereto (each, a
"Global Exchange Certificate"), except that the Private Placement Legend
(hereinafter defined) shall be omitted. Such Global Exchange Certificates shall
be in registered form and be registered in the name of DTC and deposited with
the Trustee, at its Corporate Trust Office, as custodian DTC. The aggregate
principal amount of any Global Exchange
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Certificate may from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for DTC for such Global Exchange
Certificate, which adjustments shall be conclusive as to the aggregate principal
amount of any such Global Exchange Certificates. Subject to clause (i) of the
first sentence of this Section 3.01(f), the terms hereof applicable to Global
Certificates shall apply to the Global Exchange Certificates, mutatis mutandis.
(g) The definitive Certificates shall be in registered form and
shall be typed, printed, lithographed or engraved or produced by any combination
of these methods or may be produced in any other manner, all as determined by
the officers executing such Certificates, as evidenced by their execution of
such Certificates.
Section 3.02. Restrictive Legends. (a) Subject to Section 3.06, each
Global Certificate (other than the Permanent Offshore Global Certificate) and
each U.S. Physical Certificate shall bear the following legend (the "Private
Placement Legend") on the face thereof:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY
MIDWAY AIRLINES CORPORATION ("MIDWAY") OR ANY AFFILIATE OF MIDWAY, RESELL
OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO MIDWAY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATES
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE
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TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS
CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY
MIDWAY OR AN AFFILIATE OF MIDWAY, THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR
TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND MIDWAY SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
(b) Each Global Certificate shall also bear the following legend on
the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE 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 HEREON 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.
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TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST
AGREEMENT REFERRED TO HEREIN.
Section 3.03. Authentication of Certificates. (a) The Trustee shall
duly execute, authenticate and deliver Certificates in authorized denominations
equalling in the aggregate the aggregate principal amount of the Equipment Notes
to be purchased by the Trustee pursuant to the Participation Agreements and
evidencing the entire ownership of the Trust.
(b) No Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose, unless there appears on
such Certificate a certificate of authentication substantially in the form
provided for herein executed by the Trustee by the manual signature of one of
its authorized signatories, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.
Section 3.04. Transfer and Exchange. The Trustee shall cause to be
kept at the office or agency to be maintained by it in accordance with the
provisions of Section 7.12 of this Agreement a register (the "Register") for the
Certificates in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of the Certificates
and of transfers and exchanges of the Certificates as herein provided. The
Trustee shall initially be the registrar (the "Registrar") for the purpose of
registering the Certificates and transfers and exchanges of the Certificates as
herein provided. A Certificateholder may transfer or exchange a Certificate by
written application to the Registrar stating the name of the proposed transferee
and otherwise complying with the terms of this Agreement, including providing a
written certificate or other evidence of compliance with any restrictions on
transfer; provided that no exchanges of Initial Certificates for Exchange
Certificates shall occur until an Exchange Offer Registration Statement shall
have been declared effective by the SEC (notice of which shall be provided to
the Trustee by the Company). No such transfer shall be effected until, and such
transferee shall succeed to the rights of a Certificateholder only upon, final
acceptance and registration of the transfer by the Registrar in the Register.
Prior to the registration of any transfer by a Certificateholder as provided
herein, the Trustee shall treat the person in whose name the Certificate is
registered as the owner thereof for all purposes, and the Trustee shall not be
affected by notice to the contrary. Furthermore, DTC shall, by acceptance of a
Global Certificate, agree that transfers of beneficial interests in such Global
Certificate may be effected only through a book-entry system maintained by the
Depositary (or its agent), and that ownership of a beneficial interest in the
Certificate shall be required to be reflected in a book entry. When Certificates
are presented to the Registrar with a request to register the transfer or to
exchange them for an equal face amount of
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Certificates of other authorized denominations, the Registrar shall register the
transfer or make the exchange as requested if its requirements for such
transactions are met. To permit registrations of transfers and exchanges in
accordance with the terms, conditions and restrictions hereof, the Trustee shall
execute and authenticate Certificates at the Registrar's request. No service
charge shall be made for any registration of transfer or exchange of the
Certificates, but the Trustee may require payment by the transferor of a sum
sufficient to cover any transfer tax or similar governmental charge payable in
connection therewith.
Section 3.05. Book-Entry Provisions for U.S. Global Certificate and
Offshore Global Certificates. (a) Members of, or participants in, DTC ("Agent
Members") shall have no rights under this Agreement with respect to any Global
Certificate held on their behalf by DTC, or the Trustee as its custodian, and
DTC may be treated by the Trustee and any agent of the Trustee as the absolute
owner of such Global Certificate for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Trustee or any agent of the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by DTC or shall impair, as between DTC and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a holder of any Certificate. Upon the issuance of any Global
Certificate, the Registrar or its duly appointed agent shall record a nominee of
DTC as the registered holder of such Global Certificate.
(b) Transfers of any Global Certificate shall be limited to
transfers of such Global Certificate in whole, but not in part, to nominees of
DTC, its successor or such successor's nominees. Beneficial interests in the
U.S. Global Certificate and any Offshore Global Certificate may be transferred
in accordance with the rules and procedures of DTC and the provisions of Section
3.06. Beneficial interests in the U.S. Global Certificate or an Offshore Global
Certificate shall be delivered to all beneficial owners in the form of U.S.
Physical Certificates or Offshore Physical Certificates, as the case may be, if
(i) the Company notifies the Trustee in writing that DTC is unwilling or unable
to discharge properly its responsibilities as DTC for the U.S. Global
Certificate or such Offshore Global Certificate, as the case may be, and the
Company is unable to locate a qualified successor depositary within 90 days of
such notice or (ii) after the occurrence of an Event of Default, beneficial
owners of the U.S. Global Certificate or Offshore Global Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in the Trust, by Act of such Certificateholders delivered to the Company and the
Trustee, advise the Company, the Trustee and DTC through its Clearing Agency
Participants in writing that the continuation of a book-entry system through DTC
is no longer in the best interests of the Certificateholders, then the Trustee
shall notify all owners of beneficial interests in the U.S. Global Certificate
or an Offshore Global Certificate, through DTC, of the occurrence of any such
event and the availability of definitive Certificates.
(c) Any beneficial interest in one of the Global Certificates that
is transferred to a Person who takes delivery in the form of an interest in the
other Global Certificate will, upon such transfer, cease to be an interest in
such Global
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Certificate and become an interest in the other Global Certificate and,
accordingly, will thereafter be subject to all transfer restrictions, if any,
and other procedures applicable to beneficial interests in such other Global
Certificate for as long as it remains such an interest.
(d) [Intentionally omitted.]
(e) In connection with the transfer of the entire U.S. Global
Certificate or an entire Offshore Global Certificate to the beneficial owners
thereof pursuant to paragraph (b) of this Section 3.05, such U.S. Global
Certificate or Offshore Global Certificate, as the case may be, shall be deemed
to be surrendered to the Trustee for cancellation, and the Trustee shall
execute, authenticate and deliver, to each beneficial owner identified by DTC in
exchange for its beneficial interest in such U.S. Global Certificate or Offshore
Global Certificate, as the case may be, an equal aggregate principal amount of
U.S. Physical Certificates or Offshore Physical Certificates, as the case may
be, of authorized denominations.
(f) Any U.S. Physical Certificate delivered in exchange for an
interest in the U.S. Global Certificate pursuant to paragraph (b) of this
Section 3.05 shall, except as otherwise provided by paragraph (f) of Section
3.06, bear the Private Placement Legend.
(g) Any Offshore Physical Certificate delivered in exchange for an
interest in an Offshore Global Certificate pursuant to paragraph (b) of this
Section shall, except as otherwise provided by paragraph (f) of Section 3.06,
bear the applicable legend regarding transfer restrictions set forth in Section
3.02(a).
(h) The registered holder of the U.S. Global Certificate or any
Offshore Global Certificate may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Agreement or the Certificates.
Section 3.06. Special Transfer Provisions. Unless and until (i) an
Initial Certificate is sold under an effective Shelf Registration Statement or
(ii) an Initial Certificate is exchanged for an Exchange Certificate pursuant to
an effective Exchange Offer Registration Statement, in each case pursuant to the
terms of the Registration Rights Agreement, the following provisions shall apply
to the Certificates:
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Certificate to any Institutional Accredited Investor
which is not a QIB (excluding transfers to or by Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Certificate,
whether or not such Certificate bears the Private Placement Legend, if (x)
the requested transfer is at least two years after the later of the
original issue date of the
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Certificates and the last date on which such Certificate was held by the
Company or any affiliate thereof or (y) the proposed transferee has
delivered to the Registrar a letter substantially in the form of Exhibit D
hereto and the aggregate principal amount of the Certificates being
transferred is at least $100,000.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Certificate, upon receipt by the
Registrar of (x) the documents, if any, required by paragraph (i) and (y)
instructions given in accordance with DTC's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
of the transfer and a decrease in the principal amount of such U.S. Global
Certificate in an amount equal to the principal amount of the beneficial
interest in such U.S. Global Certificate to be transferred, and the
Company shall execute, and the Trustee shall authenticate and deliver to
the transferor or at its direction, one or more U.S. Physical Certificates
of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of an Initial Certificate
to a QIB (excluding Non-U.S. Persons):
(i) If the Certificate to be transferred consists of U.S. Physical
Certificates or an interest in any Temporary Offshore Global Certificate,
the Registrar shall register the transfer if such transfer is being made
by a proposed transferor who has checked the box provided for on the form
of Initial Certificate stating, or has otherwise advised the Trustee and
the Registrar in writing, that the sale has been made in compliance with
the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Initial Certificate stating, or
has otherwise advised the Trustee and the Registrar in writing, that it is
purchasing the Initial Certificate for its own account or an account with
respect to which it exercises sole investment discretion and that it, or
the Person on whose behalf it is acting with respect to any such account,
is a QIB within the meaning of Rule 144A, and is aware that the sale to it
is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Trust and/or the Company as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
(ii) Upon receipt by the Registrar of the documents referred to in
clause (i) above and instructions given in accordance with DTC's and the
Registrar's procedures therefor, the Registrar shall reflect on its books
and records the date of such transfer and an increase in the principal
amount of the U.S. Global Certificate in an amount equal to the principal
amount of the U.S. Physical Certificates or interests in the Temporary
Offshore Global Certificate, as the case may be, being transferred, and
the Trustee shall cancel such Physical Certificates
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or decrease the amount of such Temporary Offshore Global Certificate so
transferred.
(c) [Intentionally omitted.]
(d) Transfers of Interests in the Permanent Offshore Global
Certificate or Offshore Physical Certificates. The Registrar shall register any
transfer of interests in the Permanent Offshore Global Certificate or Offshore
Physical Certificates without requiring any additional certification.
(e) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any registration of any transfer of an
Initial Certificate to a Non-U.S. Person:
(i) Prior to the Offshore Certificates Exchange Date, the Registrar
shall register any proposed transfer of an Initial Certificate to a
Non-U.S. Person upon receipt of a certificate substantially in the form
set forth as Exhibit C hereto from the proposed transferor.
(ii) On and after the Offshore Certificates Exchange Date, the
Registrar shall register any proposed transfer to any Non-U.S. Person if
the Certificate to be transferred is a U.S. Physical Certificate or an
interest in the U.S. Global Certificate, upon receipt of a certificate
substantially in the form of Exhibit C from the proposed transferor. The
Registrar shall promptly send a copy of such certificate to the Company.
(iii) Upon receipt by the Registrar of (x) the documents, if any,
required by paragraph (ii) and (y) instructions in accordance with the
Depositary's and the Registrar's procedures, the Registrar shall reflect
on its books and records the date of such transfer and a decrease in the
principal amount of such U.S. Global Certificate in an amount equal to the
principal amount of the beneficial interest in such U.S. Global
Certificate to be transferred, and (B) upon receipt by the Registrar of
instructions given in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and an increase in the principal amount of the Offshore Global Certificate
in an amount equal to the principal amount of the U.S. Physical
Certificate or the U.S. Global Certificate, as the case may be, to be
transferred, and the Trustee shall cancel the Physical Certificate, if
any, so transferred or decrease the amount of such U.S. Global
Certificate.
(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Certificates not bearing the Private Placement Legend, the
Registrar shall deliver Certificates that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Certificates bearing the
Private Placement Legend, the Registrar shall deliver only Certificates that
bear the Private Placement Legend unless either (i) the circumstances
contemplated by paragraph (a)(i)(x) or (e)(ii) of this
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Section 3.06 exist or (ii) there is delivered to the Registrar an Opinion of
Counsel to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of the
Securities Act.
(g) General. By its acceptance of any Certificate bearing the
Private Placement Legend, each Holder of such a Certificate acknowledges the
restrictions on transfer of such Certificate set forth in this Agreement and
agrees that it will transfer such Certificate only as provided in this
Agreement. The Registrar shall not register a transfer of any Certificate unless
such transfer complies with the restrictions on transfer of such Certificate set
forth in this Agreement. In connection with any transfer of Certificates, each
Certificateholder agrees by its acceptance of the Certificates to furnish the
Registrar or the Trustee such certifications, legal opinions or other
information as either of them may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or a transaction not
subject to, the registration requirements of the Securities Act; provided that
neither the Trustee nor the Registrar shall be required to determine the
sufficiency of any such certifications, legal opinions or other information.
Until such time as no Certificates remain Outstanding, the Registrar
shall retain copies of all letters, notices and other written communications
received pursuant to Section 3.05 or this Section 3.06. The Trustee, if not the
Registrar at such time, shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Registrar.
Section 3.07. 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, in authorized denominations and of like Fractional Undivided
Interest and bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Certificate under this
Section 3.07, 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 3.07 shall
constitute conclusive evidence of the appropriate Fractional Undivided Interest
in the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
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The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Trustee, the Registrar and any
Paying Agent 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 Article IV and for all other purposes whatsoever, and none of the
Trustee, the Registrar or any Paying Agent shall be affected by any notice to
the contrary.
Section 3.09. Cancellation. All Certificates surrendered for payment
or transfer or exchange shall, if surrendered to the Trustee or any agent of the
Trustee other than the Registrar, be delivered to the Registrar for cancellation
and shall promptly be cancelled by it. No Certificates shall be authenticated in
lieu of or in exchange for any Certificates cancelled as provided in this
Section, except as expressly permitted by this Agreement. All cancelled
Certificates held by the Registrar shall be destroyed and a certification of
their destruction delivered to the Trustee.
Section 3.10. Limitation of Liability for Payments. All payments and
distributions made to Certificateholders 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 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 to the extent available for distribution to such
Certificateholder as provided in this Agreement.
Section 3.11. Temporary Certificates. Until definitive Certificates
are ready for delivery, the Trustee shall authenticate temporary Certificates.
Temporary Certificates shall be substantially in the form of definitive
Certificates but may have insertions, substitutions, omissions and other
variations determined to be appropriate by the officers executing the temporary
Certificates, as evidenced by their execution of such temporary Certificates. If
temporary Certificates are issued, the Trustee will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
office or agency of the Trustee designated for such purpose pursuant to Section
7.12, without charge to the Certificateholder. Upon surrender for cancellation
of any one or more temporary Certificates, the Trustee shall execute,
authenticate and deliver in exchange therefor a like face amount of definitive
Certificates of authorized denominations. Until so exchanged, the temporary
Certificates shall be entitled to the same benefits under this Agreement as
definitive Certificates.
Section 3.12. ERISA Restrictive Legend. All Certificates issued
pursuant to this Agreement shall bear a legend to the following effect (the
"ERISA Legend")
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unless the Company and the Trustee determine otherwise consistent with
applicable law:
"BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS FOR THE BENEFIT OF
THE COMPANY AND EACH OWNER PARTICIPANT THAT (A) IT IS NOT A PLAN TRANSFEREE (AS
DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR (B) ONE OR MORE PROHIBITED
TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS APPLIES SUCH THAT THE USE OF
PLAN ASSETS TO PURCHASE AND HOLD THIS PASS THROUGH CERTIFICATE WILL NOT
CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975 OF
THE CODE. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF
THE FOREGOING RESTRICTIONS."
By acceptance of any Certificate bearing the ERISA Legend, each
Holder of such a Certificate acknowledges for the benefit of the Company and
each Owner Participant the restrictions on transfer of such Certificate set
forth in this Agreement and agrees that it will transfer such Certificate only
as provided in this Agreement. The Registrar shall not register a transfer of
any Certificate unless such transfer complies with the restrictions on transfer,
if any, of such Certificate set forth in this Agreement.
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 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, 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 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 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.
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(c) The Trustee shall present to the Loan Trustee to which an
Equipment Note relates such Equipment Note on the date of its stated final
maturity or, in the case of any Equipment Note which is to be redeemed in whole
pursuant to the relevant Indenture, on the applicable redemption date under such
Indenture.
Section 4.02. Distributions from Certificate Account and Special
Payments Account. (a) On each Regular Distribution Date or as soon thereafter as
the Trustee has confirmed receipt of the payment of the Scheduled Payments due
on such date, the Trustee shall distribute out of the Certificate Account the
entire amount deposited therein pursuant to Section 4.01(a). There shall be so
distributed to each Certificateholder of record 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 Fractional Undivided Interest in the Trust held by such
Certificateholder) of the total amount in the Certificate Account, except that,
with respect to Certificates registered on the Record Date in the name of the
nominee of the Depositary (initially, such nominee to be Cede & Co.), such
distribution shall be made by wire transfer in immediately available funds to
the account designated by such nominee.
(b) On each Special Distribution Date with respect to any Special
Payment or as soon thereafter as the Trustee has confirmed receipt of any
Special Payments, the Trustee shall distribute out of the 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 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 Trust held by such Certificateholder) of the aggregate amount in
the Special Payments Account on account of such Special Payment, except that,
with respect to Certificates registered on the Record Date in the name of the
nominee of the Depositary (initially, such nominee to be Cede & Co.), such
distribution shall be made by wire transfer in immediately available funds to
the account designated by such nominee.
(c) The Trustee shall, at the expense of the Company, cause notice
of each Special Payment to be mailed to each Certificateholder at his address as
it appears in the Register. In the event of redemption, prepayment or purchase
of Equipment Notes held in the Trust, such notice shall be mailed not less than
15 days prior to the date any 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 (which notice, in the case of a Special Redemption Premium,
shall include a copy of the notice delivered by the Escrow Paying Agent under
Section 2.06 of the Escrow Agreement). Notices mailed by the Trustee shall set
forth:
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(i) the Special Distribution Date and the Record Date therefor
(except as otherwise provided in Section 11.01),
(ii) the amount of the Special Payment for each $1,000 face amount
Certificate (taking into account any payment to be made by the Company
pursuant to Section 2.02) 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, the total amount to be received on such date for each
$1,000 face amount Certificate.
If the amount of (x) premium, if any, payable upon the redemption, prepayment or
purchase of an Equipment Note or (y) Special Redemption Premium has not been
calculated at the time 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 such premium or Special Redemption Premium, as the case may
be, received will also be distributed.
If any redemption of the Equipment Notes held in the Trust is
cancelled, the Trustee, as soon as possible after learning thereof, shall cause
notice thereof to be mailed to each Certificateholder at its address as it
appears on the Register.
Section 4.03. Statements to Certificateholders. (a) On each
Distribution Date, the Trustee will include with each distribution to
Certificateholders of a Scheduled Payment or Special Payment, as the case may
be, a statement setting forth the information provided below (in the case of a
Special Payment, including any Special Redemption Premium, reflecting in part
the information provided by the Escrow Paying Agent under the Escrow Agreement).
Such statement shall set forth (per $1,000 face amount Certificate as to (ii),
(iii), (iv) and (v) below) the following information:
(i) the aggregate amount of funds distributed on such Distribution
Date under the Agreement and under the Escrow Agreement, indicating the
amount allocable to each source;
(ii) the amount of such distribution under the Agreement allocable
to principal and the amount allocable to premium (including the Special
Redemption Premium), if any;
(iii) the amount of such distribution under the Agreement allocable
to interest;
(iv) the amount of such distribution under the Escrow Agreement
allocable to interest;
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(v) the amount of such distribution under the Escrow Agreement
allocable to Deposits; and
(vi) the Pool Balance and the Pool Factor.
With respect to the Certificates registered in the name of a
Clearing Agency or its nominee, 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 Trustee will
mail to each such Clearing Agency Participant the statement described above and
will make available additional copies as requested by such Clearing Agency
Participant for forwarding to holders of Certificates.
(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), (a)(ii), (a)(iii), (a)(iv) and (a)(v)
above with respect to the 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 a Clearing Agency or its nominee, such report and such other items shall be
prepared on the basis of information supplied to the Trustee 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.
(c) Utilizing information provided by Midway, promptly following (i)
the Delivery Period Termination Date, if there has been any change in the
information set forth in clauses (x), (y) and (z) below from that set forth in
page 65 of the Offering Memorandum, and (ii) any early redemption or purchase
of, or any default in the prepayment of principal or interest in respect of, any
of the Equipment Notes held in the Trust, or any Final Withdrawal, the Trustee
shall furnish to Certificateholders of record on such date a statement setting
forth (x) the expected Pool Balances for each subsequent Regular Distribution
Date following the Delivery Period Termination Date, (y) the related Pool
Factors for such Regular Distribution Dates and (z) the expected principal
distribution schedule of the Equipment Notes, in the aggregate, held as Trust
Property at the date of such notice. With respect to the Certificates registered
in the name of a Clearing Agency, on the Delivery Period Termination Date, the
Trustee will request from such Clearing Agency a securities position listing
setting forth the names of all Clearing Agency Participants reflected on such
Clearing Agency's books as holding interests in the Certificates on such date.
The Trust will mail to each such Clearing Agency Participant the statement
described above and will make available
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additional copies as requested by such Clearing Agency Participant for
forwarding to holders of interests in the 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 gross negligence (or simple negligence in
the handling of funds) 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 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 (i) organized and validly existing under the laws of the United States
of America or any state thereof or the District of Columbia, (ii) a
"citizen of the United States" (as defined in Section 40102(a)(15) of
Title 49 of the United States Code) and (iii) a United States certificated
air carrier, if and so long as such status is a condition of entitlement
to the benefits of Section 1110 of the Bankruptcy Reform Act of 1978, as
amended (11 U.S.C. ss. 1110), with respect to the Aircraft;
(b) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance, transfer or
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lease substantially all of the assets of the Company as an entirety shall
execute and deliver to the Trustee 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 this Agreement, the Other Pass Through Trust Agreements, the
Participation Agreements, and each other Note Document to be performed or
observed by the Company;
(c) immediately after giving effect to such transaction, no Event of
Default (as defined in any Lease or any Indenture relating to an Owned
Aircraft), shall have occurred and be continuing; and
(d) the Company shall have delivered to the Trustee an Officer's
Certificate of the Company and an Opinion of Counsel of the Company
reasonably satisfactory to the Trustee, each stating that such
consolidation, merger, conveyance, transfer or lease and the assumption
agreement mentioned in clause (b) above comply with this Section 5.02 and
that all conditions precedent herein provided for relating to such
transaction have been complied with.
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 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 this Agreement or any Financing Document 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 the Intercreditor
Agreement.
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(b) Purchase Rights of Certificateholders.
(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
Section 6.01(b)(i) of 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 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 the Class B
Certificates pursuant to this Section 6.01(b)(i).
(ii) By its acceptance of its Certificate, each Certificateholder
agrees that at any time after the occurrence and during the continuation
of a Triggering Event, each Class D Certificateholder shall have the right
(which shall not expire upon any purchase of the Class A Certificates
pursuant to Section 6.01(b)(i) of the Class B Trust Agreement or the
purchase of the Class A Certificates and the Class B Certificates pursuant
to clause (A) above) to purchase all, but not less than all, of the
Certificates, the Class A Certificates and the Class B Certificates upon
ten days' written notice to the Trustee, the Class A Trustee, the Class B
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 Class D Certificateholder to purchase all, but not less than
all, of the Certificates, the Class A Certificates and the Class B
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
Certificates, the Class A Certificates and the Class B Certificates
pursuant to this Section 6.01(b).
The purchase price with respect to the Certificates shall be equal
to the Pool Balance of the Certificates, 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, the Intercreditor
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Agreement, the Escrow Agreement or any Note Document or on or in respect of the
Certificates; provided, however, that (i) if such purchase occurs after the
record date specified in Section 2.03(b) of the Escrow Agreement relating to the
distribution of unused Deposits and accrued and unpaid interest thereunder, such
purchase price shall be reduced by the aggregate amount of unused Deposits and
interest to be distributed under the Escrow Agreement (which deducted amounts
shall remain distributable to, and may be retained by the Certificateholder as
of such record date) and (ii) if such purchase occurs after a Record Date, such
purchase price shall be reduced by the amount to be distributed hereunder on the
related Distribution date (which deducted amounts shall remain distributable to,
and may be retained by, the Certificateholder as of such Record Date); provided
further that no such purchase of Certificates 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 Pass Through Trust Agreements, the Certificates, the Class A
Certificates and the Class B Certificates which are senior to the Class of
Certificates (as defined in the Intercreditor Agreement) held by such purchaser.
Each payment of the purchase price of the Certificates 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 agrees by its
acceptance of its Certificate that it will, subject to Section 3.04 hereof, upon
payment from such Class D Certificateholder(s) of the purchase price set forth
in the first sentence of this paragraph, 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, the Escrow Agreement,
the Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility, the
Note Documents and all Certificates and Escrow Receipts 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, the Escrow Agreement,
the Deposit Agreement, the Intercreditor Agreement, the Liquidity Facility and
the Note Documents. The Certificates 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 (whether in the form of Physical
Certificates or beneficial interests in Global Certificates) 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 the
Certificates and (ii) if the purchaser shall so request, such Certificateholder
will comply with all the provisions of Section 3.04 hereof to enable new
Certificates 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.
As used in this Section 6.01(b), the terms "Certificates," "Class",
"Class A Certificate", "Class A Certificateholder", "Class A Trust", "Class A
Trustee", "Class B Certificate", "Class B Certificateholder", "Class B Trust",
"Class B Trustee", "Class D
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Certificate", "Class D Certificateholder", "Class D Trust" and "Class D
Trustee", shall have the respective meanings assigned to such terms in the
Intercreditor Agreement.
Section 6.02. Incidents of Sale of Equipment Notes. Upon any sale of
all or any part of the Equipment Notes made either under the power of sale given
under this Agreement or otherwise for the enforcement of this Agreement, the
following shall be applicable:
(1) Certificateholders and Trustee May Purchase Equipment Notes. Any
Certificateholder, the Trustee in its individual or any other capacity or
any other Person may bid for and purchase any of the Equipment Notes, and
upon compliance with the terms of sale, may hold, retain, possess and
dispose of such Equipment Notes in their own absolute right without
further accountability.
(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 received by
the Trustee from the Subordination Agent pursuant to the Intercreditor
Agreement upon any sale made either under the power of sale given by this
Agreement or otherwise for the enforcement of this Agreement shall 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 of the principal of,
premium, if any, or interest on any Equipment Note, or if there shall be any
failure to pay Rent (as defined in the relevant Lease) under any Lease when due
and payable, then the Trustee, in its own name and as trustee of an express
trust, as holder of such Equipment Notes, to the extent permitted by and in
accordance with the terms of the Intercreditor Agreement and the Financing
Documents (subject to the rights of the applicable Owner Trustee or Owner
Participant to cure any such failure in accordance with Section 8.03 of any
applicable Indenture relating to a Leased Aircraft), shall be entitled and
empowered to institute any suits, actions or proceedings at law, in equity or
otherwise, for the collection of the sums so due and unpaid on such Equipment
Notes or under such Lease and may prosecute any such claim or proceeding to
judgment or final decree with respect to the whole amount of any such sums so
due and unpaid.
Section 6.04. Control by Certificateholders. Subject to Section 6.03
and the Intercreditor Agreement, the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the Trust shall have the right to direct the time, method and
place of conducting any
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proceeding for any remedy available to the Trustee with respect to the Trust or
pursuant to the terms of the Intercreditor Agreement, or exercising any trust or
power conferred on the Trustee under this Agreement or the Intercreditor
Agreement, including any right of the Trustee as Controlling Party under the
Intercreditor Agreement or as holder of the Equipment Notes, provided that
(1) such Direction shall not 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 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 the Intercreditor
Agreement, the Certificateholders holding Certificates 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 Loan 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 Loan
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, 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 or X cannot be modified or amended without the consent of each
Certificateholder holding an Outstanding Certificate affected thereby.
Upon any such waiver, such default shall cease to exist with respect
to the Certificates 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 to the relevant Loan Trustee shall be annulled
with respect thereto; but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon. Upon any
such waiver, the Trustee shall vote the Equipment Notes issued under the
relevant Indenture to waive the corresponding Indenture Default.
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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 the
Intercreditor Agreement, the right of any Certificateholder to receive
distributions of payments required pursuant to Section 4.02 hereof on the
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 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) Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than 25% of the 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 7.03(e);
(3) the Trustee shall have refused or neglected to institute such an
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 shall have
been given to the Trustee during such 60-day period by Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating
not less than a majority in interest in the Trust.
It is understood and intended that no one or more of the
Certificateholders shall have any right in any manner whatsoever hereunder or
under the Certificates to (i) surrender, impair, waive, affect, disturb or
prejudice any property in the Trust Property or the lien of any Indenture on any
property subject thereto, or the rights of the Certificateholders or the holders
of the Equipment Notes, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Certificateholder 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 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 shall not be exclusive of any
other remedy
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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. Certain Duties and Responsibilities. (a) Except during
the continuance of an Event of Default, the Trustee undertakes to perform only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Trustee.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of its
own affairs.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own gross negligence (or simple negligence in the
handling of funds) or wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section; and
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts.
(d) Whether or not herein expressly so provided, every provision of
this Trust Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
Section 7.02. 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, the Owner Trustees, the Owner Participants, the
Loan Trustees and the
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Certificateholders 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, premium, if any, or interest on any
Equipment Note or any other Trust Property, 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. For the purpose of this Section, the term
"default" means any event that is, or after notice or lapse of time or both
would become, an Event of Default.
Section 7.03. 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 the
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
Officer's Certificate of the Company, any Owner Trustee or any Loan
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 the Intercreditor
Agreement at the request or direction of any of the Certificateholders
pursuant to this Agreement or the 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,
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opinion, 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 the Intercreditor Agreement or perform any duties under this
Agreement or the 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 the Intercreditor Agreement;
(h) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction of the Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in
interest in the 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 the
Intercreditor Agreement; and
(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.
Section 7.04. Not Responsible for Recitals or Issuance of
Certificates. The recitals contained herein and in the Certificates, 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 7.15, the Trustee makes no representations as to the validity
or sufficiency of this Agreement, any Participation Agreement, the Escrow
Agreement, the Deposit Agreement, any Equipment Notes, the Certificates or any
other Note Document, except that the Trustee hereby represents and warrants that
this Agreement has been, and the Intercreditor Agreement, each Note Document and
each Certificate will be, executed, authenticated and delivered by one of its
officers who is duly authorized to execute, authenticate and deliver such
document on its behalf.
Section 7.05. 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, if
applicable, may otherwise deal with the Company, the Owner Trustees or the Loan
Trustees with the same rights it would have if it were not Trustee, Paying
Agent, Registrar or such other agent.
Section 7.06. Money Held in Trust. Money held by the Trustee or the
Paying Agent in trust hereunder need not be segregated from other funds except
to the
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extent required herein or by law and neither the Trustee nor the Paying Agent
shall have any liability for interest upon any such moneys except as provided
for herein.
Section 7.07. Compensation and Reimbursement. The Company agrees:
(1) to pay, or cause to be paid, to the Trustee from time to time
compensation (as set out in a separate fee agreement between the Trustee
and the Company) 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 herein, 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 Agreement or the
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 own
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 7.15;
(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 gross negligence (or
simple negligence in the handling of funds), 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 7.15. 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 (which consent shall not be
unreasonably withheld) and the Company will pay the reasonable fees and
expenses of such counsel. The Company need not pay for any settlement made
without its consent; and
(4) to indemnify, or cause to be indemnified, the Trustee, solely in
its individual capacity, for, and to hold it harmless against, any tax
(except to the extent the Trustee is reimbursed therefor pursuant to the
next paragraph, provided that no indemnification shall be available with
respect to any tax attributable to the Trustee's compensation for serving
as such) incurred without negligence, willful misconduct or bad faith, on
its part, arising out of or in connection with the acceptance or
administration of this Trust, including any costs and expenses incurred in
contesting the imposition of any such tax. The Trustee, in its individual
capacity, shall notify the Company promptly of any
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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 cooperate in the defense. The Trustee,
in its individual capacity, may have separate counsel with the consent of
the Company (which consent shall not be unreasonably withheld) 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 upon, the Trust Property for any tax incurred
without gross negligence (or simple negligence in the handling of funds), 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. If the Trustee
reimburses itself from the Trust Property of such Trust for any such tax, it
will mail a brief report within 30 days setting forth the circumstances thereof
to all Certificateholders as their names and addresses appear in the Register.
Section 7.08. Corporate Trustee Required; Eligibility. There shall
at all times be a Trustee hereunder 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 $75,000,000 (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 and having a combined capital
and surplus of at least $75,000,000). If such corporation publishes reports of
conditions at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section 7.08, 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 7.08 to act as Trustee, the
Trustee shall resign immediately as Trustee in the manner and with the effect
specified in Section 7.09.
Section 7.09. Resignation and Removal; Appointment of Successor. (a)
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 7.10.
(b) The Trustee may resign at any time as trustee by giving prior
written notice thereof to the Company, the Authorized Agents, the Owner Trustees
and the Loan Trustees. In addition, upon the occurrence of an Event of Default,
in the event the Trustee shall not have received instructions from the
Certificateholders or
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the Certificateholders with respect to any Other Trust, the Trustee shall
resign. If an instrument of acceptance by a successor Trustee shall not have
been delivered to the Company, the Authorized Agents, the Owner Trustees, the
Loan 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 by Act of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Trustee, the Company, the Owner Trustees and the Loan Trustees.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 310 of the Trust
Indenture Act, if applicable, after written request therefor by the
Company or by any Certificateholder who has been a bona fide
Certificateholder for at least six months; or
(2) the Trustee shall cease to be eligible under Section 7.08 and
shall fail to resign after written request therefor by the Company or by
any such Certificateholder; or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any case, (i) the Company may remove the Trustee or (ii) any
Certificateholder who has been a bona fide Certificateholder for at least six
months may, on behalf of itself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
(e) If a Responsible Officer of the Trustee shall obtain actual
knowledge of an Avoidable Tax 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 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 in a jurisdiction where there
are no Avoidable Taxes.
(f) If the Trustee shall resign, be removed or become incapable of
acting as trustee or if a vacancy shall occur in the office of the Trustee for
any cause, the Company shall promptly appoint a successor Trustee. If, within 90
days after such resignation, removal or incapability, or other occurrence of
such vacancy, a successor Trustee shall be appointed by Act of the
Certificateholders holding Certificates
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evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the Trust delivered to the Company, the Owner Trustees, the Loan
Trustees and the retiring Trustee, and the Company approves such appointment,
which approval shall not be unreasonably withheld, then the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed as provided
above. If no successor Trustee shall have been so appointed as provided above
and accepted appointment in the manner hereinafter provided, any
Certificateholder 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 appointment of a successor Trustee.
(g) The successor Trustee 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 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 7.10. Acceptance of Appointment by Successor. Every
successor Trustee appointed hereunder shall execute and deliver to the Company,
the Authorized Agents, the Owner Trustees and the Loan Trustees and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee 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 Trust Property held
by such retiring Trustee hereunder, subject nevertheless to its lien, if any,
provided for in Section 7.07 and the retiring Trustee shall thereupon be
released from further liability hereunder. 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.
No institution shall accept its appointment as a Trustee hereunder
unless at the time of such acceptance such institution shall be qualified and
eligible under this Article VII.
Section 7.11. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise
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qualified and eligible under this Article, without the execution or filing of
any paper or any further act on the part of any of the parties hereto. In case
any Certificates shall have been executed or authenticated, but not delivered,
by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such execution or
authentication and deliver the Certificates so executed or authenticated with
the same effect as if such successor Trustee had itself executed or
authenticated such Certificates.
Section 7.12. Maintenance of Agencies. (a) There shall at all times
be maintained an office or agency where Certificates 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 may be served. 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. Each such Authorized Agent shall be
a bank or trust company, shall be a corporation organized and doing business
under the laws of the United States or any state, with a combined capital and
surplus of at least $75,000,000, or a corporation having a combined capital and
surplus in excess of $5,000,000, the obligations of which are guaranteed by a
corporation organized and doing business under the laws of the United States or
any state, with a combined capital and surplus of at least $75,000,000, and
shall be authorized under such laws to exercise corporate trust powers, subject
to supervision by federal or state authorities. The Trustee shall initially be
the Paying Agent and, as provided in Section 3.04, Registrar hereunder with
respect to the Certificates. 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, the Owner Trustees and the
Loan 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
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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, the Owner
Trustees and the Loan Trustees; and in each case the Trustee shall mail notice
of such appointment to all Certificateholders as their names and addresses
appear on the Register.
(e) The Company agrees to pay, or cause to be paid, from time to
time to each Authorized Agent reasonable compensation for its services and to
reimburse it for its reasonable expenses.
Section 7.13. 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 7.14. Registration of Equipment Notes in Name of
Subordination Agent. The Trustee agrees that all Equipment Notes to be purchased
by the Trust shall be issued in the name of the Subordination Agent or its
nominee and held by the Subordination Agent in trust for the benefit of the
Certificateholders, or, if not so held, the 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 7.15. Representations and Warranties of Trustee. The Trustee
hereby represents and warrants that:
(a) the Trustee is a national banking association organized and
validly existing 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, the Escrow Agreement, the
Intercreditor Agreement and the Note Purchase Agreement and has taken all
necessary action to authorize the execution, delivery, and performance by
it of this Agreement, the Escrow Agreement, the Intercreditor Agreement
and the Note Purchase Agreement;
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(c) the execution, delivery and performance by the Trustee of this
Agreement, the Escrow Agreement, the Intercreditor Agreement and the Note
Purchase Agreement (i) will not violate any provision of United States
law, Maryland law or any order, writ, judgment, or decree of any court,
arbitrator or governmental authority of the United States or the State of
Maryland 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, or (iii) will not violate any provision of, or constitute, with
or without notice or lapse of time, a default under, or result in the
creation or imposition of any lien on any properties included in the Trust
Property pursuant to the provisions of any mortgage, indenture, contract,
agreement or other undertaking to which it is a party, which violation,
default or lien could reasonably be expected to have an adverse effect on
the Trustee's performance or ability to perform its duties hereunder or
thereunder or on the transactions contemplated herein or therein;
(d) the execution, delivery and performance by the Trustee of this
Agreement, the Escrow Agreement, the Intercreditor Agreement and the Note
Purchase Agreement 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 the United States where it
is located regulating the banking and corporate trust activities of the
Trustee; and
(e) this Agreement, the Escrow Agreement, the Intercreditor
Agreement and the Note Purchase Agreement 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 7.16. Withholding Taxes; Information Reporting. (a) The
Trustee, as trustee of the 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
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 present or future taxes or similar charges are required to be withheld with
respect to any amounts payable in respect of the Certificates, to withhold such
amounts and timely pay the same to the appropriate authority in the name of and
on behalf of the Certificateholders, 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 appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Certificateholders may reasonably request from time
to time. The Trustee agrees to file any other information reports as may be
required to be filed by it under United States law.
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(b) The Trustee may satisfy certain of its obligations with respect
to this Agreement by retaining, at the expense of the Company, a firm of
independent public accountants (the "Accountants") which shall (i) be
responsible for all tax filing requirements and (ii) perform the obligations of
the Trustee in respect of tax filing requirements. The Trustee shall be deemed
to have discharged its tax filing obligations under this Agreement upon its
retention of the Accountants, and, if the Trustee shall have selected in the
Accountants in good faith and without gross negligence, the Trustee shall not
have any liability with respect to the default or misconduct of the Accountants.
(c) The Trustee, at the request (and expense) of the Company, will
make such United States federal income tax elections as may be necessary to
prevent the Trust from being classified for federal income tax purposes as an
association taxable as a corporation.
Section 7.17. Trustee's Liens. The Trustee in its individual
capacity agrees that it will 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 which is attributable to the
Trustee either (i) in its individual capacity and which is unrelated to the
transactions contemplated by this Agreement, the Intercreditor Agreement, the
Note Purchase Agreement or the Note Documents, or (ii) as Trustee hereunder or
in its individual capacity and which arises out of acts or omissions which are
not contemplated by this Agreement.
Section 7.18. 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 or cause to be
furnished 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, 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, no such list need be furnished; and provided
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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 7.12.
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 contained
in the most recent list furnished to the Trustee as provided in Section 7.12 or
Section 8.01, as the case may be, and the names and addresses of
Certificateholders 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
7.12 or Section 8.01, as the case may be, upon receipt of a new list so
furnished.
Section 8.03. Reports by Trustee. Within 60 days after May 15 of
each year commencing with the first full year following the issuance of the
Certificates, the Trustee shall transmit to the Certificateholders, 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;
(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
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pursuant to subsections (a) and (b) of this Section 8.04 as may be
required by rules and regulations prescribed by the SEC; and
(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 regard to any period of grace
or requirement of notice provided under this Agreement).
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 (and at the sole cost and expense of the Company), enter into one or
more agreements supplemental hereto or, if applicable, to the Escrow Agreement,
the Deposit Agreement, the Note Purchase Agreement, the Intercreditor Agreement
or the Liquidity Facility in form and substance satisfactory to the Trustee, for
any of the following purposes:
(1) 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 in the Note Purchase Agreement; or
(2) to add to the covenants of the Company for the benefit of the
Certificateholders, or to surrender any right or power in this Agreement
or in the Note Purchase Agreement conferred upon the Company; or
(3) to correct or supplement any provision in this Agreement, the
Escrow Agreement, the Deposit Agreement, the Note Purchase Agreement, the
Intercreditor Agreement or the Liquidity Facility which may be defective
or inconsistent with any other provision of this Agreement, the Deposit
Agreement, the Escrow Agreement, the Note Purchase Agreement, the
Intercreditor Agreement or any Liquidity Facility, as applicable, or to
cure any ambiguity or to modify any other provisions with respect to
matters or questions arising under this Agreement, the Escrow Agreement,
the Note Purchase Agreement, the Deposit Agreement, the Intercreditor
Agreement or the Liquidity Facility, provided that any such action shall
not materially adversely affect the interests of the Certificateholders;
or
(4) as provided in the Intercreditor Agreement, to give effect to or
provide for a Replacement Liquidity Facility or to comply with any
requirement
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of the Commission, any applicable law, rules or regulations of any
exchange or quotation system on which the Certificates are listed, or any
regulatory body;
(5) to modify, eliminate or add to the provisions of this Agreement,
the Deposit Agreement, the Escrow Agreement, the Intercreditor Agreement,
the Note Purchase Agreement or the Liquidity Facility to such extent as
shall be necessary to qualify or continue the qualification of this
Agreement under the Trust Indenture Act, or any similar federal statute
enacted after the execution of this Agreement, and to add to this
Agreement, the Deposit Agreement, the Escrow Agreement, the Intercreditor
Agreement, the Note Purchase Agreement or the Liquidity Facility such
provisions as may be expressly permitted by the Trust Indenture Act; and
(6) to evidence and provide for the acceptance of appointment under
this Agreement, the Deposit Agreement, the Escrow Agreement, the
Intercreditor Agreement, the Note Purchase Agreement or the Liquidity
Facility of a successor Trustee and to add or change any of the provisions
of this Agreement, the Deposit Agreement, the Escrow Agreement, the
Intercreditor Agreement, the Note Purchase Agreement or the Liquidity
Facility as shall be necessary to provide for or facilitate the
administration of the Trust under this Agreement by more than one Trustee,
provided that in each case, such modification or supplement 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 9.02. Supplemental Agreements with Consent of
Certificateholders. With the consent of the Certificateholders holding
Certificates evidencing Fractional Undivided Interests aggregating not less than
a majority in interest in the Trust, by Act of said Certificateholders delivered
to the Company and the Trustee, the Company may, and the Trustee (subject to
Section 9.03) shall, at the sole cost and expense of the Company, 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, the Deposit Agreement, the Escrow Agreement, the Intercreditor
Agreement, the Liquidity Facility or the Note Purchase Agreement to the extent
applicable to such Certificateholders or of modifying in any manner the rights
and obligations of such Certificateholders under this Agreement, the Deposit
Agreement, the Escrow Agreement, the Intercreditor Agreement, the Liquidity
Facility or the Note Purchase 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 (or, with respect to the Deposits, the
Receiptholders) of payments on the Deposits or the Equipment Notes held in
the Trust or distributions that are required to be made herein on any
Certificate, or change
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any date of payment of any Certificate, or change the place of payment
where, or the coin or currency in which, any Certificate is 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 included in the
Trust Property except as permitted by this Agreement, or otherwise deprive
such Certificateholder of the benefit of the ownership of the Equipment
Notes in the Trust; or
(3) alter the priority of distributions specified in the
Intercreditor Agreement in a manner materially adverse to the interests of
the Certificateholders;
(4) modify any of the provisions of this Section 9.02 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 affected thereby;
(5) modify any of the provisions relating to the rights of the
Certificateholders in respect of the waiver of Events of Default or
receipt of payment; or
(6) adversely affect the status of this 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.
It shall not be necessary for any Act of 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 Agreement, the Trustee may in its
discretion decline to execute such document.
Section 9.04. Execution of Supplemental Agreements. In executing, or
accepting the additional trusts created by, any supplemental agreement permitted
by this Article or the modifications thereby of the trusts created by this
Agreement, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental agreement is authorized or permitted by this Agreement.
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Section 9.05. Effect of Supplemental Agreements. Upon the execution
of any agreement supplemental to this Agreement under this Article, this
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every
Certificateholder theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
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 authenticated and delivered after the execution of any supplemental
agreement 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 after
proper presentation and demand.
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01 Amendments and Supplement to Indentures and Other Note
Documents. In the event that the Trustee, as holder (or beneficial owner through
the Subordination Agent) of any Equipment Note in trust for the benefit of the
Certificateholders or as Controlling Party, receives a request for a consent to
any amendment, modification, waiver or supplement under any Indenture or other
Note Document or other related document, the Trustee shall forthwith send a
notice of such proposed amendment, modification, waiver or supplement to each
Certificateholder registered on the Register as of the date of such notice. The
Trustee shall request from the Certificateholders a Direction as to (a) whether
or not to take or refrain from taking (or to direct the Subordination Agent to
take or refrain from taking) any action which a holder of such Equipment Note or
the Controlling Party has the option to direct, (b) whether or not to give or
execute (or to direct the Subordination Agent to give or execute) any waivers,
consents, amendments, modifications or supplements as a holder of such Equipment
Note or as Controlling Party and (c) how to vote or direct the Subordination
Agent 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 (or in directing the Subordination Agent in any of
the foregoing), (i) other than as Controlling Party, 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 (x) the aggregate face amount of all Certificates
actually voted in favor of or for giving consent to such action by such
direction of Certificateholders to (y) the aggregate face amount of all
outstanding Certificates of the Trust and (ii) as the Controlling Party, the
Trustee shall vote as directed in such Certificateholder direction
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by the Certificateholders evidencing fractional undivided interests aggregating
not less than a majority in interest in the Trust. 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 prior to two Business Days
before the Trustee directs such action or casts such vote or gives such consent.
Notwithstanding the foregoing, but subject to Section 6.04 and the Intercreditor
Agreement, the Trustee may, in its own discretion and at its own direction,
consent and notify the relevant Loan Trustee of such consent (or direct the
Subordination Agent to consent and notify the relevant Loan Trustee of such
consent) to any amendment, modification, waiver or supplement under the relevant
Indenture or any other Note Document or other related document, if an Event of
Default hereunder shall have occurred and be continuing, or if such amendment,
modification or waiver will not materially adversely affect the interests of the
Certificateholders.
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust. The respective obligations
and responsibilities of the Company and the Trustee with respect to the Trust
shall terminate upon the earlier of (A) the completion of the assignment,
transfer and discharge described in the first sentence of the immediately
following paragraph and (B) distribution to all Certificateholders 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; provided, however, that in no event shall the Trust continue beyond
one hundred ten (110) years following the date of the execution of this
Agreement.
Not later than (but in the case of clause (i), following the
Delivery Period Termination Date) the earlier of (i) the first Business Day
following September 30, 1999, or, if later, the fifth Business Day following the
Delivery Period Termination Date and (ii) the fifth Business Day following the
date on which a Triggering Event occurs (such date, the "Transfer Date"), or, if
later, the date on which all of the conditions set forth in the immediately
following sentence have been satisfied, the Trustee is hereby directed (subject
only to the immediately following sentence) to, and the Company shall direct the
institution that will serve as the Related Trustee under the Related Pass
Through Trust Agreement to, execute and deliver the Assignment and Assumption
Agreement, pursuant to which the Trustee shall assign, transfer and deliver all
of the Trustee's right, title and interest to the Trust Property to the Related
Trustee under the Related Pass Through Trust Agreement. The Trustee and the
Related Trustee shall execute and deliver the Assignment and Assumption
Agreement upon the satisfaction of the following conditions:
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(i) The Trustee, the Related Trustee and each of the Rating Agencies
then rating the Certificates shall have received an Officer's Certificate
and an Opinion of Counsel dated the date of the Assignment and Assumption
Agreement and each satisfying the requirements of Section 1.02, which
Opinion of Counsel shall be substantially to the effect set forth below
and may be relied upon by the Beneficiaries (as defined in the Assignment
and Assumption Agreement):
(a) upon the execution and delivery thereof by the parties
thereto in accordance with the terms of this Agreement and the
Related Pass Through Trust Agreement, the Assignment and Assumption
Agreement will constitute the valid and binding obligation of each
of the parties thereto enforceable against each such party in
accordance with its terms;
(b) upon the execution and delivery of the Assignment and
Assumption Agreement in accordance with the terms of this Agreement
and the Related Pass Through Trust Agreement, each of the
Certificates then Outstanding will be entitled to the benefits of
the Related Pass Through Trust Agreement;
(c) the Related Trust is not required to be registered as an
investment company under the Investment Company Act of 1940, as
amended;
(d) the Related Pass Through Trust Agreement constitutes the
valid and binding obligation of the Company enforceable against the
Company in accordance with its terms; and
(e) neither the execution and delivery of the Assignment and
Assumption Agreement in accordance with the terms of this Agreement
and the Related Pass Through Trust Agreement, nor the consummation
by the parties thereto of the transactions contemplated to be
consummated thereunder on the date thereof, will violate any law or
governmental rule or regulation of the State of New York or the
United States of America known to such counsel to be applicable to
the transactions contemplated by the Assignment and Assumption
Agreement.
(ii) The Trustee and the Company shall have received (x) a copy of
the articles of incorporation and bylaws of the Related Trustee certified
as of the Transfer Date by the Secretary or Assistant Secretary of such
institution and (y) a copy of the filing (including all attachments
thereto) made by the institution serving as the Related Trustee with the
Office of the Superintendent, State of New York Banking Department for the
qualification of the Related Trustee under Section 131(3) of the New York
Banking Law.
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Upon the execution of the Assignment and Assumption Agreement by the
parties thereto, the Trust shall be terminated, the Certificateholders shall
receive beneficial interests in the Related Trust in exchange for their
interests in the Trust equal to their respective beneficial interests in the
Trust, and the Outstanding Certificates representing Fractional Undivided
Interests in the Trust shall be deemed for all purposes of this Agreement and
the Related Pass Through Trust Agreement, without further signature or action of
any party or Certificateholder, to be certificates representing the same
fractional undivided interests in the Related Trust and its trust property. By
acceptance of its Certificate, each Certificateholder consents to such
assignment, transfer and delivery of the Trust Property of the trustee of the
Related Trust upon the execution and delivery of the Assignment and Assumption
Agreement.
In connection with the occurrence of the event set forth in clause
(B) above, notice of any termination, specifying the Regular Distribution Date
(or Special Distribution Date, as the case may be) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be mailed promptly, upon
notice to the Trustee, by the Trustee to Certificateholders not earlier than the
60th day and not later than the 20th day next 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 will
be made upon presentation and surrender of Certificates at the office or agency
of the Trustee therein specified, (B) the amount of any such proposed final
payment, and (C) that the Record Date otherwise applicable to such Regular
Distribution Date (or Special Distribution Date, as the case may be) is not
applicable, payments being made only upon presentation and surrender of the
Certificates 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. Upon presentation and surrender of the Certificates in
accordance with such notice, the Trustee shall cause to be distributed to
Certificateholders such final distribution pursuant to Section 4.02.
In the event that all of the Certificateholders 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 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 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 Loan Trustee the appropriate amount of money relating
to such Loan Trustee and shall give written notice thereof to the related Owner
Trustees, the Owner Participants and the Company.
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ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the 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. Certificates Nonassessable and Fully Paid. Except as
set forth in the last sentence of this Section 12.02, Certificateholders shall
not be personally liable for obligations of the Trust, the Fractional Undivided
Interests represented by the Certificates shall be nonassessable for any losses
or expenses of the Trust or for any reason whatsoever, and Certificates, upon
authentication thereof by the Trustee pursuant to Section 3.03, are and shall be
deemed fully paid. No Certificateholder shall have any right (except as
expressly provided herein) to vote or in any manner otherwise control the
operation and management of the Trust Property, the Trust, or the obligations of
the parties hereto, nor shall anything set forth herein, or contained in the
terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association.
Neither the existence of the Trust nor any provision herein is intended to or
shall limit the liability the Certificateholders would otherwise incur if the
Certificateholders owned Trust Property as co-owners, or incurred any
obligations of the Trust, directly rather than through the Trust.
Section 12.03. Notices. (a) Unless otherwise specifically provided
herein, all notices required under the terms and provisions of this Agreement
shall be in English and in writing, and any such notice may be given by United
States mail, courier service or telecopy, and any such notice shall be effective
when delivered or received or, if mailed, three days after deposit in the United
States mail with proper postage for ordinary mail prepaid,
if to the Company, to:
Midway Airlines Corporation
300 W. Morgan Street, Suite 1200
Durham, North Carolina 27701
Attention: General Counsel
Facsimile: (919) 956-7568
Telephone: (919) 956-4810
if to the Trustee, to:
The First National Bank of Maryland
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25 South Charles Street
Mail Code 101-591
Baltimore, Maryland 21201
Attention: Corporate Trust Department
Facsimile: (410) 244-4236
Telephone: (410) 244-4626
(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 shall be
mailed by first-class mail to the addresses for Certificateholders shown on the
Register kept by the Registrar. 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.
(d) If a notice or communication is mailed in the manner provided
above within the time prescribed, it is conclusively presumed to have been duly
given, whether or not the addressee receives it.
(e) If the Company mails a notice or communication to the
Certificateholders, it shall mail a copy to the Trustee and to the Paying Agent
at the same time.
(f) 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.
(g) 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 Loan Trustee.
Section 12.04. Governing Law. THIS AGREEMENT AND THE CERTIFICATES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
MARYLAND.
Section 12.05. 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 the Trust, or of the
Certificates or the rights of the Certificateholders thereof.
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Section 12.06. 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 12.07. 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 assigns, whether so
expressed or not.
Section 12.08. Benefits of Agreement. Nothing in this Agreement or
in the Certificates, express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder, and the Certificateholders,
any benefit or any legal or equitable right, remedy or claim under this
Agreement.
Section 12.09. Legal Holidays. In any case where any Regular
Distribution Date or Special Distribution Date relating to any Certificate shall
not be a Business Day, 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 12.10. 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 12.11. Communication by Certificateholders with Other
Certificateholders. Certificateholders may communicate with other
Certificateholders with respect to their rights under this Agreement or the
Certificates pursuant to Section 312(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 12.12. Intention of Parties. The parties hereto intend that
the Trust be classified for U.S. federal income tax purposes as a grantor trust
under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as
amended, and not as a trust or association taxable as a corporation or as a
partnership. Each Certificateholder, by its acceptance of its Certificate or a
beneficial interest therein, agrees to treat the Trust as a grantor trust for
all U.S. federal, state and local income tax purposes. The powers granted and
obligations undertaken pursuant to this Agreement shall be so construed so as to
further such intent.
Section 12.13. Trust Indenture Act Controls. Upon the qualification
of this Agreement under the Trust Indenture Act, this Agreement shall be subject
to the provisions of the Trust Indenture Act and shall, to the extent
applicable, be governed
-63-
<PAGE>
by such provisions. If any provision of this Agreement limits, qualifies or
conflicts with another provision which is required to be included in this
Agreement by the Trust Indenture Act, the required provision shall control.
-64-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first written above.
MIDWAY AIRLINES CORPORATION
By: /s/ Jonathan S. Waller
------------------------------------
Name: Jonathan S. Waller
Title: Senior Vice President
General Counsel
THE FIRST NATIONAL BANK OF
MARYLAND, as Trustee
By: /s/ Robert D. Brown
------------------------------------
Name: Robert D. Brown
Title: Assistant Vice President
-65-
<PAGE>
Exhibit A
FORM OF CERTIFICATE
REGISTERED
No. ______________
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY
MIDWAY AIRLINES CORPORATION ("MIDWAY") OR ANY AFFILIATE OF MIDWAY, RESELL
OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO MIDWAY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
A-1
<PAGE>
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
CERTIFICATE WAS HELD BY MIDWAY OR ANY AFFILIATE OF MIDWAY, THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND MIDWAY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.]*
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS FOR THE BENEFIT OF MIDWAY
AIRLINES CORPORATION AND EACH OWNER PARTICIPANT THAT (A) IT IS NOT A PLAN
TRANSFEREE (AS DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR (B) ONE OR
MORE PROHIBITED TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS APPLIES
SUCH THAT THE USE OF PLAN ASSETS TO PURCHASE AND HOLD THIS PASS THROUGH
CERTIFICATE WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER
ERISA OR SECTION 4975 OF THE CODE. THE PASS THROUGH TRUST AGREEMENT
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
- - ----------
* Not to be included on the face of the Permanent Offshore Global
Certificate.
A-2
<PAGE>
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE 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 HEREON 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.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST
AGREEMENT REFERRED TO HEREIN.]*
- - ----------
* To be included on the face of each Global Certificate.
A-3
<PAGE>
[GLOBAL CERTIFICATE]*
MIDWAY AIRLINES 1998-1C-O PASS THROUGH TRUST
8.92% Midway Airlines [Initial/Exchange] Pass Through Certificate
Series 1998-1C-O
Final Expected Distribution Date: January 2, 2008
evidencing a fractional undivided interest in a trust, the property of which
includes certain equipment notes each secured by an Aircraft leased to or owned
by Midway Airlines Corporation.
$____________ Fractional Undivided Interest
representing ._____% of the Trust per $1,000 face amount
THIS CERTIFIES THAT ____________, for value received, is the
registered owner of a $________ (_________ dollars) Fractional Undivided
Interest in Midway Airlines 1998-1C-O Pass Through Trust (the "Trust") created
pursuant to a Pass Through Trust Agreement, dated as of August 13, 1998 (the
"Agreement"), between The First National Bank of Maryland (the "Trustee") and
Midway Airlines Corporation, a corporation incorporated under Delaware law (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 "8.92%
Midway Airlines [Initial/Exchange] Pass Through Certificates Series 1998-1C-O"
(herein called the "Certificates"). This Certificate is issued under and is
subject to the terms, provisions, and conditions of the Agreement. By virtue of
its acceptance hereof the Certificateholder of this Certificate assents to and
agrees to be bound by the provisions of the Agreement and the Intercreditor
Agreement. 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, among other things, a security interest in the 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 assets or property other than the Trust Property.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from and to the extent of funds then available to the
Trustee,
- - ----------
* To be included on the face of each Global Certificate.
A-4
<PAGE>
there will be distributed on each January 2 and July 2 (a "Regular Distribution
Date"), commencing on January 2, 1999, 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 and the Intercreditor Agreement, in the event that Special Payments on
the Equipment Notes are received by the Trustee, from funds then available to
the Trustee, there shall be distributed on the applicable Special Distribution
Date, to the Person in whose name this Certificate is registered at the close of
business on the 15th day preceding the Special Distribution Date, an amount in
respect of such Special Payments on the Equipment Notes, the receipt of which
has been confirmed by the Trustee, equal to the product of the percentage
interest in the Trust evidenced by this Certificate and an amount equal to the
sum of such Special Payments so received. If a Regular Distribution Date or
Special Distribution Date is not a Business Day, distribution shall be made on
the immediately following Business Day with the same force and effect as if made
on such Regular Distribution Date or Special Distribution Date and no interest
shall accrue during the intervening period. The Trustee shall mail notice of
each Special Payment and the Special Distribution Date therefor to the
Certificateholder of this Certificate.
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 AGREEMENT AND, UNTIL THE TRANSFER, THIS CERTIFICATE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS. THE RELATED PASS THROUGH TRUST
AGREEMENT AND, FROM AND AFTER THE TRANSFER, THIS CERTIFICATE SHALL BE GOVERNED
AND 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.
Reference is hereby made to the further provisions of this
Certificate set forth in the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
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.
A-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: ____________ __, 1998 MIDWAY AIRLINES
1998-1C-O PASS THROUGH TRUST
By: The First National Bank of
Maryland, as Trustee
By: _____________________________
Name:
Title:
A-6
<PAGE>
[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred to in the
within-mentioned Agreement.
The First National Bank of Maryland,
as Trustee
By: _______________________________
Authorized Officer
A-7
<PAGE>
[REVERSE OF CERTIFICATE]
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
of their affiliates. 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 Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein 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, in the Borough of Manhattan, the City of New York,
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.
A-8
<PAGE>
Under certain circumstances set forth in Section 11.01 of the
Agreement, all of the Trustee's right, title and interest to the Trust Property
may be assigned, transferred and delivered to the Related Trustee of the Related
Trust pursuant to the Assignment and Assumption Agreement. Upon the
effectiveness of such assignment and Assumption Agreement (the "Transfer"), the
Trust shall be terminated, the Certificateholders shall receive beneficial
interests in the Related Trust in exchange for their interests in the Trust
equal to their respective beneficial interests in the Trust, the Certificates
representing Fractional Undivided Interests in the Trust shall be deemed for all
purposes of the Agreement and the Related Pass Through Trust Agreement to be
certificates representing the same fractional undivided interests in the Related
Trust and its trust property. Each Certificateholder, by its acceptance of this
Certificate or a beneficial interest herein, agrees to be bound by the
Assignment and Assumption Agreement and subject to the terms of the Related Pass
Through Trust Agreement as a certificateholder thereunder. From and after the
Transfer, unless and to the extent the context otherwise requires, references
herein to the Trust, the Agreement and the Trustee shall constitute references
to the Related Trust, the Related Pass Through Trust Agreement and trustee of
the Related Trust, respectively.
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $100,000 Fractional Undivided
Interest and integral multiples of $1,000 in excess thereof. 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 by the Holder 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.
A-9
<PAGE>
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
___________________
___________________
please print or typewrite name and address including zip code of assignee
___________________
the within Certificate and all rights thereunder, hereby irrevocably
constituting and appointing
___________________
attorney to transfer said Certificate on the books of the Trustee with full
power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT PERMANENT OFFSHORE GLOBAL AND
OFFSHORE PHYSICAL CERTIFICATES]
In connection with any transfer of this Certificate occurring prior
to __________, the undersigned confirms that without utilizing any general
solicitation or general advertising that:
[Check One]
[_] (a) this Certificate is being transferred in compliance with the
exemption from registration under the Securities Act of 1933, as
amended, provided by Rule 144A thereunder.
or
[_] (b) this Certificate is being transferred other than in accordance with
(a) above and documents are being furnished that comply with the
conditions of transfer set forth in this Certificate and the
Agreement.
A-10
<PAGE>
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Certificate in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 3.06 of the Agreement
shall have been satisfied.
Date: [Name of Transferor]
---------------- ----------------------------------------
NOTE: The signature must correspond with
the name as written upon the face of the
within-mentioned instrument in every
particular, without alteration or any
change whatsoever.
Signature Guarantee: ___________________
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Certificate for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated: ________________ ________________________________________
NOTE: To be executed by an executive
officer.
A-11
<PAGE>
Exhibit B
FORM OF CERTIFICATE FOR UNLEGENDED CERTIFICATES
[Date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1C-O Pass Through Trust (the "Trust"), 8.92%
Midway Airlines Pass Through Certificates Series 1998-1C-O (the
"Certificates")
Dear Sirs:
This letter relates to U.S. $__________ Fractional Undivided
Interest of Certificates represented by a Certificate (the "Legended
Certificate") which bears a legend outlining restrictions upon transfer of such
Legended Certificate. Pursuant to Section 3.01 of the Pass Through Trust
Agreement relating to the Certificates dated as of August 13, 1998 (the "Trust
Agreement"), between Midway Airlines Corporation ("Midway") and you, we hereby
certify that we are (or we will hold such securities on behalf of) a person
outside the United States to whom the Certificates could be transferred in
accordance with Rule 904 of Regulation S promulgated under the U.S. Securities
Act of 1933, as amended. Accordingly, you are hereby requested to exchange the
legended certificate for an unlegended certificate representing an identical
principal amount of Certificates, all in the manner provided for in the Trust
Agreement.
You and Midway are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Certificateholder]
By: ____________________________
Authorized Signature
B-1
<PAGE>
Exhibit C
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
[date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1C-O Pass Through Trust (the "Trust"), 8.92%
Midway Airlines Pass Through Certificates Series 1998-1C-O (the
"Certificates")
Sirs:
In connection with our proposed sale of $_______ Fractional Undivided Interest
of the Certificates, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the Securities Act of 1933, as amended,
and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a person in the
United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
C-1
<PAGE>
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You, Midway Airlines Corporation are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof to
any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By: __________________________________
Authorized Signature
C-2
<PAGE>
Exhibit D
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
[date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1C-O Pass Through Trust (the "Trust"), 8.92%
Midway Airlines Pass Through Certificates Series 1998-1C-O (the
"Certificates")
Dear Sirs:
In connection with our proposed purchase of $_______________
aggregate principal amount of the Certificates, we confirm that:
1. We understand that any subsequent transfer of the Certificates is
subject to certain restrictions and conditions set forth in the Pass
Through Trust Agreement dated as of August 13, 1998 relating to the
Certificates (the "Pass Through Trust Agreement") and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the
Certificates except in compliance with, such restrictions and conditions
and the Securities Act of 1933, as amended (the "Securities Act").
2. We are purchasing Certificates having an aggregate principal
amount of not less than $100,000 and each account (if any) for which we
are purchasing Certificates is purchasing Certificates having an aggregate
principal amount of not less than $100,000.
3. We understand that the Certificates have not been registered
under the Securities Act, and that the Certificates may not be offered or
sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Certificate, we will do so
only (A) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (B) to an
institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes to you and Midway Airlines Corporation a signed letter
substantially in the form of this letter, (C) outside the United States in
D-1
<PAGE>
accordance with Rule 904 of Regulation S under the Securities Act, (D)
pursuant to the exemption from registration provided by Rule 144 under the
Securities Act, or (E) pursuant to an effective registration statement
under the Securities Act, and we further agree to provide to any person
purchasing any of the Certificates from us a notice advising such
purchaser that resales of the Notes are restricted as stated herein. We
further understand that the Certificates purchased by us will bear a
legend to the foregoing effect.
4. We understand that, on any proposed resale of any Certificates,
we will be required to furnish to you, Midway Airlines Corporation
("Midway") such certifications, legal opinions and other information as
you, Midway may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that the
Certificates purchased by us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Certificates and we and any accounts for which we are acting are each able
to bear the economic risk of our or its investment.
6. We are acquiring the Certificates purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You and Midway are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By: __________________________________
Authorized Signature
D-2
<PAGE>
Exhibit E
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
Midway Airlines Pass Through Trust 1998-1C
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated _________, 199_ (the
"Assignment Agreement"), between The First National Bank of Maryland, a national
banking association, not in its individual capacity except as expressly provided
herein, but solely as trustee under the Pass Through Trust Agreement dated as of
August 13, 1998 (as amended or modified from time to time, the "Agreement"), in
respect of the Midway Airlines Pass Through Trust 1998-1C-O (the "Assignor"),
and The First National Bank of Maryland, a national banking association, not in
its individual capacity except as expressly provided herein, but solely as
trustee under the Agreement (the "New Agreement") in respect of the Midway
Airlines Pass Through Trust 1998-1C-S (the "Assignee").
W I T N E S S E T H:
WHEREAS, the parties hereto desire to effect on the date hereof (the
"Transfer Date" (a) the transfer by the Assignor to the Assignee of all of the
right, title and interest of the Assignor in, under and with respect to, among
other things, the Trust Property and each of the documents listed in Schedule I
hereto (the "Scheduled Documents") and (b) the assumption by the Assignee of the
obligations of the Assignor (i) under the Scheduled Documents and (ii) in
respect of the Certificates issued under the Agreement; and
WHEREAS, the Scheduled Documents permit such transfer upon
satisfaction of certain conditions heretofore or concurrently herewith being
complied with;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto do hereby agree as
follows (capitalized terms used herein without definition having the meaning
ascribed thereto in the Agreement):
1. Assignment. The Assignor does hereby sell, assign, convey,
transfer and set over unto the Assignee as of the Transfer Date all of its
present and future right, title and interest in, under and with respect to the
Trust Property and the Scheduled Documents and each other contract, agreement,
document or instrument relating to the Trust Property or the Scheduled Documents
(such other contracts, agreements, documents or instruments, together with the
Scheduled Documents, to be referred to as the "Assigned Documents"), and any
proceeds therefrom, together with all documents and instruments evidencing any
of such right, title and interest.
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2. Assumption. The Assignee hereby assumes for the benefit of the
Assignor and each of the parties listed in Schedule II hereto (collectively, the
"Beneficiaries") all of the duties and obligations of the Assignor, whenever
accrued, pursuant to the Assigned Documents and hereby confirms that it shall be
deemed a party to each of the Assigned Documents to which the Assignor is a
party and shall be bound by all the terms thereof (including the agreements and
obligations of the Assignor set forth therein) as if therein named as the
Assignor. Further, the Assignee hereby assumes for the benefit of the Assignor
and the Beneficiaries all of the duties and obligations of the Assignor under
the Outstanding Certificates and hereby confirms that the Certificates
representing Fractional Undivided Interests under the Agreement shall be deemed
for all purposes of the Agreement and the New Agreement equal to their
respective beneficial interests in the trust created under the Agreement.
3. Effectiveness. This Assignment Agreement shall be effective upon
the execution and delivery hereof by the parties hereto, and each
Certificateholder, by its acceptance of its Applicable Certificate or a
beneficial interest therein, agrees to be bound by the terms of this Assignment
Agreement.
4. Payments. The Assignor hereby covenants and agrees to pay over to
the Assignee, if and when received following the Transfer Date, any amounts
(including any sums payable as interest in respect thereof) paid to or for the
benefit of the Assignor that, under Section 1 hereof, belong to the Assignee.
5. Further Assurances. The Assignor shall, at any time and from time
to time, upon the request of the Assignee, promptly and duly execute and deliver
any and all such further instruments and documents and take such further action
ad the Assignee may reasonably request to obtain the full benefits of this
Assignment Agreement and of the right and powers herein granted. The Assignor
agrees to deliver any Certificates, and all Trust Property, if any, then in the
physical possession of the Assignor, to the Assignee.
6. Representation and Warranties. (a) The Assignee represents and
warrants to the Assignor and each of the Beneficiaries that:
(i) 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 obligations of the "Pass Through Trustee" under the
Assigned Documents; and
(ii) on and as of the date hereof, the representations and
warranties of the Assignee set forth in Section 7.15 of the New Agreement
are true and correct.
(b) The Assignor represents and warrants to the Assignee that:
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(i) it is duly incorporated, validly existing and in good standing
under the laws of the State of Maryland and the United States pertaining
to its trust and fiduciary powers to execute and deliver this Assignment
Agreement;
(ii) the execution and delivery by it of this Assignment Agreement
and the performance by it of its obligations hereunder have been duly
authorized by it and will not violate its articles of association or
by-laws or the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it is bound; and
(iii) this Assignment Agreement constitutes the legal, valid and
binding obligations of it enforceable against it in accordance with its
terms, except and 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.
7. GOVERNING LAW. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
8. Counterparts. This Assignment Agreement may be executed in any
number of counterparts, all of which together shall constitute a single
instrument. It shall not be necessary that any counterpart be signed by both
parties so long as each party shall sign at least one counterpart.
9. Third Party Beneficiaries. The Assignee hereby agrees, for the
benefit of the Beneficiaries, that is representations,, warranties and covenants
contained herein are also intended to be for the benefit of each Beneficiary,
and each Beneficiary shall be deemed to be an express third party beneficiary
with respect thereto, entitled to enforce directly and in its own name any
rights or claims it may have against such party as such beneficiary.
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IN WITNESS WHEREOF, the parties hereto, through their respective
officers thereunto duly authorized, have duly executed this Assignment Agreement
as of the day and year first above written.
ASSIGNOR:
THE FIRST NATIONAL BANK OF MARYLAND, not in its
individual capacity except as expressly provided
herein, but solely as trustee under the Pass
Through Trust Agreement and Trust Supplement in
respect of the Midway Airlines Pass
Through Trust 1998-1C-O
By: __________________________________________
Title:
ASSIGNEE:
THE FIRST NATIONAL BANK OF MARYLAND, not in its
individual capacity except as expressly provided
herein, but solely as trustee under the Pass
Through Trust Agreement and Trust Supplement in
respect of the Midway Airlines Pass
Through Trust 1998-1C-S
By: __________________________________________
Title:
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SCHEDULE 1
Schedule of Assigned Documents
(1) Intercreditor Agreement dated as of August 13, 1998 among the
Trustee, the Other Trustees, the Liquidity Providers, the liquidity provider, if
any, relating to the Certificates issued under (and as defined in) each of the
Other Pass Through Trust Agreements and the Subordination Agent.
(2) Escrow and Paying Agent Agreement (Class C) dated as of August
13, 1998 among the Escrow Agent, the Underwriters, the Trustee and the Paying
Agent.
(3) Note Purchase Agreement dated as of August 13, 1998 among the
Company, the Trustee, the Other Trustees, the Depositary, the Escrow Agent, the
Paying Agent and the Subordination Agent.
(4) Deposit Agreement (Class C) dated as of August 13, 1998 between
the Escrow Agent and the Depositary.
(5) Each of the Operative Agreements (as defined in the
Participation Agreement for each Aircraft) in effect as of the Transfer Date.
<PAGE>
SCHEDULE 2
Schedule of Beneficiaries
The First National Bank of Maryland, not in its individual capacity but solely
as Subordination Agent
The First National Bank of Maryland, not in its individual capacity but solely
as Paying Agent
ABN AMRO Bank N.V., acting through its Chicago branch, as Liquidity Provider
Midway Airlines Corporation
Morgan Stanley & Co. Incorporated, as Initial Purchaser
Credit Suisse First Boston Corporation, as Initial Purchaser
First Union Trust Company, National Association, as Escrow Agent
Each of the other parties to the Assigned Documents
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PASS THROUGH TRUST AGREEMENT
Dated as of August 13, 1998
among
MIDWAY AIRLINES CORPORATION
and
THE FIRST NATIONAL BANK OF MARYLAND
as Trustee
Midway Airlines 1998-1D-S Pass Through Trust
8.86% 1998-1D-S Initial Pass Through Certificates
8.86% 1998-1D-S Exchange Pass Through Certificates
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<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS................................................ 2
Section 1.01. Definitions........................................... 2
Section 1.02. Compliance Certificates and Opinions.................. 14
Section 1.03. Form of Documents Delivered to Trustee................ 15
Section 1.04. Acts of Certificateholders............................ 15
ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES.......................... 17
Section 2.01. Acquisition of Trust Property......................... 17
Section 2.02. [Reserved]............................................ 18
Section 2.03. The Trustee........................................... 18
Section 2.04. Acceptance by Trustee................................. 18
Section 2.05. Limitation of Powers.................................. 18
ARTICLE III THE CERTIFICATES........................................... 19
Section 3.01. Title, Form, Denomination and Execution of
Certificates......................................... 19
Section 3.02. Restrictive Legends................................... 21
Section 3.03. Authentication of Certificates........................ 23
Section 3.04. Transfer and Exchange................................. 23
Section 3.05. Book-Entry Provisions for U.S. Global Certificate and
Offshore Global Certificates......................... 24
Section 3.06. Special Transfer Provisions........................... 25
Section 3.07. Mutilated, Destroyed, Lost or Stolen Certificates..... 28
Section 3.08. Persons Deemed Owners................................. 28
Section 3.09. Cancellation.......................................... 29
Section 3.10. Limitation of Liability for Payments.................. 29
Section 3.11. Temporary Certificates................................ 29
Section 3.12. ERISA Restrictive Legend.............................. 29
ARTICLE IV DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS......................................... 30
Section 4.01. Certificate Account and Special Payments Account...... 30
Section 4.02. Distributions from Certificate Account and Special
Payments Account..................................... 30
Section 4.03. Statements to Certificateholders...................... 32
Section 4.04. Investment of Special Payment Moneys.................. 33
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ARTICLE V THE COMPANY................................................ 34
Section 5.01. Maintenance of Corporate Existence.................... 34
Section 5.02. Consolidation, Merger, Etc............................ 34
ARTICLE VI DEFAULT.................................................... 35
Section 6.01. Events of Default..................................... 35
Section 6.02. Incidents of Sale of Equipment Notes.................. 37
Section 6.03. Judicial Proceedings Instituted by Trustee;
Trustee May Bring Suit............................... 37
Section 6.04. Control by Certificateholders......................... 37
Section 6.05. Waiver of Past Defaults............................... 38
Section 6.06. Right of Certificateholders to Receive Payments
Not to Be Impaired................................... 39
Section 6.07. Certificateholders May Not Bring Suit Except Under
Certain Conditions................................... 39
Section 6.08. Remedies Cumulative................................... 40
Section 6.09. Undertaking for Costs................................. 40
ARTICLE VII THE TRUSTEE................................................ 40
Section 7.01. Certain Duties and Responsibilities................... 40
Section 7.02. Notice of Defaults.................................... 40
Section 7.03. Certain Rights of Trustee............................. 41
Section 7.04. Not Responsible for Recitals or Issuance of
Certificates......................................... 42
Section 7.05. May Hold Certificates................................. 42
Section 7.06. Money Held in Trust................................... 43
Section 7.07. Compensation and Reimbursement........................ 43
Section 7.08. Corporate Trustee Required; Eligibility............... 44
Section 7.09. Resignation and Removal; Appointment of Successor..... 44
Section 7.10. Acceptance of Appointment by Successor................ 46
Section 7.11. Merger, Conversion, Consolidation or Succession
to Business.......................................... 46
Section 7.12. Maintenance of Agencies............................... 47
Section 7.13. Money for Certificate Payments to Be Held in Trust.... 48
Section 7.14. Registration of Equipment Notes in Name of
Subordination Agent.................................. 48
Section 7.15. Representations and Warranties of Trustee............. 48
Section 7.16. Withholding Taxes; Information Reporting.............. 49
Section 7.17. Trustee's Liens....................................... 50
Section 7.18. Preferential Collection of Claims..................... 50
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ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND REPORTS
BY TRUSTEE................................................. 50
Section 8.01. The Company to Furnish Trustee with Names and
Addresses of Certificateholders...................... 50
Section 8.02. Preservation of Information; Communications to
Certificateholders................................... 51
Section 8.03. Reports by Trustee.................................... 51
Section 8.04. Reports by the Company................................ 51
ARTICLE IX SUPPLEMENTAL AGREEMENTS.................................... 52
Section 9.01. Supplemental Agreements Without Consent of
Certificateholders................................... 52
Section 9.02. Supplemental Agreements with Consent of
Certificateholders................................... 53
Section 9.03. Documents Affecting Immunity or Indemnity............. 54
Section 9.04. Execution of Supplemental Agreements.................. 54
Section 9.05. Effect of Supplemental Agreements..................... 55
Section 9.06. Conformity with Trust Indenture Act................... 55
Section 9.07. Reference in Certificates to Supplemental
Agreements........................................... 55
ARTICLE X AMENDMENTS TO INDENTURES AND FINANCING
DOCUMENTS.................................................. 55
Section 10.01 Amendments and Supplement to Indentures and
Other Note Documents.................................. 55
ARTICLE XI TERMINATION OF TRUST....................................... 56
Section 11.01. Termination of the Trust............................. 56
ARTICLE XII MISCELLANEOUS PROVISIONS................................... 57
Section 12.01. Limitation on Rights of Certificateholders........... 57
Section 12.02. Certificates Nonassessable and Fully Paid............ 57
Section 12.03. Notices.............................................. 57
Section 12.04. Governing Law........................................ 59
Section 12.05. Severability of Provisions........................... 59
Section 12.06. Effect of Headings and Table of Contents............. 59
Section 12.07. Successors and Assigns............................... 59
Section 12.08. Benefits of Agreement................................ 59
Section 12.09. Legal Holidays....................................... 59
Section 12.10. Counterparts......................................... 59
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Section 12.11. Communication by Certificateholders with Other
Certificateholders.................................. 59
Section 12.12. Intention of Parties................................. 60
Section 12.13. Trust Indenture Act Controls......................... 60
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EXHIBIT LIST
Exhibit A Form of Certificate
Exhibit B Form of Certificate for Unlegended Certificates
Exhibit C Form of Certificate to be Delivered in connection with
Transfers Pursuant to Regulation S
Exhibit D Form of Certificate to be Delivered in connection with
Transfers to Non-QIB Accredited Investors
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PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of August 13, 1998,
among MIDWAY AIRLINES CORPORATION, a Delaware corporation (the "Company"), and
THE FIRST NATIONAL BANK OF MARYLAND, a national banking association, as Trustee,
is made with respect to the formation of Midway Airlines 1998-1D-S Pass Through
Trust and the issuance of 8.86% Midway Airlines 1998-1D-S Pass Through
Certificates representing fractional undivided interests in the Trust.
WITNESSETH:
WHEREAS, the Company has obtained commitments from Bombardier for
the delivery of certain Aircraft;
WHEREAS, as of the Transfer Date (as defined below), the Company
will have financed the acquisition of all or a portion of such Aircraft either
(i) through separate leveraged lease transactions, in which case the Company
leases such Aircraft (collectively, the "Leased Aircraft") or (ii) through
separate secured loan transactions, in which case the Company owns such Aircraft
(collectively, the "Owned Aircraft");
WHEREAS, as of the Transfer Date in the case of each Leased
Aircraft, each Owner Trustee, acting on behalf of the corresponding Owner
Participant, will have issued pursuant to an Indenture, on a non-recourse basis,
Equipment Notes in order to finance a portion of its purchase price of such
Leased Aircraft;
WHEREAS, as of the Transfer Date, in the case of each Owned
Aircraft, the Company will have issued pursuant to an Indenture, on a resource
basis, Equipment Notes to finance a portion of the purchase price of such Owned
Aircraft;
WHEREAS, as of the Transfer Date, the Related Trustee will assign,
transfer and deliver all of such trustee's right, title and interest to the
trust property held by the Related Trustee to the Trustee pursuant to the
Assignment and Assumption Agreement (as defined below);
WHEREAS, the Trustee, effective only, but automatically, upon
execution and delivery of the Assignment and Assumption Agreement, will be
deemed to have declared the creation of the Midway Airlines Pass Through Trust
1998-1D-S (the "Trust") for the benefit of the Certificateholders, and each
Holder of Certificates outstanding as of the Transfer Date, as the grantors of
the Trust, by their respective acceptances of such Certificates, will join in
the creation of this Trust with the Trustee;
WHEREAS, all Certificates deemed issued by the Trust will evidence
fractional undivided interests in the Trust and will convey no rights, benefits
or interests in respect of any property other than the Trust Property except for
those Certificates to which an Escrow Receipt (as defined below) has been
affixed;
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WHEREAS, upon execution and delivery of the Assignment and
Assumption Agreement, all of the conditions and requirements necessary to make
this Trust Agreement, 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 Agreement in the form and with the terms hereof have been
in all respects duly authorized; and
WHEREAS, upon issuance of the Exchange Certificates, if any, or the
effectiveness of the Shelf Registration Statement, this Agreement, as amended or
supplemented from time to time, will be subject to the provisions of the Trust
Indenture Act of 1939, and shall, to the extent applicable, be governed by such
provisions;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, 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 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 other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference herein have the meanings
assigned to them therein;
(3) all references in this Agreement to designated "Articles",
"Sections", "Subsections" and other subdivisions are to the designated
Articles, Sections, Subsections and other subdivisions of this Agreement;
(4) 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, Subsection or other subdivision; and
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(5) unless the context otherwise requires, whenever the words
"including", "include" or "includes" are used herein, it shall be deemed
to be followed by the phrase "without limitation".
Act: With respect to any Certificateholder has the meaning specified
in Section 1.04.
Affiliate: Means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person. For 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.
Agent Members: Has the meaning specified in Section 3.05(a).
Aircraft: Means each of the New Aircraft in respect of which a
Participation Agreement is entered into in accordance with the Note
Purchase Agreement.
Assignment and Assumption Agreement: Means the assignment and
assumption agreement substantially in the form of Exhibit E to the Related
Trust Agreement executed and delivered in accordance with Section 11.01 of
the Related Trust Agreement.
Authorized Agent: Means any Paying Agent or Registrar for the
Certificates.
Avoidable Tax: Means a state or local tax (i) upon (w) the Trust,
(x) the Trust Property, (y) Certificateholders or (z) the Trustee for
which the Trustee is entitled to seek reimbursement from the Trust
Property, 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 if the Company or any Owner Trustee
shall agree to pay, and shall pay, such tax.
Book-Entry Certificates: With respect to the Certificates, means a
beneficial interest in the Certificates, ownership and transfers of which
shall be made through book entries as described in Section 3.04.
Business Day: Means any day other than a Saturday, a Sunday or a day
on which commercial banks are required or authorized to close in
Baltimore, Maryland, New York, New York, Charlotte, North Carolina or, so
long as any Certificate is outstanding, the city and state in which the
Trustee or any Loan Trustee maintains its Corporate Trust Office or
receives and disburses funds.
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Cedel: Means Cedel Bank societe anonyme.
Certificate: Means any of the Initial Certificates or Exchange
Certificates issued by the Related Trust and that are "Outstanding" (as
defined in the Related Pass Through Trust Agreement) as of the Transfer
Date (the "Transfer Date Certificates") and any Certificates issued in
exchange therefor or replacement thereof pursuant to this Agreement.
Certificate Account: Means the account or accounts created and
maintained pursuant to Section 4.01(a).
Certificateholder or Holder: Means the Person in whose name a
Certificate is registered in the Register.
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.
Code: Means the United States Internal Revenue Code of 1986, as
amended.
Company: Means Midway Airlines Corporation, a Delaware corporation,
or its successor in interest.
Controlling Party: Means the party entitled to act as such pursuant
to the terms of the Intercreditor Agreement.
Corporate Trust Office: With respect to the Trustee or any Loan
Trustee, means the office of such trustee in the city at which at any
particular time its corporate trust business shall be principally
administered.
Delivery Notice: Has the meaning specified in the Note Purchase
Agreement.
Delivery Period Termination Date: Has the meaning specified in the
Related Pass Through Trust Agreement.
Deposits: Has the meaning specified in the Deposit Agreement.
Deposit Agreement: Means the Deposit Agreement dated as of August
13, 1998 relating to the Certificates between the Depositary and the
Escrow Agent,
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<PAGE>
as the same may be amended, supplemented or otherwise modified from time
to time in accordance with its terms.
Depositary: Means First Union National Bank.
DTC: Means The Depository Trust Company, its nominees and their
respective successors.
Direction: Has the meaning specified in Section 1.04(c).
Distribution Date: Means each Regular Distribution Date or Special
Distribution Date.
Equipment Notes: Means the Equipment Notes issued pursuant to the
Indentures.
ERISA: Means the Employee Retirement Income Security Act of 1974, as
amended.
Escrow Agent: Means, initially, First Union Trust Company, National
Association, and any replacement or successor therefor appointed in
accordance with the Escrow Agreement.
Escrow Agreement: Means the Escrow and Paying Agent Agreement dated
as of August 13, 1998 relating to the Certificates, among the Escrow
Agent, the Escrow Paying Agent, the Trustee and the Initial Purchasers, as
the same may be amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Escrow Paying Agent: Means the Person acting as paying agent under
the Escrow Agreement.
Escrow Receipt: Means the receipt substantially in the form annexed
to the Escrow Agreement representing a fractional undivided interest in
the funds held in escrow thereunder.
Euroclear: Means the Euroclear System.
Exchange Certificates: Means the pass through certificates
substantially in the form of Exhibit A hereto issued in exchange for the
Initial Certificates pursuant to the Registration Rights Agreement and
authenticated hereunder.
Exchange Offer: Means the exchange offer which may be made pursuant
to the Registration Rights Agreement to exchange Initial Certificates for
Exchange Certificates.
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Exchange Offer Registration Statement: Means the registration
statement that, pursuant to the Registration Rights Agreement, is filed by
the Company with the SEC with respect to the exchange of Initial
Certificates for Exchange Certificates.
Event of Default: Means the occurrence of an Indenture Default under
any Indenture pursuant to which Equipment Notes held by the Trust were
issued.
Final Maturity Date: Means July, 2, 2004.
Final Withdrawal: Has the meaning specified in the Escrow Agreement.
Final Withdrawal Date: Has the meaning specified in the Escrow
Agreement.
Fractional Undivided Interest: Means the fractional undivided
interest in the Trust that is evidenced by a Certificate.
Global Certificates: Has the meaning assigned to such term in
Section 3.01.
Indenture: Means each of the separate trust indenture and security
agreements relating to the Aircraft, each as specified or described in a
Delivery Notice delivered pursuant to the Note Purchase Agreement or the
related Participation Agreement in each case as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
its terms.
Indenture Default: With respect to any Indenture, means any
Indenture Event of Default (as such term is defined in such Indenture)
thereunder.
Initial Certificates: Means the certificates issued and
authenticated hereunder substantially in the form of Exhibit A hereto
other than the Exchange Certificates.
Initial Purchasers: Means Morgan Stanley & Co. Incorporated and
Credit Suisse First Boston Corporation.
Initial Regular Distribution Date: Means the first Regular
Distribution Date on which a Scheduled Payment is to be made.
Institutional Accredited Investor: Means an institutional investor
that is an "accredited investor" within the meaning set forth in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act.
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Intercreditor Agreement: Means the Intercreditor Agreement dated
August 13, 1998 among the Trustee, the Other Trustees, the Liquidity
Provider, the liquidity providers, if any, relating to the Certificates
issued under (and as defined in) the Other Pass Through Trust Agreements,
and The First National Bank of Maryland, as Subordination Agent
thereunder, as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Issuance Date: Means the date of the issuance of the Initial
Certificates.
Lease: Means, with respect to each Leased Aircraft, the 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.
Leased Aircraft: Has the meaning given to such term in the recitals
hereto.
Letter of Representations: Means the agreement dated the Issuance
Date among the Company, the Trustee and the initial Clearing Agency.
Liquidity Facility: Means the Irrevocable Revolving Credit Agreement
dated August 13, 1998 relating to the Certificates, between the Liquidity
Provider and the Subordination Agent, as amended, replaced, supplemented
or otherwise modified from time to time in accordance with its terms and
the terms of the Intercreditor Agreement.
Liquidity Provider: Means, initially, ABN AMRO Bank N.V., acting
through its Chicago branch, and any replacement or successor therefor
appointed in accordance with the Liquidity Facility and the Intercreditor
Agreement.
Loan 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 Loan
Trustee as such trustee; and Loan Trustees means all of the Loan Trustees
under the Indentures.
New Aircraft: Has the meaning specified in the Note Purchase
Agreement.
Non-U.S. Person: Means a Person that is not a U.S. Person, as
defined in Regulation S.
Note Documents: With respect to any Equipment Note, means (i) the
Indenture and the Participation Agreement relating to such Equipment Note,
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and (ii) in the case of any Equipment Note related to a Leased Aircraft,
also includes the Lease relating to such Leased Aircraft.
Note Purchase Agreement. Means the Note Purchase Agreement dated as
of August 13, 1998 among the Trustee, the Other Trustees, the Company, the
Escrow Agent, the Escrow Paying Agent and the Subordination Agent,
providing for, among other things, the purchase of Equipment Notes by the
Trustee on behalf of the Trust, as the same may be amended, supplemented
or otherwise modified from time to time, in accordance with its terms.
Officer's Certificate: Means a certificate signed, (a) in the case
of the Company, by (i) 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 a Loan
Trustee, a Responsible Officer of the Trustee or such Owner Trustee or
such Loan Trustee, as the case may be.
Offshore Certificates Exchange Date: Has the meaning specified in
Section 3.01.
Offshore Global Certificates: Has the meaning assigned to such term
in Section 3.01.
Offshore Physical Certificates: Has the meaning assigned to such
term in Section 3.01.
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 or (ii) such other counsel
designated by the Company and reasonably acceptable to the Trustee and (b)
in the case of any Owner Trustee or any Loan Trustee may be such counsel
as may be designated by any of them whether or not such counsel is an
employee of any of them, and who shall be reasonably acceptable to the
Trustee.
Other Pass Through Trust Agreement: Means each of the three other
Midway Airlines 1998-1 Pass Through Trust Agreements relating to,
respectively, Midway Airlines 1998-1A-S Pass Through Trust, Midway
Airlines 1998-1B-S Pass Through Trust and Midway Airlines 1998-1C-S Pass
Through Trust, each dated the date hereof; and Other Pass Through Trust
Agreements means all such agreements.
Other Trust: Means each of the Midway Airlines Pass Through Trust
1998-1A-S, the Midway Airlines Pass Through Trust 1998-1B-S and the Midway
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Airlines Pass Through Trust 1998-1C-S, each created on the date hereof;
and Other Trusts means all such trusts.
Other Trustee: Means the trustee under each of the Other Pass
Through Trust Agreements, and any successor or other trustee appointed as
provided therein; and Other Trustees means all such trustees.
Outstanding: With respect to Certificates, means, as of the date of
determination, all Certificates theretofore authenticated and delivered
under this Agreement, except:
(i) Certificates theretofore cancelled by the Registrar or
delivered to the Trustee or the Registrar for cancellation;
(ii) All of the Certificates if money in the full amount
required to make the final distribution with respect thereto
pursuant to Section 11.01 hereof has been theretofore deposited with
the Trustee in trust for the Holders of such Certificates as
provided in Section 4.01 pending distribution of such money to such
Certificateholders pursuant to such final distribution payment; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been authenticated and delivered pursuant to this
Agreement.
Owned Aircraft: Has the meaning given to such term in the recitals
hereto.
Owner Participant: With respect to any Equipment Note relating to a
Leased Aircraft, means the "Owner Participant" 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 relating to a
Leased Aircraft, means the "Owner Trustee", 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 Indentures.
Participation Agreement: Means each Participation Agreement to be
entered into by the Trustee pursuant to the Note Purchase Agreement, as
the same may be amended, supplemented or otherwise modified in accordance
with its terms.
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Paying Agent: Means the paying agent maintained and appointed for
the Certificates pursuant to Section 7.12.
Permanent Offshore Global Certificates: Has the meaning specified in
Section 3.01.
Permitted Investments: Means obligations of the United States of
America or agencies or instrumentalities thereof for the payment of which
the full faith and credit of the United States of America is pledged,
maturing in not more than 60 days or such lesser time as is necessary for
payment of any Special Payments on a Special Distribution Date or any
mutual fund the portfolio of which is limited to such obligations,
including any proprietary mutual fund of The First National Bank of
Maryland for which such bank or an affiliate is investment advisor or to
which such bank provides other services and receives reasonable
compensation for such services.
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.
Physical Certificates: Has the meaning specified in Section 3.01.
Plan Transferee: Means any Plan or any entity that is using the
assets of any Plan to purchase or hold its interest in a 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.
Pool Balance: Means, as of any date, (i) the original aggregate face
amount of the Certificates less (ii) the aggregate amount of all payments
made in respect of such Certificates or in respect of Deposits 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 as of any Distribution Date shall be computed after giving effect
to any special distribution with respect to unused Deposits, payment of
principal, if any, on the Equipment Notes or other Trust Property held in
the Trust and the distribution thereof to be made on such Distribution
Date.
Pool Factor: Means, as of any date, the quotient (rounded to the
seventh decimal place) computed by dividing (i) the Pool Balance as at
such date by (ii) the original aggregate face amount of the Certificates.
The Pool Factor as of any Distribution Date shall be computed after giving
effect to any special distribution with respect to unused Deposits,
payment of principal, if any, on the Equipment Notes or other Trust
Property and the distribution thereof to be made on such Distribution
Date.
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Private Placement Legend: Has the meaning specified in Section 3.02.
Purchase Agreement: Means the Purchase Agreement dated August 6,
1998 between the Company and the Initial Purchasers.
QIB: Means a qualified institutional buyer as defined in Rule 144A.
Record Date: Means (i) for Scheduled Payments to be distributed on
any Regular Distribution Date, other than the final distribution, 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, the 15th day
(whether or not a Business Day) preceding such Special Distribution Date.
Register and Registrar: Mean the register maintained and the
registrar appointed pursuant to Sections 3.04 and 7.12.
Registration Rights Agreement: Means the Registration Rights
Agreement, dated as of August 13, 1998, among the Initial Purchasers, the
Trustee, the Other Trustees and the Company, as amended, supplemented or
otherwise modified from time to time in accordance with its terms.
Regular Distribution Date: With respect to distributions of
Scheduled Payments in respect of the Certificates, means each date
designated as a Regular Distribution Date in this Agreement, until payment
of all the Scheduled Payments to be made under the Equipment Notes held in
the Trust have been made; 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.
Regulation S: Means Regulation S under the Securities Act or any
successor regulation thereto.
Related Other Pass Through Trust Agreements: Means the "Other
Agreements" as defined in the Related Pass Through Trust Agreement.
Related Other Trustees: Means the "Other Trustees" as defined in the
Related Pass Through Trust Agreement.
Related Pass Through Trust Agreement: Means the Pass Through Trust
Agreement 1998-1D-O dated the date hereof relating to the Midway Airlines
Pass Through Trust 1998-1D-O and entered into by the Company and the
Trustee.
Related Trust: Means the Midway Pass Through Trust 1998-1D-O, to be
formed under the Related Pass Through Trust Agreement.
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Related Trustee: Means the trustee under the Related Pass Through
Trust Agreement.
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 Agreement.
Responsible Officer: With respect to the Trustee, any Loan Trustee
and any Owner Trustee, means any officer in the Corporate Trust Division
of the Trustee, Loan 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.
Rule 144A: Means Rule 144A under the Securities Act and any
successor regulation thereto.
Scheduled Payment: With respect to any Equipment Note, means any
payment of principal and interest on such Equipment Note (other than any
such payment which is not in fact received by the Trustee or any
Subordination Agent within five days of the date on which such payment is
scheduled to be made) or any payment of interest on the Certificates with
funds drawn under the Liquidity Facility 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, as
amended, 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.
Securities Act: Means the United States Securities Act of 1933, as
amended from time to time, or any successor thereto.
Shelf Registration Statement: Means the shelf registration statement
which may be required to be filed by the Company with the SEC pursuant to
any Registration Rights Agreement, other than an Exchange Offer
Registration Statement.
Special Distribution Date: Means each date on which a Special
Payment is to be distributed as specified in this Agreement; provided,
however, that, if any
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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) or Special Redemption Premium.
Special Payments Account: Means the account or accounts created and
maintained pursuant to Section 4.01(b).
Special Redemption Premium: Means the premium payable by the Company
in respect of the Final Withdrawal pursuant to the Note Purchase
Agreement.
Specified Investments: Means (i) obligations of, or guaranteed by,
the United States Government or agencies thereof, (ii) open market
commercial paper of any corporation incorporated under the laws of the
United States of America or any State thereof rated at least P-2 or its
equivalent by Moody's Investors Service, Inc. or at least A-2 or its
equivalent by Standard & Poor's Ratings Group, (iii) certificates of
deposit issued by commercial banks organized under the laws of the United
States or of any political subdivision thereof having a combined capital
and surplus in excess of $500,000,000 which banks or their holding
companies have a rating of A or its equivalent by Moody's Investors
Service, Inc. or Standard & Poor's Ratings Group; provided, however, that
the aggregate amount at any one time so invested in certificates of
deposit issued by any one bank shall not exceed 5% of such bank's capital
and surplus, (iv) U.S. dollar denominated offshore certificates of deposit
issued by, or offshore time deposits with, any commercial bank described
in (iii) or any subsidiary thereof, (v) repurchase agreements with any
financial institution having combined capital and surplus of at least
$500,000,000 with any of the obligations described in clauses (i) through
(iv) as collateral and (vi) any mutual fund the portfolio of which is
limited to investments of the types specified in the preceding clauses (i)
through (v), including any proprietary mutual fund of The First National
Bank of Maryland for which such bank or an affiliate is investment advisor
or to which such bank provides other services and receives reasonable
compensation for such services; 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.
Subordination Agent: Has the meaning specified in the Intercreditor
Agreement.
Temporary Offshore Global Certificates: Has the meaning specified in
Section 3.01.
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Transfer Date: Means the moment of execution and delivery of the
Assignment and Assumption Agreement by each of the parties thereto.
Transfer Date Certificate: Has the meaning specified in the
definition of "Certificates".
Triggering Event: Has the meaning assigned to such term in the
Intercreditor Agreement.
Trust: Means the trust created by this Agreement, the estate of
which consists of the Trust Property.
Trust Indenture Act: Except as otherwise provided in Section 9.06,
means the United States Trust Indenture Act of 1939 as in force at the
date hereof.
Trust Property: Means (i) subject to the Intercreditor Agreement,
the Equipment Notes held as the property of the Trust, 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, subject to the Intercreditor Agreement, any
proceeds from the sale by the Trustee pursuant to Section 6.02 of any
Equipment Note and (iii) all rights of the Trust and the Trustee, on
behalf of the Trust, under the Intercreditor Agreement, the Escrow
Agreement, the Note Purchase Agreement and the Liquidity Facilities,
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 Facilities,
provided that rights with respect to the Deposits or under the Escrow
Agreement, except for the right to direct withdrawals for the purchase of
Equipment Notes to be held herein, will not constitute Trust Property.
Trustee: Means The First National Bank of Maryland, or its successor
in interest, and any successor or other trustee appointed as provided
herein.
Trustee's Lien: Has the meaning specified in Section 7.17.
U.S. Global Certificate: Has the meaning specified in Section 3.01.
U.S. Physical Certificates: Has the meaning specified in Section
3.01.
Section 1.02. Compliance Certificates and Opinions. Upon any
application or request by the Company, any Owner Trustee or any Loan Trustee to
the Trustee to take any action under any provision of this Agreement, the
Company, such Owner Trustee or such Loan Trustee, as the case may be, shall
furnish to the Trustee (i) an Officer's Certificate stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in this Agreement
relating to the proposed action have been complied with and (ii) an Opinion of
Counsel stating that in the opinion of such counsel
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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 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 Agreement (other than a certificate
provided pursuant to Section 8.04(d)) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions in this
Agreement relating thereto;
(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and 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 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 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,
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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 Loan 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 this
Agreement and conclusive in favor of the Trustee, the Company and any Loan
Trustee, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument acknowledged to him
the execution thereof, or by an affidavit of a witness to such execution sworn
to before any such notary or such other officer and where such execution is by
an officer of a corporation or association or a member of a partnership, on
behalf of such corporation, association or partnership, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other reasonable manner
which the Trustee deems sufficient.
(c) In determining whether the Certificateholders of the requisite
Fractional Undivided Interests of Certificates Outstanding have given any
direction, consent or waiver (a "Direction") under this Agreement, Certificates
owned by the Company, any Owner Trustee, any Owner Participant or any Affiliate
of any such Person thereof 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 the
Trustee in fact knows to be so owned shall be so disregarded. Notwithstanding
the foregoing, (i) if any such Person owns 100% of the Certificates Outstanding,
such Certificates shall not be so disregarded as aforesaid, and (ii) if any
amount of Certificates 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
Owner Trustee, any Owner Participant or any Affiliate of any such Person.
(d) For all purposes of this Agreement, all Initial Certificates and
all Exchange Certificates shall vote and take all other actions of
Certificateholders together as one series of Certificates.
(e) The Company may at its option, by delivery of an Officer's
Certificate to the Trustee, set a record date to determine the
Certificateholders entitled to give any consent, request, demand, authorization,
direction, notice, waiver or other 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,
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request, demand, authorization, direction, notice, waiver or other Act may be
given before or after such record date, but only the Certificateholders of
record 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 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 shall be
computed as of such record date; provided that no such consent, request, demand,
authorization, direction, notice, waiver or other Act by the Certificateholders
on such record date shall be deemed effective unless it shall become effective
pursuant to the provisions of this Agreement not later than one year after such
record date.
(f) 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.
(g) Except as otherwise provided in Section 1.04(c), Certificates
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.
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Acquisition of Trust Property. (a) The Trustee is
hereby irrevocably authorized and directed to execute and deliver the Assignment
and Assumption Agreement on the date specified in Section 11.01 of the Related
Trust Supplement, subject only to the satisfaction of the conditions set forth
in said Section 11.01. This Agreement (except only for the immediately preceding
sentence hereof, which is effective upon execution and delivery hereof) shall
become effective upon the execution and delivery of the Assignment and
Assumption Agreement by the Trustee and the Related Trustee, automatically and
without any further signature or action on the part of the Company and the
Trustee, and shall thereupon constitute the legal, valid and binding obligation
of the parties hereto enforceable against each of the parties hereto in
accordance with its terms. Upon such execution and delivery of the Assignment
and Assumption Agreement, the Related Trust shall be terminated, the
Certificateholders shall receive beneficial interests in the Trust in exchange
for their interests in the Related Trust equal to their respective beneficial
interests in the Related Trust and the "Outstanding" (as defined in the Related
Pass Through Trust Agreement) pass through certificates representing fractional
undivided interests in the Related Trust shall be deemed for all purposes of
this Agreement, without further signature or action of any party or
Certificateholder, to be Certificates representing the same Fractional Undivided
Interests in the Trust and Trust Property. By acceptance
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of its Certificate, each Certificateholder consents to and ratifies such
assignment, transfer and delivery of the trust property of the Related Trust to
the Trustee upon the execution and delivery of the Assignment and Assumption
Agreement. Except as provided in Sections 3.04, 3.05, 3.07 and 3.11, the Trustee
shall not execute, authenticate or deliver Certificates in excess of the
aggregate amount specified in this paragraph.
(b) The Trustee, upon the execution and delivery of the Assignment
and Assumption Agreement, acknowledges its acceptance of all right, title and
interest in and to the Trust Property and declares that the Trustee holds and
will hold such right, title and interest for the benefit of all then present and
future Certificateholders, upon the trusts herein set forth. By the acceptance
of each Certificate issued to it under the Related Pass Through Trust Agreement
and deemed issued under this Agreement, each Holder of any such Certificate as
grantor of the Trust thereby joins in the creation and declaration of the Trust.
Section 2.02. [Reserved]
Section 2.03. The Trustee. Subject to Section 7.15, the Trustee
shall not be responsible in any manner whatsoever for or in respect of the
validity or sufficiency of this Agreement, the Deposit Agreement or the Escrow
Agreement or the due execution hereof or thereof by the Company or the other
parties thereto (other than the Trustee), or for or in respect of the recitals
and statements contained herein or therein, all of which recitals and statements
are made solely by the Company.
Section 2.04. Acceptance by Trustee. The Trustee, upon the execution
and delivery of this Agreement, acknowledges its acceptance of all right, title
and interest in and to the Trust Property acquired pursuant to Section 2.01
hereof and the Note Purchase Agreement and declares that the Trustee holds and
will hold such right, title and interest, together with all other property
constituting the Trust Property, for the benefit of all then present and future
Certificateholders, upon the trusts herein set forth. Subject to Section 7.14,
the Trustee shall take all actions reasonably necessary to effect the
registration of all such Equipment Notes in the name of the Subordination Agent.
By its payment for and acceptance of each Certificate issued to it under this
Agreement, each initial Certificateholder as grantor of the Trust thereby joins
in the creation and declaration of the Trust.
Section 2.05. Limitation of Powers. The Trust is constituted solely
for the purpose of making the investment in the Equipment Notes, and, except as
set forth herein, 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 any Aircraft (as
defined in the respective Indentures) by bidding such Equipment Notes or
otherwise, or taking any action with respect to any such Aircraft once
acquired).
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ARTICLE III
THE CERTIFICATES
Section 3.01. Title, Form, Denomination and Execution of
Certificates. (a) The Initial Certificates shall be known as the "8.86%
1998-1D-S Initial Pass Through Certificates" and the Exchange Certificates shall
be known as the "8.86% 1998-1D-S Exchange Pass Through Certificates", in each
case, of the Trust. Each Certificate will represent a fractional undivided
interest in the Trust and shall be substantially in the form set forth as
Exhibit A hereto, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Agreement and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Certificates, as evidenced by their execution of 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. At the Escrow Agent's request under the Escrow Agreement, the
Trustee shall affix the corresponding Escrow Receipt to each Certificate. In any
event, any transfer or exchange of any Certificate shall also effect a transfer
or exchange of the related Escrow Receipt. Prior to the Final Withdrawal Date,
no transfer or exchange of any Certificate shall be permitted unless the
corresponding Escrow Receipt is attached thereto and also is so transferred or
exchanged. By acceptance of any Certificate to which an Escrow Receipt is
attached, each Holder of such a Certificate acknowledges and accepts the
restrictions on transfer of the Escrow Receipt set forth herein and in the
Escrow Agreement.
(b) The Initial Certificates shall be issued only in fully
registered form without coupons and only in denominations of $100,000 or
integral multiples of $1,000 in excess thereof, except that one Certificate may
be issued in a denomination of less than $100,000. The Exchange Certificates
will be issued in denominations of $1,000 or integral multiples thereof. Each
Certificate shall be dated the date of its authentication. The aggregate
Fractional Undivided Interest of Certificates shall not at any time exceed
$5,502,000.
(c) Initial Certificates offered and sold in reliance on Rule 144A
shall be issued initially in the form of a single permanent global Certificate
in registered form, substantially in the form set forth as Exhibit A hereto (the
"U.S. Global Certificate"), duly executed and authenticated by the Trustee as
hereinafter provided. The U.S. Global Certificate will be registered in the name
of a nominee for DTC and deposited with the Trustee, as custodian for DTC. The
aggregate principal amount of the U.S. Global Certificate may from time to time
be increased or decreased by adjustments made on the records of the Depositary
or its nominee, or of the Trustee, as custodian for DTC or its nominee, as
hereinafter provided.
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(d) Initial Certificates offered and sold in offshore transactions
in reliance on Regulation S shall be issued initially in the form of a single
temporary global Certificate in registered form, substantially in the form set
forth as Exhibit A hereto (the "Temporary Offshore Global Certificate") duly
executed and authenticated by the Trustee as hereinafter provided. The Temporary
Offshore Global Certificate will be registered in the name of a nominee of DTC
for credit to the account of the Agent Members acting as depositaries for
Euroclear and Cedel and deposited with the Trustee as custodian for DTC. At any
time on or after September 23, 1998 (the "Offshore Certificates Exchange Date"),
upon receipt by the Trustee of a certificate substantially in the form of
Exhibit B hereto, a single permanent global Certificate in registered form
substantially in the form set forth in Exhibit A (the "Permanent Offshore Global
Certificate"; and together with the Temporary Offshore Global Certificate, the
"Offshore Global Certificates"), duly executed and authenticated by the Trustee
as hereinafter provided, shall be registered in the name of a nominee for DTC
and deposited with the Trustee, as custodian for DTC, and the Registrar shall
reflect on its books and records the date of such transfer and a decrease in the
principal amount of any Temporary Offshore Global Certificate in an amount equal
to the principal amount of the beneficial interest in such Temporary Offshore
Global Certificate transferred. The U.S. Global Certificate and the Offshore
Global Certificates are sometimes referred to as the "Global Certificates".
(e) Initial Certificates offered and sold to Institutional
Accredited Investors shall be issued in the form of permanent certificated
Certificates in registered form in substantially the form set forth as Exhibit A
hereto (the "U.S. Physical Certificates"). Certificates issued pursuant to
Section 3.05(b) in exchange for interests in any Offshore Global Certificate
shall be in the form of permanent certificated Certificates in registered form
substantially in the form set forth in Exhibit A (the "Offshore Physical
Certificates"). The Offshore Physical Certificates and U.S. Physical
Certificates are sometimes collectively herein referred to as the "Physical
Certificates".
(f) The Exchange Certificates shall be issued in the form of one or
more global Certificates substantially in the form of Exhibit A hereto (each, a
"Global Exchange Certificate"), except that (i) the Private Placement Legend
(hereinafter defined) shall be omitted. Such Global Exchange Certificates shall
be in registered form and be registered in the name of DTC and deposited with
the Trustee, at its Corporate Trust Office, as custodian DTC. The aggregate
principal amount of any Global Exchange Certificate may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for DTC for such Global Exchange Certificate, which adjustments shall
be conclusive as to the aggregate principal amount of any such Global Exchange
Certificates. Subject to clause (i) of the first sentence of this Section
3.01(f), the terms hereof applicable to Global Certificates shall apply to the
Global Exchange Certificates, mutatis mutandis.
(g) The definitive Certificates shall be in registered form and
shall be typed, printed, lithographed or engraved or produced by any combination
of these
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methods or may be produced in any other manner, all as determined by the
officers executing such Certificates, as evidenced by their execution of such
Certificates.
Section 3.02. Restrictive Legends. (a) Subject to Section 3.06, each
Global Certificate (other than the Permanent Offshore Global Certificate) and
each U.S. Physical Certificate shall bear the following legend (the "Private
Placement Legend") on the face thereof:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY
MIDWAY AIRLINES CORPORATION ("MIDWAY") OR ANY AFFILIATE OF MIDWAY, RESELL
OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO MIDWAY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATES
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER
THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE
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ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
CERTIFICATE WAS HELD BY MIDWAY OR AN AFFILIATE OF MIDWAY, THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND MIDWAY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
(b) Each Global Certificate shall also bear the following legend on
the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE 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 HEREON 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.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST
AGREEMENT REFERRED TO HEREIN.
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Section 3.03. Authentication of Certificates. (a) The Trustee shall
duly execute, authenticate and deliver Certificates in authorized denominations
equalling in the aggregate the aggregate principal amount of the Equipment Notes
to be purchased by the Trustee pursuant to the Participation Agreements and
evidencing the entire ownership of the Trust.
(b) No Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose, unless there appears on
such Certificate a certificate of authentication substantially in the form
provided for herein executed by the Trustee by the manual signature of one of
its authorized signatories, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.
Section 3.04. Transfer and Exchange. The Trustee shall cause to be
kept at the office or agency to be maintained by it in accordance with the
provisions of Section 7.12 of this Agreement a register (the "Register") for the
Certificates in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of the Certificates
and of transfers and exchanges of the Certificates as herein provided. The
Trustee shall initially be the registrar (the "Registrar") for the purpose of
registering the Certificates and transfers and exchanges of the Certificates as
herein provided. A Certificateholder may transfer or exchange a Certificate by
written application to the Registrar stating the name of the proposed transferee
and otherwise complying with the terms of this Agreement, including providing a
written certificate or other evidence of compliance with any restrictions on
transfer; provided that no exchanges of Initial Certificates for Exchange
Certificates shall occur until an Exchange Offer Registration Statement shall
have been declared effective by the SEC (notice of which shall be provided to
the Trustee by the Company). No such transfer shall be effected until, and such
transferee shall succeed to the rights of a Certificateholder only upon, final
acceptance and registration of the transfer by the Registrar in the Register.
Prior to the registration of any transfer by a Certificateholder as provided
herein, the Trustee shall treat the person in whose name the Certificate is
registered as the owner thereof for all purposes, and the Trustee shall not be
affected by notice to the contrary. Furthermore, DTC shall, by acceptance of a
Global Certificate, agree that transfers of beneficial interests in such Global
Certificate may be effected only through a book-entry system maintained by the
Depositary (or its agent), and that ownership of a beneficial interest in the
Certificate shall be required to be reflected in a book entry. When Certificates
are presented to the Registrar with a request to register the transfer or to
exchange them for an equal face amount of Certificates of other authorized
denominations, the Registrar shall register the transfer or make the exchange as
requested if its requirements for such transactions are met. To permit
registrations of transfers and exchanges in accordance with the terms,
conditions and restrictions hereof, the Trustee shall execute and authenticate
Certificates at the Registrar's request. No service charge shall be made for any
registration of transfer or exchange of the Certificates, but the Trustee may
require payment by the transferor of a sum sufficient to cover any transfer tax
or similar governmental charge payable in connection therewith.
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Section 3.05. Book-Entry Provisions for U.S. Global Certificate and
Offshore Global Certificates. (a) Members of, or participants in, DTC ("Agent
Members") shall have no rights under this Agreement with respect to any Global
Certificate held on their behalf by DTC, or the Trustee as its custodian, and
DTC may be treated by the Trustee and any agent of the Trustee as the absolute
owner of such Global Certificate for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Trustee or any agent of the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by DTC or shall impair, as between DTC and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a holder of any Certificate. Upon the issuance of any Global
Certificate, the Registrar or its duly appointed agent shall record a nominee of
DTC as the registered holder of such Global Certificate.
(b) Transfers of any Global Certificate shall be limited to
transfers of such Global Certificate in whole, but not in part, to nominees of
DTC, its successor or such successor's nominees. Beneficial interests in the
U.S. Global Certificate and any Offshore Global Certificate may be transferred
in accordance with the rules and procedures of DTC and the provisions of Section
3.06. Beneficial interests in the U.S. Global Certificate or an Offshore Global
Certificate shall be delivered to all beneficial owners in the form of U.S.
Physical Certificates or Offshore Physical Certificates, as the case may be, if
(i) the Company notifies the Trustee in writing that DTC is unwilling or unable
to discharge properly its responsibilities as DTC for the U.S. Global
Certificate or such Offshore Global Certificate, as the case may be, and the
Company is unable to locate a qualified successor depositary within 90 days of
such notice or (ii) after the occurrence of an Event of Default, beneficial
owners of the U.S. Global Certificate or Offshore Global Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in the Trust, by Act of such Certificateholders delivered to the Company and the
Trustee, advise the Company, the Trustee and DTC through its Clearing Agency
Participants in writing that the continuation of a book-entry system through DTC
is no longer in the best interests of the Certificateholders, then the Trustee
shall notify all owners of beneficial interests in the U.S. Global Certificate
or an Offshore Global Certificate, through DTC, of the occurrence of any such
event and the availability of definitive Certificates.
(c) Any beneficial interest in one of the Global Certificates that
is transferred to a Person who takes delivery in the form of an interest in the
other Global Certificate will, upon such transfer, cease to be an interest in
such Global Certificate and become an interest in the other Global Certificate
and, accordingly, will thereafter be subject to all transfer restrictions, if
any, and other procedures applicable to beneficial interests in such other
Global Certificate for as long as it remains such an interest.
(d) [Intentionally omitted.]
(e) In connection with the transfer of the entire U.S. Global
Certificate or an entire Offshore Global Certificate to the beneficial owners
thereof pursuant to
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paragraph (b) of this Section 3.05, such U.S. Global Certificate or Offshore
Global Certificate, as the case may be, shall be deemed to be surrendered to the
Trustee for cancellation, and the Trustee shall execute, authenticate and
deliver, to each beneficial owner identified by DTC in exchange for its
beneficial interest in such U.S. Global Certificate or Offshore Global
Certificate, as the case may be, an equal aggregate principal amount of U.S.
Physical Certificates or Offshore Physical Certificates, as the case may be, of
authorized denominations.
(f) Any U.S. Physical Certificate delivered in exchange for an
interest in the U.S. Global Certificate pursuant to paragraph (b) of this
Section 3.05 shall, except as otherwise provided by paragraph (f) of Section
3.06, bear the Private Placement Legend.
(g) Any Offshore Physical Certificate delivered in exchange for an
interest in an Offshore Global Certificate pursuant to paragraph (b) of this
Section shall, except as otherwise provided by paragraph (f) of Section 3.06,
bear the applicable legend regarding transfer restrictions set forth in Section
3.02(a).
(h) The registered holder of the U.S. Global Certificate or any
Offshore Global Certificate may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Agreement or the Certificates.
Section 3.06. Special Transfer Provisions. Unless and until (i) an
Initial Certificate is sold under an effective Shelf Registration Statement or
(ii) an Initial Certificate is exchanged for an Exchange Certificate pursuant to
an effective Exchange Offer Registration Statement, in each case pursuant to the
terms of the Registration Rights Agreement, the following provisions shall apply
to the Certificates:
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Certificate to any Institutional Accredited Investor
which is not a QIB (excluding transfers to or by Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Certificate,
whether or not such Certificate bears the Private Placement Legend, if (x)
the requested transfer is at least two years after the later of the
original issue date of the Certificates and the last date on which such
Certificate was held by the Company or any affiliate thereof or (y) the
proposed transferee has delivered to the Registrar a letter substantially
in the form of Exhibit D hereto and the aggregate principal amount of the
Certificates being transferred is at least $100,000.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Certificate, upon receipt by the
Registrar of (x) the documents, if any, required by paragraph (i) and (y)
instructions given in accordance with DTC's and the Registrar's
procedures, the Registrar shall reflect
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on its books and records the date of the transfer and a decrease in the
principal amount of such U.S. Global Certificate in an amount equal to the
principal amount of the beneficial interest in such U.S. Global
Certificate to be transferred, and the Company shall execute, and the
Trustee shall authenticate and deliver to the transferor or at its
direction, one or more U.S. Physical Certificates of like tenor and
amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of an Initial Certificate
to a QIB (excluding Non-U.S. Persons):
(i) If the Certificate to be transferred consists of U.S. Physical
Certificates or an interest in any Temporary Offshore Global Certificate,
the Registrar shall register the transfer if such transfer is being made
by a proposed transferor who has checked the box provided for on the form
of Initial Certificate stating, or has otherwise advised the Trustee and
the Registrar in writing, that the sale has been made in compliance with
the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Initial Certificate stating, or
has otherwise advised the Trustee and the Registrar in writing, that it is
purchasing the Initial Certificate for its own account or an account with
respect to which it exercises sole investment discretion and that it, or
the Person on whose behalf it is acting with respect to any such account,
is a QIB within the meaning of Rule 144A, and is aware that the sale to it
is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Trust and/or the Company as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
(ii) Upon receipt by the Registrar of the documents referred to in
clause (i) above and instructions given in accordance with DTC's and the
Registrar's procedures therefor, the Registrar shall reflect on its books
and records the date of such transfer and an increase in the principal
amount of the U.S. Global Certificate in an amount equal to the principal
amount of the U.S. Physical Certificates or interests in the Temporary
Offshore Global Certificate, as the case may be, being transferred, and
the Trustee shall cancel such Physical Certificates or decrease the amount
of such Temporary Offshore Global Certificate so transferred.
(c) [Intentionally omitted.]
(d) Transfers of Interests in the Permanent Offshore Global
Certificate or Offshore Physical Certificates. The Registrar shall register any
transfer of interests in the Permanent Offshore Global Certificate or Offshore
Physical Certificates without requiring any additional certification.
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(e) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any registration of any transfer of an
Initial Certificate to a Non-U.S. Person:
(i) Prior to the Offshore Certificates Exchange Date, the Registrar
shall register any proposed transfer of an Initial Certificate to a
Non-U.S. Person upon receipt of a certificate substantially in the form
set forth as Exhibit C hereto from the proposed transferor.
(ii) On and after the Offshore Certificates Exchange Date, the
Registrar shall register any proposed transfer to any Non-U.S. Person if
the Certificate to be transferred is a U.S. Physical Certificate or an
interest in the U.S. Global Certificate, upon receipt of a certificate
substantially in the form of Exhibit C from the proposed transferor. The
Registrar shall promptly send a copy of such certificate to the Company.
(iii) Upon receipt by the Registrar of (x) the documents, if any,
required by paragraph (ii) and (y) instructions in accordance with the
Depositary's and the Registrar's procedures, the Registrar shall reflect
on its books and records the date of such transfer and a decrease in the
principal amount of such U.S. Global Certificate in an amount equal to the
principal amount of the beneficial interest in such U.S. Global
Certificate to be transferred, and (B) upon receipt by the Registrar of
instructions given in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and an increase in the principal amount of the Offshore Global Certificate
in an amount equal to the principal amount of the U.S. Physical
Certificate or the U.S. Global Certificate, as the case may be, to be
transferred, and the Trustee shall cancel the Physical Certificate, if
any, so transferred or decrease the amount of such U.S. Global
Certificate.
(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Certificates not bearing the Private Placement Legend, the
Registrar shall deliver Certificates that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Certificates bearing the
Private Placement Legend, the Registrar shall deliver only Certificates that
bear the Private Placement Legend unless either (i) the circumstances
contemplated by paragraph (a)(i)(x) or (e)(ii) of this Section 3.06 exist or
(ii) there is delivered to the Registrar an Opinion of Counsel to the effect
that neither such legend nor the related restrictions on transfer are required
in order to maintain compliance with the provisions of the Securities Act.
(g) General. By its acceptance of any Certificate bearing the
Private Placement Legend, each Holder of such a Certificate acknowledges the
restrictions on transfer of such Certificate set forth in this Agreement and
agrees that it will transfer such Certificate only as provided in this
Agreement. The Registrar shall not register a transfer of any Certificate unless
such transfer complies with the restrictions on transfer of such Certificate set
forth in this Agreement. In connection with any
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transfer of Certificates, each Certificateholder agrees by its acceptance of the
Certificates to furnish the Registrar or the Trustee such certifications, legal
opinions or other information as either of them may reasonably require to
confirm that such transfer is being made pursuant to an exemption from, or a
transaction not subject to, the registration requirements of the Securities Act;
provided that neither the Trustee nor the Registrar shall be required to
determine the sufficiency of any such certifications, legal opinions or other
information.
Until such time as no Certificates remain Outstanding, the Registrar
shall retain copies of all letters, notices and other written communications
received pursuant to Section 3.05 or this Section 3.06. The Trustee, if not the
Registrar at such time, shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Registrar.
Section 3.07. 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, in authorized denominations and of like Fractional Undivided
Interest and bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Certificate under this
Section 3.07, 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 3.07 shall
constitute conclusive evidence of the appropriate Fractional Undivided Interest
in the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Trustee, the Registrar and any
Paying Agent 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 Article IV and for all
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other purposes whatsoever, and none of the Trustee, the Registrar or any Paying
Agent shall be affected by any notice to the contrary.
Section 3.09. Cancellation. All Certificates surrendered for payment
or transfer or exchange shall, if surrendered to the Trustee or any agent of the
Trustee other than the Registrar, be delivered to the Registrar for cancellation
and shall promptly be cancelled by it. No Certificates shall be authenticated in
lieu of or in exchange for any Certificates cancelled as provided in this
Section, except as expressly permitted by this Agreement. All cancelled
Certificates held by the Registrar shall be destroyed and a certification of
their destruction delivered to the Trustee.
Section 3.10. Limitation of Liability for Payments. All payments and
distributions made to Certificateholders 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 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 to the extent available for distribution to such
Certificateholder as provided in this Agreement.
Section 3.11. Temporary Certificates. Until definitive Certificates
are ready for delivery, the Trustee shall authenticate temporary Certificates.
Temporary Certificates shall be substantially in the form of definitive
Certificates but may have insertions, substitutions, omissions and other
variations determined to be appropriate by the officers executing the temporary
Certificates, as evidenced by their execution of such temporary Certificates. If
temporary Certificates are issued, the Trustee will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
office or agency of the Trustee designated for such purpose pursuant to Section
7.12, without charge to the Certificateholder. Upon surrender for cancellation
of any one or more temporary Certificates, the Trustee shall execute,
authenticate and deliver in exchange therefor a like face amount of definitive
Certificates of authorized denominations. Until so exchanged, the temporary
Certificates shall be entitled to the same benefits under this Agreement as
definitive Certificates.
Section 3.12. ERISA Restrictive Legend. All Certificates issued
pursuant to this Agreement shall bear a legend to the following effect (the
"ERISA Legend") unless the Company and the Trustee determine otherwise
consistent with applicable law:
"BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS FOR THE BENEFIT OF
THE COMPANY AND EACH OWNER PARTICIPANT THAT (A) IT IS NOT A PLAN TRANSFEREE (AS
DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR (B) ONE OR MORE PROHIBITED
TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS APPLIES SUCH THAT THE USE OF
PLAN ASSETS TO PURCHASE AND HOLD THIS PASS THROUGH CERTIFICATE WILL
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NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975
OF THE CODE. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF
THE FOREGOING RESTRICTIONS."
By acceptance of any Certificate bearing the ERISA Legend, each
Holder of such a Certificate acknowledges for the benefit of the Company and
each Owner Participant the restrictions on transfer of such Certificate set
forth in this Agreement and agrees that it will transfer such Certificate only
as provided in this Agreement. The Registrar shall not register a transfer of
any Certificate unless such transfer complies with the restrictions on transfer,
if any, of such Certificate set forth in this Agreement.
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 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, 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 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 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 Loan Trustee to which an
Equipment Note relates such Equipment Note on the date of its stated final
maturity or, in the case of any Equipment Note which is to be redeemed in whole
pursuant to the relevant Indenture, on the applicable redemption date under such
Indenture.
Section 4.02. Distributions from Certificate Account and Special
Payments Account. (a) On each Regular Distribution Date or as soon thereafter as
the Trustee has confirmed receipt of the payment of the Scheduled Payments due
on such date, the
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Trustee shall distribute out of the Certificate Account the entire amount
deposited therein pursuant to Section 4.01(a). There shall be so distributed to
each Certificateholder of record 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
Fractional Undivided Interest in the Trust held by such Certificateholder) of
the total amount in the Certificate Account, except that, with respect to
Certificates registered on the Record Date in the name of the nominee of the
Depositary (initially, such nominee to be Cede & Co.), such distribution shall
be made by wire transfer in immediately available funds to the account
designated by such nominee.
(b) On each Special Distribution Date with respect to any Special
Payment or as soon thereafter as the Trustee has confirmed receipt of any
Special Payments, the Trustee shall distribute out of the 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 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 Trust held by such Certificateholder) of the aggregate amount in
the Special Payments Account on account of such Special Payment, except that,
with respect to Certificates registered on the Record Date in the name of the
nominee of the Depositary (initially, such nominee to be Cede & Co.), such
distribution shall be made by wire transfer in immediately available funds to
the account designated by such nominee.
(c) The Trustee shall, at the expense of the Company, cause notice
of each Special Payment to be mailed to each Certificateholder at his address as
it appears in the Register. In the event of redemption, prepayment or purchase
of Equipment Notes held in the Trust, such notice shall be mailed not less than
15 days prior to the date any 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 (which notice, in the case of a Special Redemption Premium,
shall include a copy of the notice delivered by the Escrow Paying Agent under
Section 2.06 of the Escrow Agreement). Notices mailed by the Trustee shall set
forth:
(i) the Special Distribution Date and the Record Date therefor
(except as otherwise provided in Section 11.01),
(ii) the amount of the Special Payment for each $1,000 face amount
Certificate (taking into account any payment to be made by the Company
pursuant to Section 2.02) and the amount thereof constituting principal,
premium, if any, and interest,
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(iii) the reason for the Special Payment, and
(iv) if the Special Distribution Date is the same date as a Regular
Distribution Date, the total amount to be received on such date for each
$1,000 face amount Certificate.
If the amount of (x) premium, if any, payable upon the redemption, prepayment or
purchase of an Equipment Note or (y) Special Redemption Premium has not been
calculated at the time 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 such premium or Special Redemption Premium, as the case may
be, received will also be distributed.
If any redemption of the Equipment Notes held in the Trust is
cancelled, the Trustee, as soon as possible after learning thereof, shall cause
notice thereof to be mailed to each Certificateholder at its address as it
appears on the Register.
Section 4.03. Statements to Certificateholders. (a) On each
Distribution Date, the Trustee will include with each distribution to
Certificateholders of a Scheduled Payment or Special Payment, as the case may
be, a statement setting forth the information provided below (in the case of a
Special Payment, including any Special Redemption Premium, reflecting in part
the information provided by the Escrow Paying Agent under the Escrow Agreement).
Such statement shall set forth (per $1,000 face amount Certificate as to (ii),
(iii), (iv) and (v) below) the following information:
(i) the aggregate amount of funds distributed on such Distribution
Date under the Agreement and under the Escrow Agreement, indicating the
amount allocable to each source;
(ii) the amount of such distribution under the Agreement allocable
to principal and the amount allocable to premium (including the Special
Redemption Premium), if any;
(iii) the amount of such distribution under the Agreement allocable
to interest;
(iv) the amount of such distribution under the Escrow Agreement
allocable to interest;
(v) the amount of such distribution under the Escrow Agreement
allocable to Deposits; and
(vi) the Pool Balance and the Pool Factor.
With respect to the Certificates registered in the name of a
Clearing Agency or its nominee, on the record date prior to each Distribution
Date, the Trustee
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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 Trustee will mail to each such Clearing
Agency Participant the statement described above and will make available
additional copies as requested by such Clearing Agency Participant for
forwarding to holders of Certificates.
(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), (a)(ii), (a)(iii), (a)(iv) and (a)(v)
above with respect to the 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 a Clearing Agency or its nominee, such report and such other items shall be
prepared on the basis of information supplied to the Trustee 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.
(c) Utilizing information provided by Midway, promptly following (i)
the Delivery Period Termination Date, if there has been any change in the
information set forth in clauses (x), (y) and (z) below from that set forth in
page 65 of the Offering Memorandum, and (ii) any early redemption or purchase
of, or any default in the prepayment of principal or interest in respect of, any
of the Equipment Notes held in the Trust, or any Final Withdrawal, the Trustee
shall furnish to Certificateholders of record on such date a statement setting
forth (x) the expected Pool Balances for each subsequent Regular Distribution
Date following the Delivery Period Termination Date, (y) the related Pool
Factors for such Regular Distribution Dates and (z) the expected principal
distribution schedule of the Equipment Notes, in the aggregate, held as Trust
Property at the date of such notice. With respect to the Certificates registered
in the name of a Clearing Agency, on the Delivery Period Termination Date, the
Trustee will request from such Clearing Agency a securities position listing
setting forth the names of all Clearing Agency Participants reflected on such
Clearing Agency's books as holding interests in the Certificates on such date.
The Trust 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.
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
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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 gross negligence (or simple negligence in the handling of
funds) 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 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 (i) organized and validly existing under the laws of the United States
of America or any state thereof or the District of Columbia, (ii) a
"citizen of the United States" (as defined in Section 40102(a)(15) of
Title 49 of the United States Code) and (iii) a United States certificated
air carrier, if and so long as such status is a condition of entitlement
to the benefits of Section 1110 of the Bankruptcy Reform Act of 1978, as
amended (11 U.S.C. ss. 1110), with respect to the Aircraft;
(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 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 this Agreement, the Other Pass Through Trust Agreements, the
Participation Agreements, and each other Note Document to be performed or
observed by the Company;
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(c) immediately after giving effect to such transaction, no Event of
Default (as defined in any Lease or any Indenture relating to an Owned
Aircraft), shall have occurred and be continuing; and
(d) the Company shall have delivered to the Trustee an Officer's
Certificate of the Company and an Opinion of Counsel of the Company
reasonably satisfactory to the Trustee, each stating that such
consolidation, merger, conveyance, transfer or lease and the assumption
agreement mentioned in clause (b) above comply with this Section 5.02 and
that all conditions precedent herein provided for relating to such
transaction have been complied with.
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 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 this Agreement or any Financing Document 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 the Intercreditor
Agreement.
(b) Purchase Rights of Certificateholders. 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 Section 6.01(b)(i) of the Class B Trust
Agreement or any purchase of the Class A Certificates and the Class B
Certificates pursuant to Section 6.01(b)(i) of 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 by notifying in writing each of the
Other Trustees and each other Certificateholder of such Certificateholder's
intention to purchase the Class A Certificates, the Class B Certificates and the
Class C Certificates ten days after the date of such notification, 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
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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 principal amount of the Certificates held by each such
Certificateholder and (B) if prior to the end of such ten-day period any other
Certificateholder fails to notify the purchasing Certificateholder of such other
Certificateholder's desire to participate in such a purchase, then such other
Certificateholder shall lose its right to purchase the Class A Certificates, the
Class B Certificates and the Class C Certificates pursuant to this Section
6.01(b).
The purchase price with respect to each Class of Certificates shall
be equal to the Pool Balance of such Class of Certificates, 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 of such Class under this Agreement, the Intercreditor
Agreement, the Escrow Agreement or any Note Document or on or in respect of the
Certificates of such Class; provided, however, that (i) if such purchase occurs
after the record date specified in Section 2.03(b) of the Escrow Agreement
relating to the distribution of unused Deposits and accrued and unpaid interest
thereunder, such purchase price shall be reduced by the aggregate amount of
unused Deposits and interest to be distributed under the Escrow Agreement (which
deducted amounts shall remain distributable to, and may be retained by the
Certificateholder of such Class as of such record date) and (ii) if such
purchase occurs after a Record Date, such purchase price shall be reduced by the
amount to be distributed hereunder on the related Distribution date (which
deducted amounts shall remain distributable to, and may be retained by, the
Certificateholder of such Class as of such Record Date); provided further that
no such purchase of Certificates of any Class shall be effective unless the
purchaser shall certify to the Other Trustee for such Class that
contemporaneously with such purchase, such purchaser is purchasing, pursuant to
the terms of this Agreement and the Other Pass Through Trust Agreements, the
Class A Certificates, the Class B Certificates and the Class C Certificates.
Each payment of the purchase price of the Certificates of any Class referred to
in the first sentence hereof shall be made to an account or accounts designated
by the Other Trustee for such Class and each such purchase shall be subject to
the terms of this Section 6.01(b). The Class A Certificates, Class B
Certificates and the Class C Certificates will be deemed to be purchased on the
date payment of the purchase price is made notwithstanding the failure of the
Certificateholders of any Class to deliver any Certificates of such Class
(whether in the form of Physical Certificates or beneficial interests in Global
Certificates) and, upon such a purchase, (i) the only rights of the
Certificateholders of such Class will be to deliver the Certificates of such
Class to the purchaser and receive the purchase price for the Certificates of
such Class and (ii) if the purchaser shall so request, such Certificateholder
will comply with all the provisions of Section 3.04 of the Other Pass Through
Trust Agreement for such Class to enable new Certificates of such Class 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 of any
Class shall be borne by the purchaser thereof.
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As used in this Section 6.01(b), the terms "Certificateholder",
"Class", "Class A Certificate", "Class B Certificate", and "Class D
Certificate", shall have the respective meanings assigned to such terms in the
Intercreditor Agreement.
Section 6.02. Incidents of Sale of Equipment Notes. Upon any sale of
all or any part of the Equipment Notes made either under the power of sale given
under this Agreement or otherwise for the enforcement of this Agreement, the
following shall be applicable:
(1) Certificateholders and Trustee May Purchase Equipment Notes. Any
Certificateholder, the Trustee in its individual or any other capacity or
any other Person may bid for and purchase any of the Equipment Notes, and
upon compliance with the terms of sale, may hold, retain, possess and
dispose of such Equipment Notes in their own absolute right without
further accountability.
(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 received by
the Trustee from the Subordination Agent pursuant to the Intercreditor
Agreement upon any sale made either under the power of sale given by this
Agreement or otherwise for the enforcement of this Agreement shall 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 of the principal of,
premium, if any, or interest on any Equipment Note, or if there shall be any
failure to pay Rent (as defined in the relevant Lease) under any Lease when due
and payable, then the Trustee, in its own name and as trustee of an express
trust, as holder of such Equipment Notes, to the extent permitted by and in
accordance with the terms of the Intercreditor Agreement and the Financing
Documents (subject to the rights of the applicable Owner Trustee or Owner
Participant to cure any such failure in accordance with Section 8.03 of any
applicable Indenture relating to a Leased Aircraft), shall be entitled and
empowered to institute any suits, actions or proceedings at law, in equity or
otherwise, for the collection of the sums so due and unpaid on such Equipment
Notes or under such Lease and may prosecute any such claim or proceeding to
judgment or final decree with respect to the whole amount of any such sums so
due and unpaid.
Section 6.04. Control by Certificateholders. Subject to Section 6.03
and the Intercreditor Agreement, the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the
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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 the Trust
or pursuant to the terms of the Intercreditor Agreement, or exercising any trust
or power conferred on the Trustee under this Agreement or the Intercreditor
Agreement, including any right of the Trustee as Controlling Party under the
Intercreditor Agreement or as holder of the Equipment Notes, provided that
(1) such Direction shall not 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 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 the Intercreditor
Agreement, the Certificateholders holding Certificates 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 Loan 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 Loan
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, 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 or X cannot be modified or amended without the consent of each
Certificateholder holding an Outstanding Certificate affected thereby.
Upon any such waiver, such default shall cease to exist with respect
to the Certificates 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 to the relevant Loan 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
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the Equipment Notes issued under the relevant Indenture to waive the
corresponding Indenture Default.
Section 6.06. Right of Certificateholders to Receive Payments Not to
Be Impaired. Anything in this Agreement to the contrary notwithstanding,
including, without limitation, Section 6.07 hereof, but subject to the
Intercreditor Agreement, the right of any Certificateholder to receive
distributions of payments required pursuant to Section 4.02 hereof on the
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 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) Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than 25% of the 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 7.03(e);
(3) the Trustee shall have refused or neglected to institute such an
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 shall have
been given to the Trustee during such 60-day period by Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating
not less than a majority in interest in the Trust.
It is understood and intended that no one or more of the
Certificateholders shall have any right in any manner whatsoever hereunder or
under the Certificates to (i) surrender, impair, waive, affect, disturb or
prejudice any property in the Trust Property or the lien of any Indenture on any
property subject thereto, or the rights of the Certificateholders or the holders
of the Equipment Notes, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Certificateholder 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 subject to the
provisions of this Agreement.
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Section 6.08. Remedies Cumulative. Every remedy given hereunder to
the Trustee or to any of the Certificateholders 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. Certain Duties and Responsibilities. (a) Except during
the continuance of an Event of Default, the Trustee undertakes to perform only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Trustee.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of its
own affairs.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own gross negligence (or simple negligence in the
handling of funds) or wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section; and
(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts.
(d) Whether or not herein expressly so provided, every provision of
this Trust Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
Section 7.02. 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
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below) hereunder known to the Trustee, the Trustee shall transmit by mail to the
Company, the Owner Trustees, the Owner Participants, the Loan Trustees and the
Certificateholders 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, premium, if any, or interest on any
Equipment Note or any other Trust Property, 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. For the purpose of this Section, the term
"default" means any event that is, or after notice or lapse of time or both
would become, an Event of Default.
Section 7.03. 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 the
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
Officer's Certificate of the Company, any Owner Trustee or any Loan
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 the Intercreditor
Agreement at the request or direction of any of the Certificateholders
pursuant to this Agreement or the 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;
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(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, 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 the Intercreditor Agreement or perform any duties under this
Agreement or the 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 the Intercreditor Agreement;
(h) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction of the Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in
interest in the 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 the
Intercreditor Agreement; and
(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.
Section 7.04. Not Responsible for Recitals or Issuance of
Certificates. The recitals contained herein and in the Certificates, 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 7.15, the Trustee makes no representations as to the validity
or sufficiency of this Agreement, any Participation Agreement, the Escrow
Agreement, the Deposit Agreement, any Equipment Notes, the Certificates or any
other Note Document, except that the Trustee hereby represents and warrants that
this Agreement has been, and the Intercreditor Agreement, each Note Document and
each Certificate will be, executed, authenticated and delivered by one of its
officers who is duly authorized to execute, authenticate and deliver such
document on its behalf.
Section 7.05. 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, if
applicable, may otherwise deal with the Company, the Owner Trustees or the Loan
Trustees with the same rights it would have if it were not Trustee, Paying
Agent, Registrar or such other agent.
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Section 7.06. Money Held in Trust. Money held by the Trustee or the
Paying Agent in trust hereunder need not be segregated from other funds except
to the extent required herein or by law and neither the Trustee nor the Paying
Agent shall have any liability for interest upon any such moneys except as
provided for herein.
Section 7.07. Compensation and Reimbursement. The Company agrees:
(1) to pay, or cause to be paid, to the Trustee from time to time
compensation (as set out in a separate fee agreement between the Trustee
and the Company) 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 herein, 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 Agreement or the
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 own
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 7.15;
(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 gross negligence (or
simple negligence in the handling of funds), 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 7.15. 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 (which consent shall not be
unreasonably withheld) and the Company will pay the reasonable fees and
expenses of such counsel. The Company need not pay for any settlement made
without its consent; and
(4) to indemnify, or cause to be indemnified, the Trustee, solely in
its individual capacity, for, and to hold it harmless against, any tax
(except to the extent the Trustee is reimbursed therefor pursuant to the
next paragraph, provided that no indemnification shall be available with
respect to any tax attributable to the Trustee's compensation for serving
as such) incurred without negligence, willful misconduct or bad faith, on
its part, arising out of or in connection with the acceptance or
administration of this Trust, including any
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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 cooperate in the defense. The
Trustee, in its individual capacity, may have separate counsel with the
consent of the Company (which consent shall not be unreasonably withheld)
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 upon, the Trust Property for any tax incurred
without gross negligence (or simple negligence in the handling of funds), 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. If the Trustee
reimburses itself from the Trust Property of such Trust for any such tax, it
will mail a brief report within 30 days setting forth the circumstances thereof
to all Certificateholders as their names and addresses appear in the Register.
Section 7.08. Corporate Trustee Required; Eligibility. There shall
at all times be a Trustee hereunder 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 $75,000,000 (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 and having a combined capital
and surplus of at least $75,000,000). If such corporation publishes reports of
conditions at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section 7.08, 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 7.08 to act as Trustee, the
Trustee shall resign immediately as Trustee in the manner and with the effect
specified in Section 7.09.
Section 7.09. Resignation and Removal; Appointment of Successor. (a)
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 7.10.
(b) The Trustee may resign at any time as trustee by giving prior
written notice thereof to the Company, the Authorized Agents, the Owner Trustees
and
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the Loan Trustees. In addition, upon the occurrence of an Event of Default, in
the event the Trustee shall not have received instructions from the
Certificateholders or the Certificateholders with respect to any Other Trust,
the Trustee shall resign. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Company, the Authorized Agents, the Owner
Trustees, the Loan 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 by Act of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Trustee, the Company, the Owner Trustees and the Loan Trustees.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 310 of the Trust
Indenture Act, if applicable, after written request therefor by the
Company or by any Certificateholder who has been a bona fide
Certificateholder for at least six months; or
(2) the Trustee shall cease to be eligible under Section 7.08 and
shall fail to resign after written request therefor by the Company or by
any such Certificateholder; or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any case, (i) the Company may remove the Trustee or (ii) any
Certificateholder who has been a bona fide Certificateholder for at least six
months may, on behalf of itself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
(e) If a Responsible Officer of the Trustee shall obtain actual
knowledge of an Avoidable Tax 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 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 in a jurisdiction where there
are no Avoidable Taxes.
(f) If the Trustee shall resign, be removed or become incapable of
acting as trustee or if a vacancy shall occur in the office of the Trustee for
any cause, the Company shall promptly appoint a successor Trustee. If, within 90
days after such
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resignation, removal or incapability, or other occurrence of such vacancy, a
successor Trustee shall be appointed by Act of the Certificateholders holding
Certificates evidencing Fractional Undivided Interests aggregating not less than
a majority in interest in the Trust delivered to the Company, the Owner
Trustees, the Loan Trustees and the retiring Trustee, and the Company approves
such appointment, which approval shall not be unreasonably withheld, then the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee and supersede the successor Trustee
appointed as provided above. If no successor Trustee shall have been so
appointed as provided above and accepted appointment in the manner hereinafter
provided, any Certificateholder 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 appointment of a successor
Trustee.
(g) The successor Trustee 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 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 7.10. Acceptance of Appointment by Successor. Every
successor Trustee appointed hereunder shall execute and deliver to the Company,
the Authorized Agents, the Owner Trustees and the Loan Trustees and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee 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 Trust Property held
by such retiring Trustee hereunder, subject nevertheless to its lien, if any,
provided for in Section 7.07 and the retiring Trustee shall thereupon be
released from further liability hereunder. 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.
No institution shall accept its appointment as a Trustee hereunder
unless at the time of such acceptance such institution shall be qualified and
eligible under this Article VII.
Section 7.11. 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
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to all or substantially all of the corporate trust business of the Trustee,
shall be the successor of the Trustee hereunder, provided such corporation shall
be otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties hereto.
In case any Certificates shall have been executed or authenticated, but not
delivered, by the Trustee then in office, any successor by merger, conversion or
consolidation to such authenticating Trustee may adopt such execution or
authentication and deliver the Certificates so executed or authenticated with
the same effect as if such successor Trustee had itself executed or
authenticated such Certificates.
Section 7.12. Maintenance of Agencies. (a) There shall at all times
be maintained an office or agency where Certificates 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 may be served. 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. Each such Authorized Agent shall be
a bank or trust company, shall be a corporation organized and doing business
under the laws of the United States or any state, with a combined capital and
surplus of at least $75,000,000, or a corporation having a combined capital and
surplus in excess of $5,000,000, the obligations of which are guaranteed by a
corporation organized and doing business under the laws of the United States or
any state, with a combined capital and surplus of at least $75,000,000, and
shall be authorized under such laws to exercise corporate trust powers, subject
to supervision by federal or state authorities. The Trustee shall initially be
the Paying Agent and, as provided in Section 3.04, Registrar hereunder with
respect to the Certificates. 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, the Owner Trustees and the
Loan 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
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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, the Owner Trustees and the Loan Trustees; and in each case the Trustee
shall mail notice of such appointment to all Certificateholders as their names
and addresses appear on the Register.
(e) The Company agrees to pay, or cause to be paid, from time to
time to each Authorized Agent reasonable compensation for its services and to
reimburse it for its reasonable expenses.
Section 7.13. 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 7.14. Registration of Equipment Notes in Name of
Subordination Agent. The Trustee agrees that all Equipment Notes to be purchased
by the Trust shall be issued in the name of the Subordination Agent or its
nominee and held by the Subordination Agent in trust for the benefit of the
Certificateholders, or, if not so held, the 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 7.15. Representations and Warranties of Trustee. The Trustee
hereby represents and warrants that:
(a) the Trustee has full power, authority and legal right to receive
the Trust Property assigned by the Related Trustee, assume the obligations
under, and perform, the Assignment and Assumption Agreement, this
Agreement, the Intercreditor Agreement, the Escrow Agreement and the Note
Documents and has taken all necessary action to authorize such receipt,
assumption and performance by it of this Agreement, the Intercreditor
Agreement, the Escrow Agreement and the Note Documents to which it is a
party;
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(b) the receipt of the Trust Property under the Assignment and
Assumption Agreement and the performance by the Trustee of the Assignment
and Assumption Agreement, this Agreement, the Intercreditor Agreement, the
Escrow Agreement and the Note Documents (i) will not violate any provision
of any United States law or Maryland law or any order, writ, judgement, or
decree of any court, arbitrator or governmental authority of the United
States or the State of Maryland applicable to the Trustee or any of its
assets, (ii) will not violate any provision of the articles or by-laws of
the Trustee, or (iii) will not violate any provision of, or constitute,
with or without notice or lapse of time, a default under, or result in the
creation or imposition of any lien on any properties included in the Trust
Property pursuant to the provisions of any mortgage, indenture, contract,
agreement or other undertaking to which it is a party, which violation,
default or lien could reasonably be expected to have an adverse effect on
the Trustee's performance or ability to perform its duties hereunder or
thereunder or on the transactions contemplated herein or therein;
(c) the receipt of the Trust Property under the Assignment and
Assumption Agreement and the performance by the Trustee of the Assignment
and Assumption Agreement, this Agreement, the Intercreditor Agreement, the
Escrow Agreement and the Note Documents 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 the United Sates where it is located regulating the banking and
corporate trust activities of the Trustee; and
(d) the Assignment and Assumption Agreement has been duly executed
and delivered by the Trustee and this Agreement, the Intercreditor
Agreement, the Escrow Agreement and the Note Documents have been, or will
be, as applicable, duly executed and delivered by the Trustee and
constitute, or will constitute, as applicable, the legal, valid and
binding agreements of the Trustee, enforceable against it in accordance
with their respective terms; provided, however, 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 7.16. Withholding Taxes; Information Reporting. (a) The
Trustee, as trustee of the 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
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 present or future taxes or similar charges are required to be withheld with
respect to any amounts payable in respect of the Certificates, to withhold such
amounts and timely pay the same to the appropriate authority in the name of and
on behalf of the Certificateholders, 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
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Certificateholder appropriate documentation showing the payment thereof,
together with such additional documentary evidence as such Certificateholders
may reasonably request from time to time. The Trustee agrees to file any other
information reports as may be required to be filed by it under United States
law.
(b) The Trustee may satisfy certain of its obligations with respect
to this Agreement by retaining, at the expense of the Company, a firm of
independent public accountants (the "Accountants") which shall (i) be
responsible for all tax filing requirements and (ii) perform the obligations of
the Trustee in respect of tax filing requirements. The Trustee shall be deemed
to have discharged its tax filing obligations under this Agreement upon its
retention of the Accountants, and, if the Trustee shall have selected in the
Accountants in good faith and without gross negligence, the Trustee shall not
have any liability with respect to the default or misconduct of the Accountants.
(c) The Trustee, at the request (and expense) of the Company, will
make such United States federal income tax elections as may be necessary to
prevent the Trust from being classified for federal income tax purposes as an
association taxable as a corporation.
Section 7.17. Trustee's Liens. The Trustee in its individual
capacity agrees that it will 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 which is attributable to the
Trustee either (i) in its individual capacity and which is unrelated to the
transactions contemplated by this Agreement, the Intercreditor Agreement, the
Note Purchase Agreement or the Note Documents, or (ii) as Trustee hereunder or
in its individual capacity and which arises out of acts or omissions which are
not contemplated by this Agreement.
Section 7.18. 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 or cause to be
furnished 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
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may reasonably require, of all information in the possession or control of the
Company as to the names and addresses of the Certificateholders, 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, 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 7.12.
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 contained
in the most recent list furnished to the Trustee as provided in Section 7.12 or
Section 8.01, as the case may be, and the names and addresses of
Certificateholders 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
7.12 or Section 8.01, as the case may be, upon receipt of a new list so
furnished.
Section 8.03. Reports by Trustee. Within 60 days after May 15 of
each year commencing with the first full year following the issuance of the
Certificates, the Trustee shall transmit to the Certificateholders, 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;
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(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; and
(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 regard to any period of grace
or requirement of notice provided under this Agreement).
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 (and at the sole cost and expense of the Company), enter into one or
more agreements supplemental hereto or, if applicable, to the Escrow Agreement,
the Deposit Agreement, the Note Purchase Agreement, the Intercreditor Agreement
or the Liquidity Facility in form and substance satisfactory to the Trustee, for
any of the following purposes:
(1) 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 in the Note Purchase Agreement; or
(2) to add to the covenants of the Company for the benefit of the
Certificateholders, or to surrender any right or power in this Agreement
or in the Note Purchase Agreement conferred upon the Company; or
(3) to correct or supplement any provision in this Agreement, the
Escrow Agreement, the Deposit Agreement, the Note Purchase Agreement, the
Intercreditor Agreement or the Liquidity Facility which may be defective
or inconsistent with any other provision of this Agreement, the Deposit
Agreement, the Escrow Agreement, the Note Purchase Agreement, the
Intercreditor Agreement or any Liquidity Facility, as applicable, or to
cure any ambiguity or to modify any other provisions with respect to
matters or questions arising under this Agreement, the Escrow Agreement,
the Note Purchase Agreement, the Deposit Agreement, the Intercreditor
Agreement or the Liquidity Facility, provided that any such action shall
not materially adversely affect the interests of the Certificateholders;
or
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(4) as provided in the Intercreditor Agreement, to give effect to or
provide for a Replacement Liquidity Facility or to comply with any
requirement of the Commission, any applicable law, rules or regulations of
any exchange or quotation system on which the Certificates are listed, or
any regulatory body;
(5) to modify, eliminate or add to the provisions of this Agreement,
the Deposit Agreement, the Escrow Agreement, the Intercreditor Agreement,
the Note Purchase Agreement or the Liquidity Facility to such extent as
shall be necessary to qualify or continue the qualification of this
Agreement under the Trust Indenture Act, or any similar federal statute
enacted after the execution of this Agreement, and to add to this
Agreement, the Deposit Agreement, the Escrow Agreement, the Intercreditor
Agreement, the Note Purchase Agreement or the Liquidity Facility such
provisions as may be expressly permitted by the Trust Indenture Act; and
(6) to evidence and provide for the acceptance of appointment under
this Agreement, the Deposit Agreement, the Escrow Agreement, the
Intercreditor Agreement, the Note Purchase Agreement or the Liquidity
Facility of a successor Trustee and to add or change any of the provisions
of this Agreement, the Deposit Agreement, the Escrow Agreement, the
Intercreditor Agreement, the Note Purchase Agreement or the Liquidity
Facility as shall be necessary to provide for or facilitate the
administration of the Trust under this Agreement by more than one Trustee,
provided that in each case, such modification or supplement 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 9.02. Supplemental Agreements with Consent of
Certificateholders. With the consent of the Certificateholders holding
Certificates evidencing Fractional Undivided Interests aggregating not less than
a majority in interest in the Trust, by Act of said Certificateholders delivered
to the Company and the Trustee, the Company may, and the Trustee (subject to
Section 9.03) shall, at the sole cost and expense of the Company, 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, the Deposit Agreement, the Escrow Agreement, the Intercreditor
Agreement, the Liquidity Facility or the Note Purchase Agreement to the extent
applicable to such Certificateholders or of modifying in any manner the rights
and obligations of such Certificateholders under this Agreement, the Deposit
Agreement, the Escrow Agreement, the Intercreditor Agreement, the Liquidity
Facility or the Note Purchase 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 (or, with respect to the Deposits, the
Receiptholders) of
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payments on the Deposits or Equipment Notes held in the Trust or
distributions that are required to be made herein on any Certificate, or
change any date of payment of any Certificate, or change the place of
payment where, or the coin or currency in which, any Certificate is
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 included in the
Trust Property except as permitted by this Agreement, or otherwise deprive
such Certificateholder of the benefit of the ownership of the Equipment
Notes in the Trust; or
(3) alter the priority of distributions specified in the
Intercreditor Agreement in a manner materially adverse to the interests of
the Certificateholders;
(4) modify any of the provisions of this Section 9.02 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 affected thereby;
(5) modify any of the provisions relating to the rights of the
Certificateholders in respect of the waiver of Events of Default or
receipt of payment; or
(6) adversely affect the status of this 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.
It shall not be necessary for any Act of 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 Agreement, the Trustee may in its
discretion decline to execute such document.
Section 9.04. Execution of Supplemental Agreements. In executing, or
accepting the additional trusts created by, any supplemental agreement permitted
by this Article or the modifications thereby of the trusts created by this
Agreement, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental agreement is authorized or permitted by this Agreement.
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Section 9.05. Effect of Supplemental Agreements. Upon the execution
of any agreement supplemental to this Agreement under this Article, this
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every
Certificateholder theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
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 authenticated and delivered after the execution of any supplemental
agreement 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 after
proper presentation and demand.
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01 Amendments and Supplement to Indentures and Other Note
Documents. In the event that the Trustee, as holder (or beneficial owner through
the Subordination Agent) of any Equipment Note in trust for the benefit of the
Certificateholders or as Controlling Party, receives a request for a consent to
any amendment, modification, waiver or supplement under any Indenture or other
Note Document or other related document, the Trustee shall forthwith send a
notice of such proposed amendment, modification, waiver or supplement to each
Certificateholder registered on the Register as of the date of such notice. The
Trustee shall request from the Certificateholders a Direction as to (a) whether
or not to take or refrain from taking (or to direct the Subordination Agent to
take or refrain from taking) any action which a holder of such Equipment Note or
the Controlling Party has the option to direct, (b) whether or not to give or
execute (or to direct the Subordination Agent to give or execute) any waivers,
consents, amendments, modifications or supplements as a holder of such Equipment
Note or as Controlling Party and (c) how to vote or direct the Subordination
Agent 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 (or in directing the Subordination Agent in any of
the foregoing), (i) other than as Controlling Party, 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 (x) the aggregate face amount of all Certificates
actually voted in favor of or for giving consent to such action by such
direction of Certificateholders to (y) the aggregate face amount of all
outstanding Certificates of the Trust and (ii) as the Controlling Party, the
Trustee shall vote as directed in such Certificateholder direction
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by the Certificateholders evidencing fractional undivided interests aggregating
not less than a majority in interest in the Trust. 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 prior to two Business Days
before the Trustee directs such action or casts such vote or gives such consent.
Notwithstanding the foregoing, but subject to Section 6.04 and the Intercreditor
Agreement, the Trustee may, in its own discretion and at its own direction,
consent and notify the relevant Loan Trustee of such consent (or direct the
Subordination Agent to consent and notify the relevant Loan Trustee of such
consent) to any amendment, modification, waiver or supplement under the relevant
Indenture or any other Note Document or other related document, if an Event of
Default hereunder shall have occurred and be continuing, or if such amendment,
modification or waiver will not materially adversely affect the interests of the
Certificateholders.
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust. The respective obligations
and responsibilities of the Company and the Trustee with respect to the Trust
shall terminate upon distribution to all Certificateholders 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; provided,
however, that in no event shall the Trust continue beyond one hundred ten (110)
years following the date of the execution of this Agreement.
Notice of any termination, specifying the Distribution Date upon
which the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be mailed promptly by
the Trustee to Certificateholders not earlier than the 60th day and not later
than the 15th day next preceding such final Distribution Date specifying (A) the
Distribution Date upon which the proposed final payment of the Certificates will
be made upon presentation and surrender of Certificates at the office or agency
of the Trustee therein specified, (B) the amount of any such proposed final
payment, and (c) that the Record Date otherwise applicable to such Distribution
Date is not applicable, payments being made only upon presentation and surrender
of the Certificates at the office or agency of the Trustee therein specified,
(B) the amount of any such proposed final payment, and (c) that the Record Date
otherwise applicable to such Distribution Date is not applicable, payments being
made only upon presentation and surrender of the Certificates 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. Upon
presentation and surrender of the Certificates in accordance with such notice,
the Trustee shall cause to be distributed to Certificateholders such final
payments.
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<PAGE>
In the event that all of the Certificateholders 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 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 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 Loan Trustee the appropriate amount of money relating
to such Loan Trustee and shall give written notice thereof to the related Owner
Trustees, the Owner Participants and the Company.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the 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. Certificates Nonassessable and Fully Paid. Except as
set forth in the last sentence of this Section 12.02, Certificateholders shall
not be personally liable for obligations of the Trust, the Fractional Undivided
Interests represented by the Certificates shall be nonassessable for any losses
or expenses of the Trust or for any reason whatsoever, and Certificates, upon
authentication thereof by the Trustee pursuant to Section 3.03, are and shall be
deemed fully paid. No Certificateholder shall have any right (except as
expressly provided herein) to vote or in any manner otherwise control the
operation and management of the Trust Property, the Trust, or the obligations of
the parties hereto, nor shall anything set forth herein, or contained in the
terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association.
Neither the existence of the Trust nor any provision herein is intended to or
shall limit the liability the Certificateholders would otherwise incur if the
Certificateholders owned Trust Property as co-owners, or incurred any
obligations of the Trust, directly rather than through the Trust.
Section 12.03. Notices. (a) Unless otherwise specifically provided
herein, all notices required under the terms and provisions of this Agreement
shall be in English and in writing, and any such notice may be given by United
States mail, courier
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<PAGE>
service or telecopy, and any such notice shall be effective when delivered or
received or, if mailed, three days after deposit in the United States mail with
proper postage for ordinary mail prepaid,
if to the Company, to:
Midway Airlines Corporation
300 W. Morgan Street, Suite 1200
Durham, North Carolina 27701
Attention: General Counsel
Facsimile: (919) 956-7568
Telephone: (919) 956-4810
if to the Trustee, to:
The First National Bank of Maryland
25 South Charles Street
Mail Code 101-591
Baltimore, Maryland 21201
Attention: Corporate Trust Department
Facsimile: (410) 244-4236
Telephone: (410) 244-4626
(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 shall be
mailed by first-class mail to the addresses for Certificateholders shown on the
Register kept by the Registrar. 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.
(d) If a notice or communication is mailed in the manner provided
above within the time prescribed, it is conclusively presumed to have been duly
given, whether or not the addressee receives it.
(e) If the Company mails a notice or communication to the
Certificateholders, it shall mail a copy to the Trustee and to the Paying Agent
at the same time.
(f) 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.
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<PAGE>
(g) 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 Loan Trustee.
Section 12.04. Governing Law. THIS AGREEMENT AND THE CERTIFICATES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
Section 12.05. 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 the Trust, or of the
Certificates or the rights of the Certificateholders thereof.
Section 12.06. 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 12.07. 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 assigns, whether so
expressed or not.
Section 12.08. Benefits of Agreement. Nothing in this Agreement or
in the Certificates, express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder, and the Certificateholders,
any benefit or any legal or equitable right, remedy or claim under this
Agreement.
Section 12.09. Legal Holidays. In any case where any Regular
Distribution Date or Special Distribution Date relating to any Certificate shall
not be a Business Day, 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 12.10. 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 12.11. Communication by Certificateholders with Other
Certificateholders. Certificateholders may communicate with other
Certificateholders with respect to their rights under this Agreement or the
Certificates pursuant to
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<PAGE>
Section 312(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 12.12. Intention of Parties. The parties hereto intend that
the Trust be classified for U.S. federal income tax purposes as a grantor trust
under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as
amended, and not as a trust or association taxable as a corporation or as a
partnership. Each Certificateholder, by its acceptance of its Certificate or a
beneficial interest therein, agrees to treat the Trust as a grantor trust for
all U.S. federal, state and local income tax purposes. The powers granted and
obligations undertaken pursuant to this Agreement shall be so construed so as to
further such intent.
Section 12.13. Trust Indenture Act Controls. Upon the qualification
of this Agreement under the Trust Indenture Act, this Agreement shall be subject
to the provisions of the Trust Indenture Act and shall, to the extent
applicable, be governed by such provisions. If any provision of this Agreement
limits, qualifies or conflicts with another provision which is required to be
included in this Agreement by the Trust Indenture Act, the required provision
shall control.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first written above.
MIDWAY AIRLINES CORPORATION
By: /s/ Jonathan S. Waller
-------------------------------
Name: Jonathan S. Waller
Title: Senior Vice President
General Counsel
THE FIRST NATIONAL BANK OF
MARYLAND, as Trustee
By: /s/ Robert D. Brown
-------------------------------
Name: Robert D. Brown
Title: Assistant Vice President
-60-
<PAGE>
Exhibit A
FORM OF CERTIFICATE
REGISTERED
No. ______________
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY
MIDWAY AIRLINES CORPORATION ("MIDWAY") OR ANY AFFILIATE OF MIDWAY, RESELL
OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO MIDWAY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
A-1
<PAGE>
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
CERTIFICATE WAS HELD BY MIDWAY OR ANY AFFILIATE OF MIDWAY, THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND MIDWAY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.]*
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS FOR THE BENEFIT OF MIDWAY
AIRLINES CORPORATION AND EACH OWNER PARTICIPANT THAT (A) IT IS NOT A PLAN
TRANSFEREE (AS DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR (B) ONE OR
MORE PROHIBITED TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS APPLIES
SUCH THAT THE USE OF PLAN ASSETS TO PURCHASE AND HOLD THIS PASS THROUGH
CERTIFICATE WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER
ERISA OR SECTION 4975 OF THE CODE. THE PASS THROUGH TRUST AGREEMENT
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
- - --------
* Not to be included on the face of the Permanent Offshore Global
Certificate.
A-2
<PAGE>
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE 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 HEREON 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.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST
AGREEMENT REFERRED TO HEREIN.]*
- - --------
* To be included on the face of each Global Certificate.
A-3
<PAGE>
[GLOBAL CERTIFICATE]*
MIDWAY AIRLINES 1998-1D-S PASS THROUGH TRUST
8.86% Midway Airlines [Initial/Exchange] Pass Through Certificate
Series 1998-1D-S
Final Expected Distribution Date: January 2, 2003
evidencing a fractional undivided interest in a trust, the property of which
includes certain equipment notes each secured by an Aircraft leased to or owned
by Midway Airlines Corporation.
$________ Fractional Undivided Interest
representing .______% of the Trust per $1,000 face amount
THIS CERTIFIES THAT ____________________, for value received, is the
registered owner of a $________ (_________ dollars) Fractional Undivided
Interest in Midway Airlines 1998-1D-S Pass Through Trust (the "Trust") created
pursuant to a Pass Through Trust Agreement, dated as of August 13, 1998 (the
"Agreement"), between The First National Bank of Maryland (the "Trustee") and
Midway Airlines Corporation, a corporation incorporated under Delaware law (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 "8.86%
Midway Airlines [Initial/Exchange] Pass Through Certificates Series 1998-1D-S"
(herein called the "Certificates"). This Certificate is issued under and is
subject to the terms, provisions, and conditions of the Agreement. By virtue of
its acceptance hereof the Certificateholder of this Certificate assents to and
agrees to be bound by the provisions of the Agreement and the Intercreditor
Agreement. 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, among other things, a security interest in the 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 assets or property other than the Trust Property.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from and to the extent of funds then available to the
Trustee,
- - --------
* To be included on the face of each Global Certificate.
A-4
<PAGE>
there will be distributed on each January 2 and July 2 (a "Regular Distribution
Date"), commencing on January 2, 1999, 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 and the Intercreditor Agreement, in the event that Special Payments on
the Equipment Notes are received by the Trustee, from funds then available to
the Trustee, there shall be distributed on the applicable Special Distribution
Date, to the Person in whose name this Certificate is registered at the close of
business on the 15th day preceding the Special Distribution Date, an amount in
respect of such Special Payments on the Equipment Notes, the receipt of which
has been confirmed by the Trustee, equal to the product of the percentage
interest in the Trust evidenced by this Certificate and an amount equal to the
sum of such Special Payments so received. If a Regular Distribution Date or
Special Distribution Date is not a Business Day, distribution shall be made on
the immediately following Business Day with the same force and effect as if made
on such Regular Distribution Date or Special Distribution Date and no interest
shall accrue during the intervening period. The Trustee shall mail notice of
each Special Payment and the Special Distribution Date therefor to the
Certificateholder of this Certificate.
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 AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY AND
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.
Reference is hereby made to the further provisions of this
Certificate set forth in the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
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.
A-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: ____________ __, 1998 MIDWAY AIRLINES
1998-1D-S PASS THROUGH TRUST
By: The First National Bank of
Maryland, as Trustee
By: _______________________________
Name:
Title:
A-6
<PAGE>
[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred to in the
within-mentioned Agreement.
The First National Bank of Maryland,
as Trustee
By: _______________________________
Authorized Officer
A-7
<PAGE>
[REVERSE OF CERTIFICATE]
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
of their affiliates. 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 Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein 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, in the Borough of Manhattan, the City of New York,
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.
A-8
<PAGE>
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $100,000 Fractional Undivided
Interest and integral multiples of $1,000 in excess thereof. 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 by the Holder 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.
A-9
<PAGE>
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
__________________________________
__________________________________
please print or typewrite name and address including zip code of assignee
__________________________________
the within Certificate and all rights thereunder, hereby irrevocably
constituting and appointing
__________________________________
attorney to transfer said Certificate on the books of the Trustee with full
power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT PERMANENT OFFSHORE GLOBAL AND
OFFSHORE PHYSICAL CERTIFICATES]
In connection with any transfer of this Certificate occurring prior
to __________, the undersigned confirms that without utilizing any general
solicitation or general advertising that:
[Check One]
[ ](a) this Certificate is being transferred in compliance with the exemption
from registration under the Securities Act of 1933, as amended, provided
by Rule 144A thereunder.
or
[ ](b) this Certificate is being transferred other than in accordance with
(a) above and documents are being furnished that comply with the
conditions of transfer set forth in this Certificate and the Agreement.
A-10
<PAGE>
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Certificate in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 3.06 of the Agreement
shall have been satisfied.
Date: ____________________ [Name of Transferor]
----------------------------------------
NOTE: The signature must correspond with
the name as written upon the face of the
within-mentioned instrument in every
particular, without alteration or any
change whatsoever.
Signature Guarantee: _________________________
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Certificate for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated: _____________________ _______________________________________
NOTE: To be executed by an executive
officer.
A-11
<PAGE>
Exhibit B
FORM OF CERTIFICATE FOR UNLEGENDED CERTIFICATES
[Date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1D-S Pass Through Trust (the "Trust"), 8.86%
Midway Airlines Pass Through Certificates Series 1998-1D-S (the
"Certificates")
Dear Sirs:
This letter relates to U.S. $__________ Fractional Undivided
Interest of Certificates represented by a Certificate (the "Legended
Certificate") which bears a legend outlining restrictions upon transfer of such
Legended Certificate. Pursuant to Section 3.01 of the Pass Through Trust
Agreement relating to the Certificates dated as of August 13, 1998 (the "Trust
Agreement"), between Midway Airlines Corporation ("Midway") and you, we hereby
certify that we are (or we will hold such securities on behalf of) a person
outside the United States to whom the Certificates could be transferred in
accordance with Rule 904 of Regulation S promulgated under the U.S. Securities
Act of 1933, as amended. Accordingly, you are hereby requested to exchange the
legended certificate for an unlegended certificate representing an identical
principal amount of Certificates, all in the manner provided for in the Trust
Agreement.
You and Midway are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Certificateholder]
By: _________________________________
Authorized Signature
B-1
<PAGE>
Exhibit C
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
[date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1D-S Pass Through Trust (the "Trust"), 8.86%
Midway Airlines Pass Through Certificates Series 1998-1D-S (the
"Certificates")
Sirs:
In connection with our proposed sale of $_______ Fractional Undivided Interest
of the Certificates, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the Securities Act of 1933, as amended,
and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a person in the
United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
C-1
<PAGE>
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You, Midway Airlines Corporation are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof to
any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By: ________________________________
Authorized Signature
C-2
<PAGE>
Exhibit D
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
[date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1D-S Pass Through Trust (the "Trust"), 8.86%
Midway Airlines Pass Through Certificates Series 1998-1D-S (the
"Certificates")
Dear Sirs:
In connection with our proposed purchase of $_______________
aggregate principal amount of the Certificates, we confirm that:
1. We understand that any subsequent transfer of the Certificates is
subject to certain restrictions and conditions set forth in the Pass
Through Trust Agreement dated as of August 13, 1998 relating to the
Certificates (the "Pass Through Trust Agreement") and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the
Certificates except in compliance with, such restrictions and conditions
and the Securities Act of 1933, as amended (the "Securities Act").
2. We are purchasing Certificates having an aggregate principal
amount of not less than $100,000 and each account (if any) for which we
are purchasing Certificates is purchasing Certificates having an aggregate
principal amount of not less than $100,000.
3. We understand that the Certificates have not been registered
under the Securities Act, and that the Certificates may not be offered or
sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Certificate, we will do so
only (A) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (B) to an
institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes to you and Midway Airlines Corporation a signed letter
substantially in the form of this letter, (C) outside the United States in
D-1
<PAGE>
accordance with Rule 904 of Regulation S under the Securities Act, (D)
pursuant to the exemption from registration provided by Rule 144 under the
Securities Act, or (E) pursuant to an effective registration statement
under the Securities Act, and we further agree to provide to any person
purchasing any of the Certificates from us a notice advising such
purchaser that resales of the Notes are restricted as stated herein. We
further understand that the Certificates purchased by us will bear a
legend to the foregoing effect.
4. We understand that, on any proposed resale of any Certificates,
we will be required to furnish to you, Midway Airlines Corporation
("Midway") such certifications, legal opinions and other information as
you, Midway may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that the
Certificates purchased by us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Certificates and we and any accounts for which we are acting are each able
to bear the economic risk of our or its investment.
6. We are acquiring the Certificates purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You and Midway are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By: _______________________________
Authorized Signature
D-2
- - --------------------------------------------------------------------------------
PASS THROUGH TRUST AGREEMENT
Dated as of August 13, 1998
among
MIDWAY AIRLINES CORPORATION
and
THE FIRST NATIONAL BANK OF MARYLAND
as Trustee
Midway Airlines 1998-1D-O Pass Through Trust
8.86% 1998-1D-O Initial Pass Through Certificates
8.86% 1998-1D-O Exchange Pass Through Certificates
- - --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS................................................... 3
Section 1.01. Definitions........................................... 3
Section 1.02. Compliance Certificates and Opinions.................. 15
Section 1.03. Form of Documents Delivered to Trustee................ 16
Section 1.04. Acts of Certificateholders............................ 16
ARTICLE II ORIGINAL ISSUANCE OF CERTIFICATES............................. 18
Section 2.01. Delivery of Documents; Delivery Date.................. 18
Section 2.02. Withdrawal of Deposits................................ 19
Section 2.03. The Trustee........................................... 19
Section 2.04. Acceptance by Trustee................................. 19
Section 2.05. Limitation of Powers.................................. 20
ARTICLE III THE CERTIFICATES.............................................. 20
Section 3.01. Title, Form, Denomination and Execution of
Certificates....................................... 20
Section 3.02. Restrictive Legends................................... 22
Section 3.03. Authentication of Certificates........................ 24
Section 3.04. Transfer and Exchange................................. 24
Section 3.05. Book-Entry Provisions for U.S. Global Certificate
and Offshore Global Certificates................... 25
Section 3.06. Special Transfer Provisions........................... 26
Section 3.07. Mutilated, Destroyed, Lost or Stolen Certificates..... 29
Section 3.08. Persons Deemed Owners................................. 30
Section 3.09. Cancellation.......................................... 30
Section 3.10. Limitation of Liability for Payments.................. 30
Section 3.11. Temporary Certificates................................ 30
Section 3.12. ERISA Restrictive Legend.............................. 30
ARTICLE IV DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS............................................ 31
Section 4.01. Certificate Account and Special Payments Account...... 31
Section 4.02. Distributions from Certificate Account and Special
Payments Account................................... 32
Section 4.03. Statements to Certificateholders...................... 33
Section 4.04. Investment of Special Payment Moneys.................. 35
ARTICLE V THE COMPANY................................................... 35
Section 5.01. Maintenance of Corporate Existence.................... 35
Section 5.02. Consolidation, Merger, Etc............................ 35
ARTICLE VI DEFAULT....................................................... 36
Section 6.01. Events of Default..................................... 36
Section 6.02. Incidents of Sale of Equipment Notes.................. 39
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<PAGE>
Section 6.03. Judicial Proceedings Instituted by Trustee;
Trustee May Bring Suit............................. 39
Section 6.04. Control by Certificateholders......................... 40
Section 6.05. Waiver of Past Defaults............................... 40
Section 6.06. Right of Certificateholders to Receive Payments
Not to Be Impaired................................. 41
Section 6.07. Certificateholders May Not Bring Suit Except Under
Certain Conditions................................. 41
Section 6.08. Remedies Cumulative................................... 42
Section 6.09. Undertaking for Costs................................. 42
ARTICLE VII THE TRUSTEE................................................ 42
Section 7.01. Certain Duties and Responsibilities................... 42
Section 7.02. Notice of Defaults.................................... 43
Section 7.03. Certain Rights of Trustee............................. 43
Section 7.04. Not Responsible for Recitals or Issuance of
Certificates....................................... 44
Section 7.05. May Hold Certificates................................. 45
Section 7.06. Money Held in Trust................................... 45
Section 7.07. Compensation and Reimbursement........................ 45
Section 7.08. Corporate Trustee Required; Eligibility............... 46
Section 7.09. Resignation and Removal; Appointment of Successor..... 47
Section 7.10. Acceptance of Appointment by Successor................ 48
Section 7.11. Merger, Conversion, Consolidation or Succession to
Business........................................... 49
Section 7.12. Maintenance of Agencies............................... 49
Section 7.13. Money for Certificate Payments to Be Held in Trust.... 50
Section 7.14. Registration of Equipment Notes in Name of
Subordination Agent................................ 50
Section 7.15. Representations and Warranties of Trustee............. 51
Section 7.16. Withholding Taxes; Information Reporting.............. 51
Section 7.17. Trustee's Liens....................................... 52
Section 7.18. Preferential Collection of Claims..................... 52
ARTICLE VIII CERTIFICATEHOLDERS' LISTS AND
REPORTS BY TRUSTEE......................................... 53
Section 8.01. The Company to Furnish Trustee with Names and
Addresses of Certificateholders.................... 53
Section 8.02. Preservation of Information; Communications to
Certificateholders................................. 53
Section 8.03. Reports by Trustee.................................... 53
Section 8.04. Reports by the Company................................ 53
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<PAGE>
ARTICLE IX SUPPLEMENTAL AGREEMENTS....................................... 54
Section 9.01. Supplemental Agreements Without Consent of
Certificateholders................................. 54
Section 9.02. Supplemental Agreements with Consent of
Certificateholders................................. 55
Section 9.03. Documents Affecting Immunity or Indemnity............. 56
Section 9.04. Execution of Supplemental Agreements.................. 57
Section 9.05. Effect of Supplemental Agreements..................... 57
Section 9.06. Conformity with Trust Indenture Act................... 57
Section 9.07. Reference in Certificates to Supplemental Agreements.. 57
ARTICLE X AMENDMENTS TO INDENTURES AND
FINANCING DOCUMENTS........................................... 57
Section 10.01 Amendments and Supplement to Indentures and Other
Note Documents..................................... 57
ARTICLE XI TERMINATION OF TRUST.......................................... 58
Section 11.01. Termination of the Trust.............................. 58
ARTICLE XII MISCELLANEOUS PROVISIONS................................... 61
Section 12.01. Limitation on Rights of Certificateholders............ 61
Section 12.02. Certificates Nonassessable and Fully Paid............. 61
Section 12.03. Notices............................................... 61
Section 12.04. Governing Law......................................... 63
Section 12.05. Severability of Provisions............................ 63
Section 12.06. Effect of Headings and Table of Contents.............. 63
Section 12.07. Successors and Assigns................................ 63
Section 12.08. Benefits of Agreement................................. 63
Section 12.09. Legal Holidays........................................ 63
Section 12.10. Counterparts.......................................... 63
Section 12.11. Communication by Certificateholders with Other
Certificateholders................................. 63
Section 12.12. Intention of Parties.................................. 64
Section 12.13. Trust Indenture Act Controls.......................... 64
iii
<PAGE>
EXHIBIT LIST
Exhibit A Form of Certificate
Exhibit B Form of Certificate for Unlegended Certificates
Exhibit C Form of Certificate to be Delivered in connection with Transfers
Pursuant to Regulation S
Exhibit D Form of Certificate to be Delivered in connection with Transfers
to Non-QIB Accredited Investors
Exhibit E Form of Assignment and Assumption Agreement
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<PAGE>
PASS THROUGH TRUST AGREEMENT
This PASS THROUGH TRUST AGREEMENT, dated as of August 13, 1998,
among MIDWAY AIRLINES CORPORATION, a Delaware corporation (the "Company"), and
THE FIRST NATIONAL BANK OF MARYLAND, a national banking association, as Trustee,
is made with respect to the formation of Midway Airlines 1998-1D-O Pass Through
Trust and the issuance of 8.86% Midway Airlines 1998-1D-O Pass Through
Certificates representing fractional undivided interests in the Trust.
WITNESSETH:
WHEREAS, the Company has obtained commitments from Bombardier for
the delivery of certain Aircraft;
WHEREAS, the Company intends to finance the acquisition of each such
Aircraft either (i) through separate leveraged lease transactions, in which case
the Company will lease such Aircraft (collectively, the "Leased Aircraft") or
(ii) through separate secured loan transactions, in which case the Company will
own such Aircraft (collectively, the "Owned Aircraft");
WHEREAS, in the case of each Leased Aircraft, each Owner Trustee,
acting on behalf of the corresponding Owner Participant, will issue pursuant to
an Indenture, on a non-recourse basis, Equipment Notes in order to finance a
portion of its purchase price of such Leased Aircraft;
WHEREAS, in the case of each Owned Aircraft, the Company will issue
pursuant to an Indenture, on a recourse basis, Equipment Notes to finance a
portion of the purchase price of such Owned Aircraft;
WHEREAS, the Trustee, upon execution and delivery of this Agreement,
hereby declares the creation of this Trust (the "1998-1D-O Trust") for the
benefit of the Certificateholders, and the initial Certificateholders, as the
grantors of the 1998-1D-O Trust, by their respective acceptances of the
Certificates, join in the creation of this 1998-1D-O Trust with the Trustee;
WHEREAS, all Certificates to be issued by the Trust will evidence
fractional undivided interests in the Trust and will convey no rights, benefits
or interests in respect of any property other than the Trust Property except for
those Certificates to which an Escrow Receipt has been affixed;
WHEREAS, the Escrow Agent and the Initial Purchasers have
contemporaneously herewith entered into an Escrow Agreement with the Escrow
Agent pursuant to which the Initial Purchasers have delivered to the Escrow
Agent the
<PAGE>
proceeds from the sale of the Certificates and have irrevocably instructed the
Escrow Agent to withdraw and pay funds from such proceeds upon request and
proper certification by the Trustee to purchase Equipment Notes as the Aircraft
are delivered by Bombardier from time to time prior to the Delivery Period
Termination Date;
WHEREAS, the Escrow Agent on behalf of the Certificateholders has
contemporaneously herewith entered into a Deposit Agreement with the Depositary
under which the Deposits referred to therein will be made and from which it will
withdraw funds to allow the Trustee to purchase Equipment Notes from time to
time prior to the Delivery Period Termination Date;
WHEREAS, pursuant to the terms and conditions of this Agreement and
the Note Purchase Agreement, upon or shortly following the delivery of an
Aircraft, the Trustee on behalf of the 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 Certificates issued
hereunder and shall hold such Equipment Notes in trust for the benefit of the
Certificateholders;
WHEREAS, all of the conditions and requirements necessary to make
this Agreement, when duly executed and delivered, a valid, binding and legal
instrument, enforceable in accordance with its terms and for the purposes herein
expressed, have been done, performed and fulfilled, and the execution and
delivery of this Agreement in the form and with the terms hereof have been in
all respects duly authorized;
WHEREAS, to facilitate the sale of Equipment Notes to, and the
purchase of Equipment Notes by, the Trustee on behalf of the 1998-1D-O Trust the
Company as the "issuer", as such term is defined in and solely for purposes of
the Securities Act of 1933, as amended, of the Certificates to be issued
pursuant hereto 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 Agreement 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;
and
WHEREAS, upon issuance of the Exchange Certificates, if any, or the
effectiveness of the Shelf Registration Statement, this Agreement, as amended or
supplemented from time to time, will be subject to the provisions of the Trust
Indenture Act of 1939, and shall, to the extent applicable, be governed by such
provisions;
NOW, THEREFORE, in consideration of the mutual agreements herein
contained, and valuable consideration the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
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<PAGE>
ARTICLE I
DEFINITIONS
Section 1.01. 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 other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference herein have the meanings
assigned to them therein;
(3) all references in this Agreement to designated "Articles",
"Sections", "Subsections" and other subdivisions are to the designated
Articles, Sections, Subsections and other subdivisions of this Agreement;
(4) 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, Subsection or other subdivision; and
(5) unless the context otherwise requires, whenever the words
"including", "include" or "includes" are used herein, it shall be deemed
to be followed by the phrase "without limitation".
Act: With respect to any Certificateholder has the meaning specified
in Section 1.04.
Affiliate: Means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct
or indirect common control with such Person. For 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.
Agent Members: Has the meaning specified in Section 3.05(a).
Aircraft: Means each of the New Aircraft in respect of which a
Participation Agreement is entered into in accordance with the Note
Purchase Agreement.
Applicable Delivery Date: Has the meaning specified in Section
2.01(b).
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<PAGE>
Applicable Participation Agreement: Has the meaning specified in
Section 2.01(b).
Assignment and Assumption Agreement: Means the assignment and
assumption agreement substantially in the form of Exhibit E hereto
executed and delivered in accordance with Section 11.01.
Authorized Agent: Means any Paying Agent or Registrar for the
Certificates.
Avoidable Tax: Means a state or local tax (i) upon (w) the Trust,
(x) the Trust Property, (y) Certificateholders or (z) the Trustee for
which the Trustee is entitled to seek reimbursement from the Trust
Property, 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 if the Company or any Owner Trustee
shall agree to pay, and shall pay, such tax.
Book-Entry Certificates: With respect to the Certificates, means a
beneficial interest in the Certificates, ownership and transfers of which
shall be made through book entries as described in Section 3.04.
Business Day: Means any day other than a Saturday, a Sunday or a day
on which commercial banks are required or authorized to close in
Baltimore, Maryland, New York, New York, Charlotte, North Carolina or, so
long as any Certificate is outstanding, the city and state in which the
Trustee or any Loan Trustee maintains its Corporate Trust Office or
receives and disburses funds.
Cedel: Means Cedel Bank societe anonyme.
Certificate: Means any one of the Initial Certificates or Exchange
Certificates and any such Certificates issued in exchange therefor or
replacement thereof, executed and authenticated by the Trustee.
Certificate Account: Means the account or accounts created and
maintained pursuant to Section 4.01(a).
Certificateholder or Holder: Means the Person in whose name a
Certificate is registered in the Register.
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.
-4-
<PAGE>
Code: Means the United States Internal Revenue Code of 1986, as
amended.
Company: Means Midway Airlines Corporation, a Delaware corporation,
or its successor in interest.
Controlling Party: Means the party entitled to act as such pursuant
to the terms of the Intercreditor Agreement.
Corporate Trust Office: With respect to the Trustee or any Loan
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: Means the earlier of (a) the Delivery Period
Termination Date and (b) the date on which a Triggering Event occurs.
Delivery Date: Has the meaning specified in the Note Purchase
Agreement.
Delivery Notice: Has the meaning specified in the Note Purchase
Agreement.
Delivery Period Termination Date: Means the earlier of (a) September
30, 1999 (provided that, if a labor strike occurs at the Manufacturer
prior to such date, such date shall be extended by adding thereto the
number of days that such strike has continued in effect), and (b) the date
on which Equipment Notes issued have been purchased by the Trust and the
Other Trusts in accordance with the Note Purchase Agreement.
Deposits: Has the meaning specified in the Deposit Agreement.
Deposit Agreement: Means the Deposit Agreement dated as of August
13, 1998 relating to the Certificates between the Depositary and the
Escrow Agent, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
Depositary: Means First Union National Bank.
DTC: Means The Depository Trust Company, its nominees and their
respective successors.
Direction: Has the meaning specified in Section 1.04(c).
Distribution Date: Means each Regular Distribution Date or Special
Distribution Date.
-5-
<PAGE>
Equipment Notes: Means the Equipment Notes issued pursuant to the
Indentures.
ERISA: Means the Employee Retirement Income Security Act of 1974, as
amended.
Escrow Agent: Means, initially, First Union Trust Company, National
Association, and any replacement or successor therefor appointed in
accordance with the Escrow Agreement.
Escrow Agreement: Means the Escrow and Paying Agent Agreement dated
as of August 13, 1998 relating to the Certificates, among the Escrow
Agent, the Escrow Paying Agent, the Trustee and the Initial Purchasers, as
the same may be amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Escrow Paying Agent: Means the Person acting as paying agent under
the Escrow Agreement.
Escrow Receipt: Means the receipt substantially in the form annexed
to the Escrow Agreement representing a fractional undivided interest in
the funds held in escrow thereunder.
Euroclear: Means the Euroclear System.
Exchange Certificates: Means the pass through certificates
substantially in the form of Exhibit A hereto issued in exchange for the
Initial Certificates pursuant to the Registration Rights Agreement and
authenticated hereunder.
Exchange Offer: Means the exchange offer which may be made pursuant
to the Registration Rights Agreement to exchange Initial Certificates for
Exchange Certificates.
Exchange Offer Registration Statement: Means the registration
statement that, pursuant to the Registration Rights Agreement, is filed by
the Company with the SEC with respect to the exchange of Initial
Certificates for Exchange Certificates.
Event of Default: Means the occurrence of an Indenture Default under
any Indenture pursuant to which Equipment Notes held by the Trust were
issued.
Final Maturity Date: Means July 2, 2004.
Final Withdrawal: Has the meaning specified in the Escrow Agreement.
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<PAGE>
Final Withdrawal Date: Has the meaning specified in the Escrow
Agreement.
Final Withdrawal Notice: Has the meaning specified in Section 2.02.
Fractional Undivided Interest: Means the fractional undivided
interest in the Trust that is evidenced by a Certificate.
Global Certificates: Has the meaning assigned to such term in
Section 3.01.
Indenture: Means each of the separate trust indenture and security
agreements relating to the Aircraft, each as specified or described in a
Delivery Notice delivered pursuant to the Note Purchase Agreement or the
related Participation Agreement in each case as the same may be amended,
supplemented or otherwise modified from time to time in accordance with
its terms.
Indenture Default: With respect to any Indenture, means any
Indenture Event of Default (as such term is defined in such Indenture)
thereunder.
Initial Certificates: Means the certificates issued and
authenticated hereunder substantially in the form of Exhibit A hereto
other than the Exchange Certificates.
Initial Purchasers: Means Morgan Stanley & Co. Incorporated and
Credit Suisse First Boston Corporation.
Initial Regular Distribution Date: Means the first Regular
Distribution Date on which a Scheduled Payment is to be made.
Institutional Accredited Investor: Means an institutional investor
that is an "accredited investor" within the meaning set forth in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act.
Intercreditor Agreement: Means the Intercreditor Agreement dated
August 13, 1998 among the Trustee, the Other Trustees, the Liquidity
Provider, the liquidity providers, if any, relating to the Certificates
issued under (and as defined in) the Other Pass Through Trust Agreements,
and The First National Bank of Maryland, as Subordination Agent
thereunder, as amended, supplemented or otherwise modified from time to
time in accordance with its terms.
Issuance Date: Means the date of the issuance of the Initial
Certificates.
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<PAGE>
Lease: Means, with respect to each Leased Aircraft, the 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.
Leased Aircraft: Has the meaning given to such term in the recitals
hereto.
Letter of Representations: Means the agreement dated the Issuance
Date among the Company, the Trustee and the initial Clearing Agency.
Liquidity Facility: Means the Irrevocable Revolving Credit Agreement
dated August 13, 1998 relating to the Certificates, between the Liquidity
Provider and the Subordination Agent, as amended, replaced, supplemented
or otherwise modified from time to time in accordance with its terms and
the terms of the Intercreditor Agreement.
Liquidity Provider: Means, initially, ABN AMRO Bank N.V., acting
through its Chicago branch, and any replacement or successor therefor
appointed in accordance with the Liquidity Facility and the Intercreditor
Agreement.
Loan 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 Loan
Trustee as such trustee; and Loan Trustees means all of the Loan Trustees
under the Indentures.
New Aircraft: Has the meaning specified in the Note Purchase
Agreement.
Non-U.S. Person: Means a Person that is not a U.S. Person, as
defined in Regulation S.
Note Documents: With respect to any Equipment Note, means (i) the
Indenture and the Participation Agreement relating to such Equipment Note,
and (ii) in the case of any Equipment Note related to a Leased Aircraft,
also includes the Lease relating to such Leased Aircraft.
Note Purchase Agreement. Means the Note Purchase Agreement dated as
of August 13, 1998 among the Trustee, the Other Trustees, the Company, the
Escrow Agent, the Escrow Paying Agent and the Subordination Agent,
providing for, among other things, the purchase of Equipment Notes by the
Trustee on behalf of the Trust, as the same may be amended, supplemented
or otherwise modified from time to time, in accordance with its terms.
-8-
<PAGE>
Notice of Purchase Withdrawal: Has the meaning specified in the
Deposit Agreement.
Officer's Certificate: Means a certificate signed, (a) in the case
of the Company, by (i) 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 a Loan
Trustee, a Responsible Officer of the Trustee or such Owner Trustee or
such Loan Trustee, as the case may be.
Offshore Certificates Exchange Date: Has the meaning specified in
Section 3.01.
Offshore Global Certificates: Has the meaning assigned to such term
in Section 3.01.
Offshore Physical Certificates: Has the meaning assigned to such
term in Section 3.01.
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 or (ii) such other counsel
designated by the Company and reasonably acceptable to the Trustee and (b)
in the case of any Owner Trustee or any Loan Trustee may be such counsel
as may be designated by any of them whether or not such counsel is an
employee of any of them, and who shall be reasonably acceptable to the
Trustee.
Other Pass Through Trust Agreement: Means each of the three other
Midway Airlines 1998-1 Pass Through Trust Agreements relating to,
respectively, Midway Airlines 1998-1A-O Pass Through Trust, Midway
Airlines 1998-1B-O Pass Through Trust and Midway Airlines 1998-1C-O Pass
Through Trust, each dated the date hereof; and Other Pass Through Trust
Agreements means all such agreements.
Other Trust: Means each of the Midway Airlines Pass Through Trust
1998-1A-O, the Midway Airlines Pass Through Trust 1998-1B-O and the Midway
Airlines Pass Through Trust 1998-1C-O, each created on the date hereof;
and Other Trusts means all such trusts.
Other Trustee: Means the trustee under each of the Other Pass
Through Trust Agreements, and any successor or other trustee appointed as
provided therein; and Other Trustees means all such trustees.
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Outstanding: With respect to Certificates, means, as of the date of
determination, all Certificates theretofore authenticated and delivered
under this Agreement, except:
(i) Certificates theretofore cancelled by the Registrar or
delivered to the Trustee or the Registrar for cancellation;
(ii) All of the Certificates if money in the full amount
required to make the final distribution with respect thereto
pursuant to Section 11.01 hereof has been theretofore deposited with
the Trustee in trust for the Holders of such Certificates as
provided in Section 4.01 pending distribution of such money to such
Certificateholders pursuant to such final distribution payment; and
(iii) Certificates in exchange for or in lieu of which other
Certificates have been authenticated and delivered pursuant to this
Agreement.
Owned Aircraft: Has the meaning given to such term in the recitals
hereto.
Owner Participant: With respect to any Equipment Note relating to a
Leased Aircraft, means the "Owner Participant" 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 relating to a
Leased Aircraft, means the "Owner Trustee", 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 Indentures.
Participation Agreement: Means each Participation Agreement to be
entered into by the Trustee pursuant to the Note Purchase Agreement, as
the same may be amended, supplemented or otherwise modified in accordance
with its terms.
Paying Agent: Means the paying agent maintained and appointed for
the Certificates pursuant to Section 7.12.
Permanent Offshore Global Certificates: Has the meaning specified in
Section 3.01.
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Permitted Investments: Means obligations of the United States of
America or agencies or instrumentalities thereof for the payment of which
the full faith and credit of the United States of America is pledged,
maturing in not more than 60 days or such lesser time as is necessary for
payment of any Special Payments on a Special Distribution Date or any
mutual fund the portfolio of which is limited to such obligations,
including any proprietary mutual fund of The First National Bank of
Maryland for which such bank or an affiliate is investment advisor or to
which such bank provides other services and receives reasonable
compensation for such services.
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.
Physical Certificates: Has the meaning specified in Section 3.01.
Plan Transferee: Means any Plan or any entity that is using the
assets of any Plan to purchase or hold its interest in a 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.
Pool Balance: Means, as of any date, (i) the original aggregate face
amount of the Certificates less (ii) the aggregate amount of all payments
made in respect of such Certificates or in respect of Deposits 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 as of any Distribution Date shall be computed after giving effect
to any special distribution with respect to unused Deposits, payment of
principal, if any, on the Equipment Notes or other Trust Property held in
the Trust and the distribution thereof to be made on such Distribution
Date.
Pool Factor: Means, as of any date, the quotient (rounded to the
seventh decimal place) computed by dividing (i) the Pool Balance as at
such date by (ii) the original aggregate face amount of the Certificates.
The Pool Factor as of any Distribution Date shall be computed after giving
effect to any special distribution with respect to unused Deposits,
payment of principal, if any, on the Equipment Notes or other Trust
Property and the distribution thereof to be made on such Distribution
Date.
Private Placement Legend: Has the meaning specified in Section 3.02.
Purchase Agreement: Means the Purchase Agreement dated August 6,
1998 between the Company and the Initial Purchasers.
QIB: Means a qualified institutional buyer as defined in Rule 144A.
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Record Date: Means (i) for Scheduled Payments to be distributed on
any Regular Distribution Date, other than the final distribution, 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, the 15th day
(whether or not a Business Day) preceding such Special Distribution Date.
Register and Registrar: Mean the register maintained and the
registrar appointed pursuant to Sections 3.04 and 7.12.
Registration Rights Agreement: Means the Registration Rights
Agreement, dated as of August 13, 1998, among the Initial Purchasers, the
Trustee, the Other Trustees and the Company, as amended, supplemented or
otherwise modified from time to time in accordance with its terms.
Regular Distribution Date: With respect to distributions of
Scheduled Payments in respect of the Certificates, means each date
designated as a Regular Distribution Date in this Agreement, until payment
of all the Scheduled Payments to be made under the Equipment Notes held in
the Trust have been made; 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.
Regulation S: Means Regulation S under the Securities Act or any
successor regulation thereto.
Related Pass Through Trust Agreement: Means the Pass Through Trust
Agreement 1998-1D-S dated the date hereof relating to the Midway Airlines
Pass Through Trust 1998-1D-S and entered into by the Company and the
Trustee, which agreement becomes effective upon the execution and delivery
of the Assignment and Assumption Agreement pursuant to Section 7.01.
Related Trust: Means the Midway Pass Through Trust 1998-1D-S, to be
formed under the Related Pass Through Trust Agreement.
Related Trustee: Means the trustee under the Related Pass Through
Trust Agreement.
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 Agreement.
Responsible Officer: With respect to the Trustee, any Loan Trustee
and any Owner Trustee, means any officer in the Corporate Trust Division
of the Trustee, Loan Trustee or Owner Trustee or any other officer
customarily performing functions similar to those performed by the persons
who at the time
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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.
Rule 144A: Means Rule 144A under the Securities Act and any
successor regulation thereto.
Scheduled Payment: With respect to any Equipment Note, means any
payment of principal and interest on such Equipment Note (other than any
such payment which is not in fact received by the Trustee or any
Subordination Agent within five days of the date on which such payment is
scheduled to be made) or any payment of interest on the Certificates with
funds drawn under the Liquidity Facility 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, as
amended, 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.
Securities Act: Means the United States Securities Act of 1933, as
amended from time to time, or any successor thereto.
Shelf Registration Statement: Means the shelf registration statement
which may be required to be filed by the Company with the SEC pursuant to
any Registration Rights Agreement, other than an Exchange Offer
Registration Statement.
Special Distribution Date: Means each date on which a Special
Payment is to be distributed as specified in 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) or Special Redemption Premium.
Special Payments Account: Means the account or accounts created and
maintained pursuant to Section 4.01(b).
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Special Redemption Premium: Means the premium payable by the Company
in respect of the Final Withdrawal pursuant to the Note Purchase
Agreement.
Specified Investments: Means (i) obligations of, or guaranteed by,
the United States Government or agencies thereof, (ii) open market
commercial paper of any corporation incorporated under the laws of the
United States of America or any State thereof rated at least P-2 or its
equivalent by Moody's Investors Service, Inc. or at least A-2 or its
equivalent by Standard & Poor's Ratings Group, (iii) certificates of
deposit issued by commercial banks organized under the laws of the United
States or of any political subdivision thereof having a combined capital
and surplus in excess of $500,000,000 which banks or their holding
companies have a rating of A or its equivalent by Moody's Investors
Service, Inc. or Standard & Poor's Ratings Group; provided, however, that
the aggregate amount at any one time so invested in certificates of
deposit issued by any one bank shall not exceed 5% of such bank's capital
and surplus, (iv) U.S. dollar denominated offshore certificates of deposit
issued by, or offshore time deposits with, any commercial bank described
in (iii) or any subsidiary thereof, (v) repurchase agreements with any
financial institution having combined capital and surplus of at least
$500,000,000 with any of the obligations described in clauses (i) through
(iv) as collateral and (vi) any mutual fund the portfolio of which is
limited to investments of the types specified in the preceding clauses (i)
through (v), including any proprietary mutual fund of The First National
Bank of Maryland for which such bank or an affiliate is investment advisor
or to which such bank provides other services and receives reasonable
compensation for such services; 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.
Subordination Agent: Has the meaning specified in the Intercreditor
Agreement.
Temporary Offshore Global Certificates: Has the meaning specified in
Section 3.01.
Transfer Date: Has the meaning specified in Section 11.01.
Triggering Event: Has the meaning assigned to such term in the
Intercreditor Agreement.
Trust: Means the trust created by this Agreement, the estate of
which consists of the Trust Property.
Trust Indenture Act: Except as otherwise provided in Section 9.06,
means the United States Trust Indenture Act of 1939 as in force at the
date hereof.
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Trust Property: Means (i) subject to the Intercreditor Agreement,
the Equipment Notes held as the property of the Trust, 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, subject to the Intercreditor Agreement, any
proceeds from the sale by the Trustee pursuant to Section 6.02 of any
Equipment Note and (iii) all rights of the Trust and the Trustee, on
behalf of the Trust, under the Intercreditor Agreement, the Escrow
Agreement, the Note Purchase Agreement and the Liquidity Facilities,
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 Facilities,
provided that rights with respect to the Deposits or under the Escrow
Agreement, except for the right to direct withdrawals for the purchase of
Equipment Notes to be held herein, will not constitute Trust Property.
Trustee: Means The First National Bank of Maryland, or its successor
in interest, and any successor or other trustee appointed as provided
herein.
Trustee's Lien: Has the meaning specified in Section 7.17.
U.S. Global Certificate: Has the meaning specified in Section 3.01.
U.S. Physical Certificates: Has the meaning specified in Section
3.01.
Section 1.02. Compliance Certificates and Opinions. Upon any
application or request by the Company, any Owner Trustee or any Loan Trustee to
the Trustee to take any action under any provision of this Agreement, the
Company, such Owner Trustee or such Loan Trustee, as the case may be, shall
furnish to the Trustee (i) an Officer's Certificate stating that, in the opinion
of the signers, all conditions precedent, if any, provided for in this Agreement
relating to the proposed action have been complied with and (ii) 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 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 Agreement (other than a certificate
provided pursuant to Section 8.04(d)) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions in this
Agreement relating thereto;
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(2) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.03. Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be so
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and 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 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 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 Loan
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 this Agreement and conclusive in favor of the
Trustee, the Company and any Loan Trustee, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument acknowledged to him
the execution
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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 Outstanding have given any
direction, consent or waiver (a "Direction") under this Agreement, Certificates
owned by the Company, any Owner Trustee, any Owner Participant or any Affiliate
of any such Person thereof 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 the
Trustee in fact knows to be so owned shall be so disregarded. Notwithstanding
the foregoing, (i) if any such Person owns 100% of the Certificates Outstanding,
such Certificates shall not be so disregarded as aforesaid, and (ii) if any
amount of Certificates 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
Owner Trustee, any Owner Participant or any Affiliate of any such Person.
(d) For all purposes of this Agreement, all Initial Certificates and
all Exchange Certificates shall vote and take all other actions of
Certificateholders together as one series of Certificates.
(e) The Company may at its option, by delivery of an Officer's
Certificate to the Trustee, set a record date to determine the
Certificateholders entitled to give any consent, request, demand, authorization,
direction, notice, waiver or other 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 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 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 shall be computed as of such
record date; provided that no such consent, request, demand, authorization,
direction, notice, waiver or other Act by the Certificateholders on such record
date shall be deemed effective unless it shall become effective pursuant to the
provisions of this Agreement not later than one year after such record date.
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(f) 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.
(g) Except as otherwise provided in Section 1.04(c), Certificates
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.
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES
Section 2.01. Delivery of Documents; Delivery Date. (a) The Trustee
is hereby directed (i) to execute and deliver the Intercreditor Agreement, the
Escrow Agreement and the Note Purchase Agreement on or prior to the Issuance
Date, each in the form delivered to the Trustee by the Company and (ii) subject
to the respective terms thereof, to perform its obligations thereunder. Upon
request of the Company and the satisfaction or waiver of the closing conditions
specified in the Purchase Agreement, the Trustee shall execute, deliver,
authenticate, issue and sell Certificates in authorized denominations equalling
in the aggregate the amount set forth, with respect to the Trust, in Schedule I
to the Purchase Agreement evidencing the entire ownership interest in the Trust,
which amount equals the maximum aggregate principal amount of Equipment Notes
which may be purchased by the Trustee pursuant to the Note Purchase Agreement.
Except as provided in Sections 3.04, 3.05, 3.07 and 3.11, the Trustee shall not
execute, authenticate or deliver Certificates in excess of the aggregate amount
specified in this paragraph.
(b) On or after the Issuance Date, the Company may deliver from time
to time to the Trustee a Delivery Notice relating to one or more Equipment
Notes. After receipt of a Delivery Notice and in any case no later than one
Business Day prior to a Delivery Date as to which such Delivery Notices relates
(the "Applicable Delivery Date"), the Trustee shall (as and when specified in
the Delivery Notice) instruct the Escrow Agent to provide a Notice of Purchase
Withdrawal to the Depositary requesting (A) the withdrawal of one or more
Deposits on the Applicable Delivery Date in accordance with and to the extent
permitted by the terms of the Escrow Agreement and the Deposit Agreement and (B)
the payment of all, or a portion, of such Deposit or Deposits in an amount equal
in the aggregate to the purchase price of such Equipment Notes to or on behalf
of the Owner Trustee or the Company, as the case may be, issuing such Equipment
Notes, all as shall be described in the Delivery Notice. The Trustee shall (as
and when specified in such Delivery Notice), subject to the conditions set forth
in Section 2 of the Note Purchase Agreement, enter into and perform its
obligations under the Participation Agreement specified in such Delivery Notice
(the
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"Applicable Participation Agreement") and cause such certificates, documents and
legal opinions relating to the Trustee to be duly delivered as required by the
Applicable Participation Agreement. If at any time prior to the Applicable
Delivery Date, the Trustee receives a notice of postponement pursuant to Section
1(e) or 1(f) of the Note Purchase Agreement, then the Trustee shall give the
Depositary (with a copy to the Escrow Agent) a notice of cancellation of such
Notice of Purchase Withdrawal relating to such Deposit or Deposits on such
Applicable Delivery Date. Upon satisfaction of the conditions specified in the
Note Purchase Agreement and the Applicable Participation Agreement, the Trustee
shall purchase the applicable Equipment Notes with the proceeds of the
withdrawals of one or more Deposits made on the Applicable Delivery Date in
accordance with the terms of the Deposit Agreement and the Escrow Agreement. The
purchase price of such Equipment Notes shall equal the principal amount of such
Equipment Notes. Amounts withdrawn from such Deposit or Deposits in excess of
the purchase price of the Equipment Notes or to the extent not applied on the
Applicable Delivery Date to the purchase price of the Equipment Notes, shall be
re-deposited by the Trustee with the Depositary on the Applicable Delivery Date
in accordance with the terms of the Deposit Agreement.
Section 2.02. Withdrawal of Deposits. If any Deposits remain
outstanding on the Business Day next succeeding the Cut-off Date, (i)(A) the
Trustee shall give the Escrow Agent notice that the Trustee's obligation to
purchase Equipment Notes under the Note Purchase Agreement has terminated and
instruct the Escrow Agent to provide a notice of Final Withdrawal to the
Depositary substantially in the form of Exhibit B to the Deposit Agreement (the
"Final Withdrawal Notice") and (B) the Trustee will make a demand upon the
Company under the Note Purchase Agreement for an amount equal to the Special
Redemption Premium, such payment to be made on the Final Withdrawal Date.
Section 2.03. The Trustee. Subject to Section 7.15, the Trustee
shall not be responsible in any manner whatsoever for or in respect of the
validity or sufficiency of this Agreement, the Deposit Agreement or the Escrow
Agreement or the due execution hereof or thereof by the Company or the other
parties thereto (other than the Trustee), or for or in respect of the recitals
and statements contained herein or therein, all of which recitals and statements
are made solely by the Company.
Section 2.04. Acceptance by Trustee. The Trustee, upon the execution
and delivery of this Agreement, acknowledges its acceptance of all right, title
and interest in and to the Trust Property acquired pursuant to Section 2.01
hereof and the Note Purchase Agreement and declares that the Trustee holds and
will hold such right, title and interest, together with all other property
constituting the Trust Property, for the benefit of all then present and future
Certificateholders, upon the trusts herein set forth. Subject to Section 7.14,
the Trustee shall take all actions reasonably necessary to effect the
registration of all such Equipment Notes in the name of the Subordination Agent.
By its payment for and acceptance of each Certificate issued to it under this
Agreement, each initial Certificateholder as grantor of the Trust thereby joins
in the creation and declaration of the Trust.
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Section 2.05. Limitation of Powers. The Trust is constituted solely
for the purpose of making the investment in the Equipment Notes, and, except as
set forth herein, 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 any Aircraft (as
defined in the respective 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. Title, Form, Denomination and Execution of
Certificates. (a) The Initial Certificates shall be known as the "8.86%
1998-1D-O Initial Pass Through Certificates" and the Exchange Certificates shall
be known as the "8.86% 1998-1D-O Exchange Pass Through Certificates", in each
case, of the Trust. Each Certificate will represent a fractional undivided
interest in the Trust and shall be substantially in the form set forth as
Exhibit A hereto, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Agreement and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with the rules of any
securities exchange or as may, consistently herewith, be determined by the
officers executing such Certificates, as evidenced by their execution of 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. At the Escrow Agent's request under the Escrow Agreement, the
Trustee shall affix the corresponding Escrow Receipt to each Certificate. In any
event, any transfer or exchange of any Certificate shall also effect a transfer
or exchange of the related Escrow Receipt. Prior to the Final Withdrawal Date,
no transfer or exchange of any Certificate shall be permitted unless the
corresponding Escrow Receipt is attached thereto and also is so transferred or
exchanged. By acceptance of any Certificate to which an Escrow Receipt is
attached, each Holder of such a Certificate acknowledges and accepts the
restrictions on transfer of the Escrow Receipt set forth herein and in the
Escrow Agreement.
(b) The Initial Certificates shall be issued only in fully
registered form without coupons and only in denominations of $100,000 or
integral multiples of $1,000 in excess thereof, except that one Certificate may
be issued in a denomination of less than $100,000. The Exchange Certificates
will be issued in denominations of $1,000 or integral multiples thereof. Each
Certificate shall be dated the date of its authentication. The aggregate
Fractional Undivided Interest of Certificates shall not at any time exceed
$5,502,000.
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(c) Initial Certificates offered and sold in reliance on Rule 144A
shall be issued initially in the form of a single permanent global Certificate
in registered form, substantially in the form set forth as Exhibit A hereto (the
"U.S. Global Certificate"), duly executed and authenticated by the Trustee as
hereinafter provided. The U.S. Global Certificate will be registered in the name
of a nominee for DTC and deposited with the Trustee, as custodian for DTC. The
aggregate principal amount of the U.S. Global Certificate may from time to time
be increased or decreased by adjustments made on the records of the Depositary
or its nominee, or of the Trustee, as custodian for DTC or its nominee, as
hereinafter provided.
(d) Initial Certificates offered and sold in offshore transactions
in reliance on Regulation S shall be issued initially in the form of a single
temporary global Certificate in registered form, substantially in the form set
forth as Exhibit A hereto (the "Temporary Offshore Global Certificate") duly
executed and authenticated by the Trustee as hereinafter provided. The Temporary
Offshore Global Certificate will be registered in the name of a nominee of DTC
for credit to the account of the Agent Members acting as depositaries for
Euroclear and Cedel and deposited with the Trustee as custodian for DTC. At any
time on or after September 23, 1998 (the "Offshore Certificates Exchange Date"),
upon receipt by the Trustee of a certificate substantially in the form of
Exhibit B hereto, a single permanent global Certificate in registered form
substantially in the form set forth in Exhibit A (the "Permanent Offshore Global
Certificate"; and together with the Temporary Offshore Global Certificate, the
"Offshore Global Certificates"), duly executed and authenticated by the Trustee
as hereinafter provided, shall be registered in the name of a nominee for DTC
and deposited with the Trustee, as custodian for DTC, and the Registrar shall
reflect on its books and records the date of such transfer and a decrease in the
principal amount of any Temporary Offshore Global Certificate in an amount equal
to the principal amount of the beneficial interest in such Temporary Offshore
Global Certificate transferred. The U.S. Global Certificate and the Offshore
Global Certificates are sometimes referred to as the "Global Certificates".
(e) Initial Certificates offered and sold to Institutional
Accredited Investors shall be issued in the form of permanent certificated
Certificates in registered form in substantially the form set forth as Exhibit A
hereto (the "U.S. Physical Certificates"). Certificates issued pursuant to
Section 3.05(b) in exchange for interests in any Offshore Global Certificate
shall be in the form of permanent certificated Certificates in registered form
substantially in the form set forth in Exhibit A (the "Offshore Physical
Certificates"). The Offshore Physical Certificates and U.S. Physical
Certificates are sometimes collectively herein referred to as the "Physical
Certificates".
(f) The Exchange Certificates shall be issued in the form of one or
more global Certificates substantially in the form of Exhibit A hereto (each, a
"Global Exchange Certificate"), except that the Private Placement Legend
(hereinafter defined) shall be omitted. Such Global Exchange Certificates shall
be in registered form and be registered in the name of DTC and deposited with
the Trustee, at its Corporate Trust Office, as custodian DTC. The aggregate
principal amount of any Global Exchange
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Certificate may from time to time be increased or decreased by adjustments made
on the records of the Trustee, as custodian for DTC for such Global Exchange
Certificate, which adjustments shall be conclusive as to the aggregate principal
amount of any such Global Exchange Certificates. Subject to clause (i) of the
first sentence of this Section 3.01(f), the terms hereof applicable to Global
Certificates shall apply to the Global Exchange Certificates, mutatis mutandis.
(g) The definitive Certificates shall be in registered form and
shall be typed, printed, lithographed or engraved or produced by any combination
of these methods or may be produced in any other manner, all as determined by
the officers executing such Certificates, as evidenced by their execution of
such Certificates.
Section 3.02. Restrictive Legends. (a) Subject to Section 3.06, each
Global Certificate (other than the Permanent Offshore Global Certificate) and
each U.S. Physical Certificate shall bear the following legend (the "Private
Placement Legend") on the face thereof:
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND ACCORDINGLY, MAY NOT
BE OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY
MIDWAY AIRLINES CORPORATION ("MIDWAY") OR ANY AFFILIATE OF MIDWAY, RESELL
OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO MIDWAY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATES
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE
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TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT, (E)
PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE
SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT WILL DELIVER TO
EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A NOTICE SUBSTANTIALLY
TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS
CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY
MIDWAY OR AN AFFILIATE OF MIDWAY, THE HOLDER MUST CHECK THE APPROPRIATE
BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE MANNER OF SUCH
TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE PROPOSED
TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR
TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND MIDWAY SUCH CERTIFICATIONS,
LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY
REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN
EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.
(b) Each Global Certificate shall also bear the following legend on
the face thereof:
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE 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 HEREON 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.
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TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST
AGREEMENT REFERRED TO HEREIN.
Section 3.03. Authentication of Certificates. (a) The Trustee shall
duly execute, authenticate and deliver Certificates in authorized denominations
equalling in the aggregate the aggregate principal amount of the Equipment Notes
to be purchased by the Trustee pursuant to the Participation Agreements and
evidencing the entire ownership of the Trust.
(b) No Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose, unless there appears on
such Certificate a certificate of authentication substantially in the form
provided for herein executed by the Trustee by the manual signature of one of
its authorized signatories, and such certificate upon any Certificate shall be
conclusive evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.
Section 3.04. Transfer and Exchange. The Trustee shall cause to be
kept at the office or agency to be maintained by it in accordance with the
provisions of Section 7.12 of this Agreement a register (the "Register") for the
Certificates in which, subject to such reasonable regulations as it may
prescribe, the Trustee shall provide for the registration of the Certificates
and of transfers and exchanges of the Certificates as herein provided. The
Trustee shall initially be the registrar (the "Registrar") for the purpose of
registering the Certificates and transfers and exchanges of the Certificates as
herein provided. A Certificateholder may transfer or exchange a Certificate by
written application to the Registrar stating the name of the proposed transferee
and otherwise complying with the terms of this Agreement, including providing a
written certificate or other evidence of compliance with any restrictions on
transfer; provided that no exchanges of Initial Certificates for Exchange
Certificates shall occur until an Exchange Offer Registration Statement shall
have been declared effective by the SEC (notice of which shall be provided to
the Trustee by the Company). No such transfer shall be effected until, and such
transferee shall succeed to the rights of a Certificateholder only upon, final
acceptance and registration of the transfer by the Registrar in the Register.
Prior to the registration of any transfer by a Certificateholder as provided
herein, the Trustee shall treat the person in whose name the Certificate is
registered as the owner thereof for all purposes, and the Trustee shall not be
affected by notice to the contrary. Furthermore, DTC shall, by acceptance of a
Global Certificate, agree that transfers of beneficial interests in such Global
Certificate may be effected only through a book-entry system maintained by the
Depositary (or its agent), and that ownership of a beneficial interest in the
Certificate shall be required to be reflected in a book entry. When Certificates
are presented to the Registrar with a request to register the transfer or to
exchange them for an equal face amount of
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Certificates of other authorized denominations, the Registrar shall register the
transfer or make the exchange as requested if its requirements for such
transactions are met. To permit registrations of transfers and exchanges in
accordance with the terms, conditions and restrictions hereof, the Trustee shall
execute and authenticate Certificates at the Registrar's request. No service
charge shall be made for any registration of transfer or exchange of the
Certificates, but the Trustee may require payment by the transferor of a sum
sufficient to cover any transfer tax or similar governmental charge payable in
connection therewith.
Section 3.05. Book-Entry Provisions for U.S. Global Certificate and
Offshore Global Certificates. (a) Members of, or participants in, DTC ("Agent
Members") shall have no rights under this Agreement with respect to any Global
Certificate held on their behalf by DTC, or the Trustee as its custodian, and
DTC may be treated by the Trustee and any agent of the Trustee as the absolute
owner of such Global Certificate for all purposes whatsoever. Notwithstanding
the foregoing, nothing herein shall prevent the Trustee or any agent of the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by DTC or shall impair, as between DTC and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a holder of any Certificate. Upon the issuance of any Global
Certificate, the Registrar or its duly appointed agent shall record a nominee of
DTC as the registered holder of such Global Certificate.
(b) Transfers of any Global Certificate shall be limited to
transfers of such Global Certificate in whole, but not in part, to nominees of
DTC, its successor or such successor's nominees. Beneficial interests in the
U.S. Global Certificate and any Offshore Global Certificate may be transferred
in accordance with the rules and procedures of DTC and the provisions of Section
3.06. Beneficial interests in the U.S. Global Certificate or an Offshore Global
Certificate shall be delivered to all beneficial owners in the form of U.S.
Physical Certificates or Offshore Physical Certificates, as the case may be, if
(i) the Company notifies the Trustee in writing that DTC is unwilling or unable
to discharge properly its responsibilities as DTC for the U.S. Global
Certificate or such Offshore Global Certificate, as the case may be, and the
Company is unable to locate a qualified successor depositary within 90 days of
such notice or (ii) after the occurrence of an Event of Default, beneficial
owners of the U.S. Global Certificate or Offshore Global Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in the Trust, by Act of such Certificateholders delivered to the Company and the
Trustee, advise the Company, the Trustee and DTC through its Clearing Agency
Participants in writing that the continuation of a book-entry system through DTC
is no longer in the best interests of the Certificateholders, then the Trustee
shall notify all owners of beneficial interests in the U.S. Global Certificate
or an Offshore Global Certificate, through DTC, of the occurrence of any such
event and the availability of definitive Certificates.
(c) Any beneficial interest in one of the Global Certificates that
is transferred to a Person who takes delivery in the form of an interest in the
other Global Certificate will, upon such transfer, cease to be an interest in
such Global
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Certificate and become an interest in the other Global Certificate and,
accordingly, will thereafter be subject to all transfer restrictions, if any,
and other procedures applicable to beneficial interests in such other Global
Certificate for as long as it remains such an interest.
(d) [Intentionally omitted.]
(e) In connection with the transfer of the entire U.S. Global
Certificate or an entire Offshore Global Certificate to the beneficial owners
thereof pursuant to paragraph (b) of this Section 3.05, such U.S. Global
Certificate or Offshore Global Certificate, as the case may be, shall be deemed
to be surrendered to the Trustee for cancellation, and the Trustee shall
execute, authenticate and deliver, to each beneficial owner identified by DTC in
exchange for its beneficial interest in such U.S. Global Certificate or Offshore
Global Certificate, as the case may be, an equal aggregate principal amount of
U.S. Physical Certificates or Offshore Physical Certificates, as the case may
be, of authorized denominations.
(f) Any U.S. Physical Certificate delivered in exchange for an
interest in the U.S. Global Certificate pursuant to paragraph (b) of this
Section 3.05 shall, except as otherwise provided by paragraph (f) of Section
3.06, bear the Private Placement Legend.
(g) Any Offshore Physical Certificate delivered in exchange for an
interest in an Offshore Global Certificate pursuant to paragraph (b) of this
Section shall, except as otherwise provided by paragraph (f) of Section 3.06,
bear the applicable legend regarding transfer restrictions set forth in Section
3.02(a).
(h) The registered holder of the U.S. Global Certificate or any
Offshore Global Certificate may grant proxies and otherwise authorize any
Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Agreement or the Certificates.
Section 3.06. Special Transfer Provisions. Unless and until (i) an
Initial Certificate is sold under an effective Shelf Registration Statement or
(ii) an Initial Certificate is exchanged for an Exchange Certificate pursuant to
an effective Exchange Offer Registration Statement, in each case pursuant to the
terms of the Registration Rights Agreement, the following provisions shall apply
to the Certificates:
(a) Transfers to Non-QIB Institutional Accredited Investors. The
following provisions shall apply with respect to the registration of any
proposed transfer of a Certificate to any Institutional Accredited Investor
which is not a QIB (excluding transfers to or by Non-U.S. Persons):
(i) The Registrar shall register the transfer of any Certificate,
whether or not such Certificate bears the Private Placement Legend, if (x)
the requested transfer is at least two years after the later of the
original issue date of the
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Certificates and the last date on which such Certificate was held by the
Company or any affiliate thereof or (y) the proposed transferee has
delivered to the Registrar a letter substantially in the form of Exhibit D
hereto and the aggregate principal amount of the Certificates being
transferred is at least $100,000.
(ii) If the proposed transferor is an Agent Member holding a
beneficial interest in the U.S. Global Certificate, upon receipt by the
Registrar of (x) the documents, if any, required by paragraph (i) and (y)
instructions given in accordance with DTC's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
of the transfer and a decrease in the principal amount of such U.S. Global
Certificate in an amount equal to the principal amount of the beneficial
interest in such U.S. Global Certificate to be transferred, and the
Company shall execute, and the Trustee shall authenticate and deliver to
the transferor or at its direction, one or more U.S. Physical Certificates
of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of an Initial Certificate
to a QIB (excluding Non-U.S. Persons):
(i) If the Certificate to be transferred consists of U.S. Physical
Certificates or an interest in any Temporary Offshore Global Certificate,
the Registrar shall register the transfer if such transfer is being made
by a proposed transferor who has checked the box provided for on the form
of Initial Certificate stating, or has otherwise advised the Trustee and
the Registrar in writing, that the sale has been made in compliance with
the provisions of Rule 144A to a transferee who has signed the
certification provided for on the form of Initial Certificate stating, or
has otherwise advised the Trustee and the Registrar in writing, that it is
purchasing the Initial Certificate for its own account or an account with
respect to which it exercises sole investment discretion and that it, or
the Person on whose behalf it is acting with respect to any such account,
is a QIB within the meaning of Rule 144A, and is aware that the sale to it
is being made in reliance on Rule 144A and acknowledges that it has
received such information regarding the Trust and/or the Company as it has
requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
(ii) Upon receipt by the Registrar of the documents referred to in
clause (i) above and instructions given in accordance with DTC's and the
Registrar's procedures therefor, the Registrar shall reflect on its books
and records the date of such transfer and an increase in the principal
amount of the U.S. Global Certificate in an amount equal to the principal
amount of the U.S. Physical Certificates or interests in the Temporary
Offshore Global Certificate, as the case may be, being transferred, and
the Trustee shall cancel such Physical Certificates
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or decrease the amount of such Temporary Offshore Global Certificate so
transferred.
(c) [Intentionally omitted.]
(d) Transfers of Interests in the Permanent Offshore Global
Certificate or Offshore Physical Certificates. The Registrar shall register any
transfer of interests in the Permanent Offshore Global Certificate or Offshore
Physical Certificates without requiring any additional certification.
(e) Transfers to Non-U.S. Persons at Any Time. The following
provisions shall apply with respect to any registration of any transfer of an
Initial Certificate to a Non-U.S. Person:
(i) Prior to the Offshore Certificates Exchange Date, the Registrar
shall register any proposed transfer of an Initial Certificate to a
Non-U.S. Person upon receipt of a certificate substantially in the form
set forth as Exhibit C hereto from the proposed transferor.
(ii) On and after the Offshore Certificates Exchange Date, the
Registrar shall register any proposed transfer to any Non-U.S. Person if
the Certificate to be transferred is a U.S. Physical Certificate or an
interest in the U.S. Global Certificate, upon receipt of a certificate
substantially in the form of Exhibit C from the proposed transferor. The
Registrar shall promptly send a copy of such certificate to the Company.
(iii) Upon receipt by the Registrar of (x) the documents, if any,
required by paragraph (ii) and (y) instructions in accordance with the
Depositary's and the Registrar's procedures, the Registrar shall reflect
on its books and records the date of such transfer and a decrease in the
principal amount of such U.S. Global Certificate in an amount equal to the
principal amount of the beneficial interest in such U.S. Global
Certificate to be transferred, and (B) upon receipt by the Registrar of
instructions given in accordance with the Depositary's and the Registrar's
procedures, the Registrar shall reflect on its books and records the date
and an increase in the principal amount of the Offshore Global Certificate
in an amount equal to the principal amount of the U.S. Physical
Certificate or the U.S. Global Certificate, as the case may be, to be
transferred, and the Trustee shall cancel the Physical Certificate, if
any, so transferred or decrease the amount of such U.S. Global
Certificate.
(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Certificates not bearing the Private Placement Legend, the
Registrar shall deliver Certificates that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Certificates bearing the
Private Placement Legend, the Registrar shall deliver only Certificates that
bear the Private Placement Legend unless either (i) the circumstances
contemplated by paragraph (a)(i)(x) or (e)(ii) of this
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Section 3.06 exist or (ii) there is delivered to the Registrar an Opinion of
Counsel to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of the
Securities Act.
(g) General. By its acceptance of any Certificate bearing the
Private Placement Legend, each Holder of such a Certificate acknowledges the
restrictions on transfer of such Certificate set forth in this Agreement and
agrees that it will transfer such Certificate only as provided in this
Agreement. The Registrar shall not register a transfer of any Certificate unless
such transfer complies with the restrictions on transfer of such Certificate set
forth in this Agreement. In connection with any transfer of Certificates, each
Certificateholder agrees by its acceptance of the Certificates to furnish the
Registrar or the Trustee such certifications, legal opinions or other
information as either of them may reasonably require to confirm that such
transfer is being made pursuant to an exemption from, or a transaction not
subject to, the registration requirements of the Securities Act; provided that
neither the Trustee nor the Registrar shall be required to determine the
sufficiency of any such certifications, legal opinions or other information.
Until such time as no Certificates remain Outstanding, the Registrar
shall retain copies of all letters, notices and other written communications
received pursuant to Section 3.05 or this Section 3.06. The Trustee, if not the
Registrar at such time, shall have the right to inspect and make copies of all
such letters, notices or other written communications at any reasonable time
upon the giving of reasonable written notice to the Registrar.
Section 3.07. 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, in authorized denominations and of like Fractional Undivided
Interest and bearing a number not contemporaneously outstanding.
In connection with the issuance of any new Certificate under this
Section 3.07, 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 3.07 shall
constitute conclusive evidence of the appropriate Fractional Undivided Interest
in the Trust, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
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The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Trustee, the Registrar and any
Paying Agent 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 Article IV and for all other purposes whatsoever, and none of the
Trustee, the Registrar or any Paying Agent shall be affected by any notice to
the contrary.
Section 3.09. Cancellation. All Certificates surrendered for payment
or transfer or exchange shall, if surrendered to the Trustee or any agent of the
Trustee other than the Registrar, be delivered to the Registrar for cancellation
and shall promptly be cancelled by it. No Certificates shall be authenticated in
lieu of or in exchange for any Certificates cancelled as provided in this
Section, except as expressly permitted by this Agreement. All cancelled
Certificates held by the Registrar shall be destroyed and a certification of
their destruction delivered to the Trustee.
Section 3.10. Limitation of Liability for Payments. All payments and
distributions made to Certificateholders 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 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 to the extent available for distribution to such
Certificateholder as provided in this Agreement.
Section 3.11. Temporary Certificates. Until definitive Certificates
are ready for delivery, the Trustee shall authenticate temporary Certificates.
Temporary Certificates shall be substantially in the form of definitive
Certificates but may have insertions, substitutions, omissions and other
variations determined to be appropriate by the officers executing the temporary
Certificates, as evidenced by their execution of such temporary Certificates. If
temporary Certificates are issued, the Trustee will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
office or agency of the Trustee designated for such purpose pursuant to Section
7.12, without charge to the Certificateholder. Upon surrender for cancellation
of any one or more temporary Certificates, the Trustee shall execute,
authenticate and deliver in exchange therefor a like face amount of definitive
Certificates of authorized denominations. Until so exchanged, the temporary
Certificates shall be entitled to the same benefits under this Agreement as
definitive Certificates.
Section 3.12. ERISA Restrictive Legend. All Certificates issued
pursuant to this Agreement shall bear a legend to the following effect (the
"ERISA Legend")
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unless the Company and the Trustee determine otherwise consistent with
applicable law:
"BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS FOR THE BENEFIT OF
THE COMPANY AND EACH OWNER PARTICIPANT THAT (A) IT IS NOT A PLAN TRANSFEREE (AS
DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR (B) ONE OR MORE PROHIBITED
TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS APPLIES SUCH THAT THE USE OF
PLAN ASSETS TO PURCHASE AND HOLD THIS PASS THROUGH CERTIFICATE WILL NOT
CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER ERISA OR SECTION 4975 OF
THE CODE. THE PASS THROUGH TRUST AGREEMENT CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF
THE FOREGOING RESTRICTIONS."
By acceptance of any Certificate bearing the ERISA Legend, each
Holder of such a Certificate acknowledges for the benefit of the Company and
each Owner Participant the restrictions on transfer of such Certificate set
forth in this Agreement and agrees that it will transfer such Certificate only
as provided in this Agreement. The Registrar shall not register a transfer of
any Certificate unless such transfer complies with the restrictions on transfer,
if any, of such Certificate set forth in this Agreement.
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 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, 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 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 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.
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(c) The Trustee shall present to the Loan Trustee to which an
Equipment Note relates such Equipment Note on the date of its stated final
maturity or, in the case of any Equipment Note which is to be redeemed in whole
pursuant to the relevant Indenture, on the applicable redemption date under such
Indenture.
Section 4.02. Distributions from Certificate Account and Special
Payments Account. (a) On each Regular Distribution Date or as soon thereafter as
the Trustee has confirmed receipt of the payment of the Scheduled Payments due
on such date, the Trustee shall distribute out of the Certificate Account the
entire amount deposited therein pursuant to Section 4.01(a). There shall be so
distributed to each Certificateholder of record 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 Fractional Undivided Interest in the Trust held by such
Certificateholder) of the total amount in the Certificate Account, except that,
with respect to Certificates registered on the Record Date in the name of the
nominee of the Depositary (initially, such nominee to be Cede & Co.), such
distribution shall be made by wire transfer in immediately available funds to
the account designated by such nominee.
(b) On each Special Distribution Date with respect to any Special
Payment or as soon thereafter as the Trustee has confirmed receipt of any
Special Payments, the Trustee shall distribute out of the 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 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 Trust held by such Certificateholder) of the aggregate amount in
the Special Payments Account on account of such Special Payment, except that,
with respect to Certificates registered on the Record Date in the name of the
nominee of the Depositary (initially, such nominee to be Cede & Co.), such
distribution shall be made by wire transfer in immediately available funds to
the account designated by such nominee.
(c) The Trustee shall, at the expense of the Company, cause notice
of each Special Payment to be mailed to each Certificateholder at his address as
it appears in the Register. In the event of redemption, prepayment or purchase
of Equipment Notes held in the Trust, such notice shall be mailed not less than
15 days prior to the date any 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 (which notice, in the case of a Special Redemption Premium,
shall include a copy of the notice delivered by the Escrow Paying Agent under
Section 2.06 of the Escrow Agreement). Notices mailed by the Trustee shall set
forth:
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(i) the Special Distribution Date and the Record Date therefor
(except as otherwise provided in Section 11.01),
(ii) the amount of the Special Payment for each $1,000 face amount
Certificate (taking into account any payment to be made by the Company
pursuant to Section 2.02) 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, the total amount to be received on such date for each
$1,000 face amount Certificate.
If the amount of (x) premium, if any, payable upon the redemption, prepayment or
purchase of an Equipment Note or (y) Special Redemption Premium has not been
calculated at the time 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 such premium or Special Redemption Premium, as the case may
be, received will also be distributed.
If any redemption of the Equipment Notes held in the Trust is
cancelled, the Trustee, as soon as possible after learning thereof, shall cause
notice thereof to be mailed to each Certificateholder at its address as it
appears on the Register.
Section 4.03. Statements to Certificateholders. (a) On each
Distribution Date, the Trustee will include with each distribution to
Certificateholders of a Scheduled Payment or Special Payment, as the case may
be, a statement setting forth the information provided below (in the case of a
Special Payment, including any Special Redemption Premium, reflecting in part
the information provided by the Escrow Paying Agent under the Escrow Agreement).
Such statement shall set forth (per $1,000 face amount Certificate as to (ii),
(iii), (iv) and (v) below) the following information:
(i) the aggregate amount of funds distributed on such Distribution
Date under the Agreement and under the Escrow Agreement, indicating the
amount allocable to each source;
(ii) the amount of such distribution under the Agreement allocable
to principal and the amount allocable to premium (including the Special
Redemption Premium), if any;
(iii) the amount of such distribution under the Agreement allocable
to interest;
(iv) the amount of such distribution under the Escrow Agreement
allocable to interest;
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(v) the amount of such distribution under the Escrow Agreement
allocable to Deposits; and
(vi) the Pool Balance and the Pool Factor.
With respect to the Certificates registered in the name of a
Clearing Agency or its nominee, 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 Trustee will
mail to each such Clearing Agency Participant the statement described above and
will make available additional copies as requested by such Clearing Agency
Participant for forwarding to holders of Certificates.
(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), (a)(ii), (a)(iii), (a)(iv) and (a)(v)
above with respect to the 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 a Clearing Agency or its nominee, such report and such other items shall be
prepared on the basis of information supplied to the Trustee 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.
(c) Utilizing information provided by Midway, promptly following (i)
the Delivery Period Termination Date, if there has been any change in the
information set forth in clauses (x), (y) and (z) below from that set forth in
page 65 of the Offering Memorandum, and (ii) any early redemption or purchase
of, or any default in the prepayment of principal or interest in respect of, any
of the Equipment Notes held in the Trust, or any Final Withdrawal, the Trustee
shall furnish to Certificateholders of record on such date a statement setting
forth (x) the expected Pool Balances for each subsequent Regular Distribution
Date following the Delivery Period Termination Date, (y) the related Pool
Factors for such Regular Distribution Dates and (z) the expected principal
distribution schedule of the Equipment Notes, in the aggregate, held as Trust
Property at the date of such notice. With respect to the Certificates registered
in the name of a Clearing Agency, on the Delivery Period Termination Date, the
Trustee will request from such Clearing Agency a securities position listing
setting forth the names of all Clearing Agency Participants reflected on such
Clearing Agency's books as holding interests in the Certificates on such date.
The Trust will mail to each such Clearing Agency Participant the statement
described above and will make available
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additional copies as requested by such Clearing Agency Participant for
forwarding to holders of interests in the 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 gross negligence (or simple negligence in
the handling of funds) 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 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 (i) organized and validly existing under the laws of the United States
of America or any state thereof or the District of Columbia, (ii) a
"citizen of the United States" (as defined in Section 40102(a)(15) of
Title 49 of the United States Code) and (iii) a United States certificated
air carrier, if and so long as such status is a condition of entitlement
to the benefits of Section 1110 of the Bankruptcy Reform Act of 1978, as
amended (11 U.S.C. ss. 1110), with respect to the Aircraft;
(b) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance, transfer or
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lease substantially all of the assets of the Company as an entirety shall
execute and deliver to the Trustee 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 this Agreement, the Other Pass Through Trust Agreements, the
Participation Agreements, and each other Note Document to be performed or
observed by the Company;
(c) immediately after giving effect to such transaction, no Event of
Default (as defined in any Lease or any Indenture relating to an Owned
Aircraft), shall have occurred and be continuing; and
(d) the Company shall have delivered to the Trustee an Officer's
Certificate of the Company and an Opinion of Counsel of the Company
reasonably satisfactory to the Trustee, each stating that such
consolidation, merger, conveyance, transfer or lease and the assumption
agreement mentioned in clause (b) above comply with this Section 5.02 and
that all conditions precedent herein provided for relating to such
transaction have been complied with.
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 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 this Agreement or any Financing Document 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 the Intercreditor
Agreement.
(b) Purchase Rights of Certificateholders. 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
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Certificates pursuant to Section 6.01(b)(i) of the Class B Trust Agreement or
any purchase of the Class A Certificates and the Class B Certificates pursuant
to Section 6.01(b)(i) of 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 by notifying in writing each of the Other Trustees and each
other Certificateholder of such Certificateholder's intention to purchase the
Class A Certificates, the Class B Certificates and the Class C Certificates ten
days after the date of such notification, 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 principal amount of the Certificates held by each such
Certificateholder and (B) if prior to the end of such ten-day period any other
Certificateholder fails to notify the purchasing Certificateholder of such other
Certificateholder's desire to participate in such a purchase, then such other
Certificateholder shall lose its right to purchase the Class A Certificates, the
Class B Certificates and the Class C Certificates pursuant to this Section
6.01(b).
The purchase price with respect to each Class of Certificates shall
be equal to the Pool Balance of such Class of Certificates, 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 of such Class under this Agreement, the Intercreditor
Agreement, the Escrow Agreement or any Note Document or on or in respect of the
Certificates of such Class; provided, however, that (i) if such purchase occurs
after the record date specified in Section 2.03(b) of the Escrow Agreement
relating to the distribution of unused Deposits and accrued and unpaid interest
thereunder, such purchase price shall be reduced by the aggregate amount of
unused Deposits and interest to be distributed under the Escrow Agreement (which
deducted amounts shall remain distributable to, and may be retained by the
Certificateholder of such Class as of such record date) and (ii) if such
purchase occurs after a Record Date, such purchase price shall be reduced by the
amount to be distributed hereunder on the related Distribution date (which
deducted amounts shall remain distributable to, and may be retained by, the
Certificateholder of such Class as of such Record Date); provided further that
no such purchase of Certificates of any Class shall be effective unless the
purchaser shall certify to the Other Trustee for such Class that
contemporaneously with such purchase, such purchaser is purchasing, pursuant to
the terms of this Agreement and the Other Pass Through Trust Agreements, the
Class A Certificates, the Class B Certificates and the Class C Certificates.
Each payment of the purchase price of the Certificates of any Class referred to
in the first sentence hereof shall be made to an account or accounts designated
by the Other Trustee for such Class and each such purchase shall be subject to
the terms of this Section 6.01(b). The Class A Certificates, Class B
Certificates and the Class C Certificates will be deemed to be purchased on the
date payment of the purchase price is made notwithstanding the failure of the
Certificateholders of any Class to deliver any Certificates of such Class
(whether in the form of Physical
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Certificates or beneficial interests in Global Certificates) and, upon such a
purchase, (i) the only rights of the Certificateholders of such Class will be to
deliver the Certificates of such Class to the purchaser and receive the purchase
price for the Certificates of such Class and (ii) if the purchaser shall so
request, such Certificateholder will comply with all the provisions of Section
3.04 of the Other Pass Through Trust Agreement for such Class to enable new
Certificates of such Class 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 of any Class shall be borne by the purchaser thereof.
As used in this Section 6.01(b), the terms "Certificateholder",
"Class", "Class A Certificate", "Class B Certificate", and "Class D
Certificate", shall have the respective meanings assigned to such terms in the
Intercreditor Agreement.
Section 6.02. Incidents of Sale of Equipment Notes. Upon any sale of
all or any part of the Equipment Notes made either under the power of sale given
under this Agreement or otherwise for the enforcement of this Agreement, the
following shall be applicable:
(1) Certificateholders and Trustee May Purchase Equipment Notes. Any
Certificateholder, the Trustee in its individual or any other capacity or
any other Person may bid for and purchase any of the Equipment Notes, and
upon compliance with the terms of sale, may hold, retain, possess and
dispose of such Equipment Notes in their own absolute right without
further accountability.
(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 received by
the Trustee from the Subordination Agent pursuant to the Intercreditor
Agreement upon any sale made either under the power of sale given by this
Agreement or otherwise for the enforcement of this Agreement shall 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 of the principal of,
premium, if any, or interest on any Equipment Note, or if there shall be any
failure to pay Rent (as defined in the relevant Lease) under any Lease when due
and payable, then the Trustee, in its own name and as trustee of an express
trust, as holder of such Equipment Notes, to the extent permitted by and in
accordance with the terms of the Intercreditor Agreement and the Financing
Documents (subject to the rights of the applicable Owner Trustee or Owner
Participant to cure any such failure in accordance
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with Section 8.03 of any applicable Indenture relating to a Leased Aircraft),
shall be entitled and empowered to institute any suits, actions or proceedings
at law, in equity or otherwise, for the collection of the sums so due and unpaid
on such Equipment Notes or under such Lease and may prosecute any such claim or
proceeding to judgment or final decree with respect to the whole amount of any
such sums so due and unpaid.
Section 6.04. Control by Certificateholders. Subject to Section 6.03
and the Intercreditor Agreement, the Certificateholders holding Certificates
evidencing Fractional Undivided Interests aggregating not less than a majority
in interest in the 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 the Trust or pursuant to the terms of the Intercreditor Agreement, or
exercising any trust or power conferred on the Trustee under this Agreement or
the Intercreditor Agreement, including any right of the Trustee as Controlling
Party under the Intercreditor Agreement or as holder of the Equipment Notes,
provided that
(1) such Direction shall not 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 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 the Intercreditor
Agreement, the Certificateholders holding Certificates 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 Loan 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 Loan
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, or
(2) in the payment of the principal of (premium, if any) or interest
on the Equipment Notes, or
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(3) in respect of a covenant or provision hereof which under Article
IX or X cannot be modified or amended without the consent of each
Certificateholder holding an Outstanding Certificate affected thereby.
Upon any such waiver, such default shall cease to exist with respect
to the Certificates 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 to the relevant Loan Trustee shall be annulled
with respect thereto; but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon. Upon any
such waiver, the Trustee shall vote the Equipment Notes issued under the
relevant Indenture to waive the corresponding Indenture Default.
Section 6.06. Right of Certificateholders to Receive Payments Not to
Be Impaired. Anything in this Agreement to the contrary notwithstanding,
including, without limitation, Section 6.07 hereof, but subject to the
Intercreditor Agreement, the right of any Certificateholder to receive
distributions of payments required pursuant to Section 4.02 hereof on the
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 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) Certificateholders holding Certificates evidencing Fractional
Undivided Interests aggregating not less than 25% of the 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 7.03(e);
(3) the Trustee shall have refused or neglected to institute such an
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 shall have
been given to the Trustee during such 60-day period by Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating
not less than a majority in interest in the Trust.
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It is understood and intended that no one or more of the
Certificateholders shall have any right in any manner whatsoever hereunder or
under the Certificates to (i) surrender, impair, waive, affect, disturb or
prejudice any property in the Trust Property or the lien of any Indenture on any
property subject thereto, or the rights of the Certificateholders or the holders
of the Equipment Notes, (ii) obtain or seek to obtain priority over or
preference with respect to any other such Certificateholder 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 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 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. Certain Duties and Responsibilities. (a) Except during
the continuance of an Event of Default, the Trustee undertakes to perform only
such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Trustee.
(b) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Agreement, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of its
own affairs.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own gross negligence (or simple negligence in the
handling of funds) or wilful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section; and
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(2) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer of the Trustee, unless it shall be
proved that the Trustee was negligent in ascertaining the pertinent facts.
(d) Whether or not herein expressly so provided, every provision of
this Trust Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section.
Section 7.02. 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, the Owner Trustees, the Owner Participants, the
Loan Trustees and the Certificateholders 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, premium, if
any, or interest on any Equipment Note or any other Trust Property, 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. For the purpose of
this Section, the term "default" means any event that is, or after notice or
lapse of time or both would become, an Event of Default.
Section 7.03. 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 the
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
Officer's Certificate of the Company, any Owner Trustee or any Loan
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;
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(e) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement or the Intercreditor
Agreement at the request or direction of any of the Certificateholders
pursuant to this Agreement or the 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, 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 the Intercreditor Agreement or perform any duties under this
Agreement or the 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 the Intercreditor Agreement;
(h) the Trustee shall not be liable with respect to any action taken
or omitted to be taken by it in good faith in accordance with the
direction of the Certificateholders holding Certificates evidencing
Fractional Undivided Interests aggregating not less than a majority in
interest in the 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 the
Intercreditor Agreement; and
(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.
Section 7.04. Not Responsible for Recitals or Issuance of
Certificates. The recitals contained herein and in the Certificates, 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 7.15, the Trustee makes no representations as to the validity
or sufficiency of this Agreement, any Participation Agreement, the Escrow
Agreement, the Deposit Agreement, any Equipment Notes, the Certificates or any
other Note Document, except that the Trustee hereby represents and warrants that
this Agreement has been, and the Intercreditor Agreement, each Note Document and
each Certificate will be, executed, authenticated and delivered by one of its
officers who is duly authorized to execute, authenticate and deliver such
document on its behalf.
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Section 7.05. 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, if
applicable, may otherwise deal with the Company, the Owner Trustees or the Loan
Trustees with the same rights it would have if it were not Trustee, Paying
Agent, Registrar or such other agent.
Section 7.06. Money Held in Trust. Money held by the Trustee or the
Paying Agent in trust hereunder need not be segregated from other funds except
to the extent required herein or by law and neither the Trustee nor the Paying
Agent shall have any liability for interest upon any such moneys except as
provided for herein.
Section 7.07. Compensation and Reimbursement. The Company agrees:
(1) to pay, or cause to be paid, to the Trustee from time to time
compensation (as set out in a separate fee agreement between the Trustee
and the Company) 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 herein, 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 Agreement or the
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 own
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 7.15;
(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 gross negligence (or
simple negligence in the handling of funds), 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 7.15. 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 (which consent shall not be
unreasonably withheld) 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
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(4) to indemnify, or cause to be indemnified, the Trustee, solely in
its individual capacity, for, and to hold it harmless against, any tax
(except to the extent the Trustee is reimbursed therefor pursuant to the
next paragraph, provided that no indemnification shall be available with
respect to any tax attributable to the Trustee's compensation for serving
as such) incurred without negligence, willful misconduct or bad faith, on
its part, arising out of or in connection with the acceptance or
administration of this Trust, including any costs and expenses incurred in
contesting the imposition of any such tax. The Trustee, in its individual
capacity, shall notify the Company promptly of any claim for any tax for
which it may seek indemnity. The Trustee shall permit the Company to
contest the imposition of such tax and the Trustee, in its individual
capacity, shall cooperate in the defense. The Trustee, in its individual
capacity, may have separate counsel with the consent of the Company (which
consent shall not be unreasonably withheld) 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 upon, the Trust Property for any tax incurred
without gross negligence (or simple negligence in the handling of funds), 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. If the Trustee
reimburses itself from the Trust Property of such Trust for any such tax, it
will mail a brief report within 30 days setting forth the circumstances thereof
to all Certificateholders as their names and addresses appear in the Register.
Section 7.08. Corporate Trustee Required; Eligibility. There shall
at all times be a Trustee hereunder 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 $75,000,000 (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 and having a combined capital
and surplus of at least $75,000,000). If such corporation publishes reports of
conditions at least annually, pursuant to law or to the requirements of federal,
state, territorial or District of Columbia supervising or examining authority,
then for the purposes of this Section 7.08, 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 7.08 to act as Trustee, the
Trustee shall resign immediately as Trustee in the manner and with the effect
specified in Section 7.09.
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Section 7.09. Resignation and Removal; Appointment of Successor. (a)
No resignation or removal of the Trustee and no appointment of a successor
Trustee pursuant to this Article shall become effective until the acceptance of
appointment by the successor Trustee under Section 7.10.
(b) The Trustee may resign at any time as trustee by giving prior
written notice thereof to the Company, the Authorized Agents, the Owner Trustees
and the Loan Trustees. In addition, upon the occurrence of an Event of Default,
in the event the Trustee shall not have received instructions from the
Certificateholders or the Certificateholders with respect to any Other Trust,
the Trustee shall resign. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Company, the Authorized Agents, the Owner
Trustees, the Loan 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 by Act of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Trustee, the Company, the Owner Trustees and the Loan Trustees.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 310 of the Trust
Indenture Act, if applicable, after written request therefor by the
Company or by any Certificateholder who has been a bona fide
Certificateholder for at least six months; or
(2) the Trustee shall cease to be eligible under Section 7.08 and
shall fail to resign after written request therefor by the Company or by
any such Certificateholder; or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any case, (i) the Company may remove the Trustee or (ii) any
Certificateholder who has been a bona fide Certificateholder for at least six
months may, on behalf of itself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
(e) If a Responsible Officer of the Trustee shall obtain actual
knowledge of an Avoidable Tax 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
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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 in a jurisdiction where there are no Avoidable
Taxes.
(f) If the Trustee shall resign, be removed or become incapable of
acting as trustee or if a vacancy shall occur in the office of the Trustee for
any cause, the Company shall promptly appoint a successor Trustee. If, within 90
days after such resignation, removal or incapability, or other occurrence of
such vacancy, a successor Trustee shall be appointed by Act of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the Trust
delivered to the Company, the Owner Trustees, the Loan Trustees and the retiring
Trustee, and the Company approves such appointment, which approval shall not be
unreasonably withheld, then the successor Trustee so appointed shall, forthwith
upon its acceptance of such appointment, become the successor Trustee and
supersede the successor Trustee appointed as provided above. If no successor
Trustee shall have been so appointed as provided above and accepted appointment
in the manner hereinafter provided, any Certificateholder 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
appointment of a successor Trustee.
(g) The successor Trustee 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 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 7.10. Acceptance of Appointment by Successor. Every
successor Trustee appointed hereunder shall execute and deliver to the Company,
the Authorized Agents, the Owner Trustees and the Loan Trustees and to the
retiring Trustee an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee 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 Trust Property held
by such retiring Trustee hereunder, subject nevertheless to its lien, if any,
provided for in Section 7.07 and the retiring Trustee shall thereupon be
released from further liability hereunder. 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.
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No institution shall accept its appointment as a Trustee hereunder
unless at the time of such acceptance such institution shall be qualified and
eligible under this Article VII.
Section 7.11. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto. In case any Certificates shall have been
executed or authenticated, but not delivered, by the Trustee then in office, any
successor by merger, conversion or consolidation to such authenticating Trustee
may adopt such execution or authentication and deliver the Certificates so
executed or authenticated with the same effect as if such successor Trustee had
itself executed or authenticated such Certificates.
Section 7.12. Maintenance of Agencies. (a) There shall at all times
be maintained an office or agency where Certificates 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 may be served. 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. Each such Authorized Agent shall be
a bank or trust company, shall be a corporation organized and doing business
under the laws of the United States or any state, with a combined capital and
surplus of at least $75,000,000, or a corporation having a combined capital and
surplus in excess of $5,000,000, the obligations of which are guaranteed by a
corporation organized and doing business under the laws of the United States or
any state, with a combined capital and surplus of at least $75,000,000, and
shall be authorized under such laws to exercise corporate trust powers, subject
to supervision by federal or state authorities. The Trustee shall initially be
the Paying Agent and, as provided in Section 3.04, Registrar hereunder with
respect to the Certificates. 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
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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, the Owner Trustees and the
Loan 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, the Owner Trustees and the Loan Trustees; and in each case the Trustee
shall mail notice of such appointment to all Certificateholders as their names
and addresses appear on the Register.
(e) The Company agrees to pay, or cause to be paid, from time to
time to each Authorized Agent reasonable compensation for its services and to
reimburse it for its reasonable expenses.
Section 7.13. 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 7.14. Registration of Equipment Notes in Name of
Subordination Agent. The Trustee agrees that all Equipment Notes to be purchased
by the Trust shall be issued in the name of the Subordination Agent or its
nominee and held by the Subordination Agent in trust for the benefit of the
Certificateholders, or, if not so held, the 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 7.15. Representations and Warranties of Trustee. The Trustee
hereby represents and warrants that:
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(a) the Trustee is a national banking association organized and
validly existing 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, the Escrow Agreement, the
Intercreditor Agreement and the Note Purchase Agreement and has taken all
necessary action to authorize the execution, delivery, and performance by
it of this Agreement, the Escrow Agreement, the Intercreditor Agreement
and the Note Purchase Agreement;
(c) the execution, delivery and performance by the Trustee of this
Agreement, the Escrow Agreement, the Intercreditor Agreement and the Note
Purchase Agreement (i) will not violate any provision of United States
law, Maryland law or any order, writ, judgment, or decree of any court,
arbitrator or governmental authority of the United States or the State of
Maryland 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, or (iii) will not violate any provision of, or constitute, with
or without notice or lapse of time, a default under, or result in the
creation or imposition of any lien on any properties included in the Trust
Property pursuant to the provisions of any mortgage, indenture, contract,
agreement or other undertaking to which it is a party, which violation,
default or lien could reasonably be expected to have an adverse effect on
the Trustee's performance or ability to perform its duties hereunder or
thereunder or on the transactions contemplated herein or therein;
(d) the execution, delivery and performance by the Trustee of this
Agreement, the Escrow Agreement, the Intercreditor Agreement and the Note
Purchase Agreement 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 the United States where it
is located regulating the banking and corporate trust activities of the
Trustee; and
(e) this Agreement, the Escrow Agreement, the Intercreditor
Agreement and the Note Purchase Agreement 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 7.16. Withholding Taxes; Information Reporting. (a) The
Trustee, as trustee of the 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
any and all withholding taxes applicable thereto as required by law. The Trustee
agrees to act as such
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withholding agent and, in connection therewith, whenever any present or future
taxes or similar charges are required to be withheld with respect to any amounts
payable in respect of the Certificates, to withhold such amounts and timely pay
the same to the appropriate authority in the name of and on behalf of the
Certificateholders, 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 appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Certificateholders may reasonably request from time
to time. The Trustee agrees to file any other information reports as may be
required to be filed by it under United States law.
(b) The Trustee may satisfy certain of its obligations with respect
to this Agreement by retaining, at the expense of the Company, a firm of
independent public accountants (the "Accountants") which shall (i) be
responsible for all tax filing requirements and (ii) perform the obligations of
the Trustee in respect of tax filing requirements. The Trustee shall be deemed
to have discharged its tax filing obligations under this Agreement upon its
retention of the Accountants, and, if the Trustee shall have selected in the
Accountants in good faith and without gross negligence, the Trustee shall not
have any liability with respect to the default or misconduct of the Accountants.
(c) The Trustee, at the request (and expense) of the Company, will
make such United States federal income tax elections as may be necessary to
prevent the Trust from being classified for federal income tax purposes as an
association taxable as a corporation.
Section 7.17. Trustee's Liens. The Trustee in its individual
capacity agrees that it will 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 which is attributable to the
Trustee either (i) in its individual capacity and which is unrelated to the
transactions contemplated by this Agreement, the Intercreditor Agreement, the
Note Purchase Agreement or the Note Documents, or (ii) as Trustee hereunder or
in its individual capacity and which arises out of acts or omissions which are
not contemplated by this Agreement.
Section 7.18. 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.
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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 or cause to be
furnished 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, 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, 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 7.12.
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 contained
in the most recent list furnished to the Trustee as provided in Section 7.12 or
Section 8.01, as the case may be, and the names and addresses of
Certificateholders 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
7.12 or Section 8.01, as the case may be, upon receipt of a new list so
furnished.
Section 8.03. Reports by Trustee. Within 60 days after May 15 of
each year commencing with the first full year following the issuance of the
Certificates, the Trustee shall transmit to the Certificateholders, 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;
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(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;
(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; and
(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 regard to any period of grace
or requirement of notice provided under this Agreement).
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 (and at the sole cost and expense of the Company), enter into one or
more agreements supplemental hereto or, if applicable, to the Escrow Agreement,
the Deposit Agreement, the Note Purchase Agreement, the Intercreditor Agreement
or the Liquidity Facility in form and substance satisfactory to the Trustee, for
any of the following purposes:
(1) 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 in the Note Purchase Agreement; or
(2) to add to the covenants of the Company for the benefit of the
Certificateholders, or to surrender any right or power in this Agreement
or in the Note Purchase Agreement conferred upon the Company; or
(3) to correct or supplement any provision in this Agreement, the
Escrow Agreement, the Deposit Agreement, the Note Purchase Agreement, the
Intercreditor Agreement or the Liquidity Facility which may be defective
or
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inconsistent with any other provision of this Agreement, the Deposit
Agreement, the Escrow Agreement, the Note Purchase Agreement, the
Intercreditor Agreement or any Liquidity Facility, as applicable, or to
cure any ambiguity or to modify any other provisions with respect to
matters or questions arising under this Agreement, the Escrow Agreement,
the Note Purchase Agreement, the Deposit Agreement, the Intercreditor
Agreement or the Liquidity Facility, provided that any such action shall
not materially adversely affect the interests of the Certificateholders;
or
(4) as provided in the Intercreditor Agreement, to give effect to or
provide for a Replacement Liquidity Facility or to comply with any
requirement of the Commission, any applicable law, rules or regulations of
any exchange or quotation system on which the Certificates are listed, or
any regulatory body;
(5) to modify, eliminate or add to the provisions of this Agreement,
the Deposit Agreement, the Escrow Agreement, the Intercreditor Agreement,
the Note Purchase Agreement or the Liquidity Facility to such extent as
shall be necessary to qualify or continue the qualification of this
Agreement under the Trust Indenture Act, or any similar federal statute
enacted after the execution of this Agreement, and to add to this
Agreement, the Deposit Agreement, the Escrow Agreement, the Intercreditor
Agreement, the Note Purchase Agreement or the Liquidity Facility such
provisions as may be expressly permitted by the Trust Indenture Act; and
(6) to evidence and provide for the acceptance of appointment under
this Agreement, the Deposit Agreement, the Escrow Agreement, the
Intercreditor Agreement, the Note Purchase Agreement or the Liquidity
Facility of a successor Trustee and to add or change any of the provisions
of this Agreement, the Deposit Agreement, the Escrow Agreement, the
Intercreditor Agreement, the Note Purchase Agreement or the Liquidity
Facility as shall be necessary to provide for or facilitate the
administration of the Trust under this Agreement by more than one Trustee,
provided that in each case, such modification or supplement 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 9.02. Supplemental Agreements with Consent of
Certificateholders. With the consent of the Certificateholders holding
Certificates evidencing Fractional Undivided Interests aggregating not less than
a majority in interest in the Trust, by Act of said Certificateholders delivered
to the Company and the Trustee, the Company may, and the Trustee (subject to
Section 9.03) shall, at the sole cost and expense of the Company, 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, the Deposit Agreement, the Escrow Agreement, the Intercreditor
Agreement, the Liquidity Facility or the Note Purchase Agreement to the extent
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applicable to such Certificateholders or of modifying in any manner the rights
and obligations of such Certificateholders under this Agreement, the Deposit
Agreement, the Escrow Agreement, the Intercreditor Agreement, the Liquidity
Facility or the Note Purchase 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 (or, with respect to the Deposits, the
Receiptholders) of payments on the Deposits or the Equipment Notes held in
the Trust or distributions that are required to be made herein on any
Certificate, or change any date of payment of any Certificate, or change
the place of payment where, or the coin or currency in which, any
Certificate is 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 included in the
Trust Property except as permitted by this Agreement, or otherwise deprive
such Certificateholder of the benefit of the ownership of the Equipment
Notes in the Trust; or
(3) alter the priority of distributions specified in the
Intercreditor Agreement in a manner materially adverse to the interests of
the Certificateholders;
(4) modify any of the provisions of this Section 9.02 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 affected thereby;
(5) modify any of the provisions relating to the rights of the
Certificateholders in respect of the waiver of Events of Default or
receipt of payment; or
(6) adversely affect the status of this 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.
It shall not be necessary for any Act of 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
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in favor of the Trustee under this Agreement, the Trustee may in its discretion
decline to execute such document.
Section 9.04. Execution of Supplemental Agreements. In executing, or
accepting the additional trusts created by, any supplemental agreement permitted
by this Article or the modifications thereby of the trusts created by this
Agreement, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental agreement is authorized or permitted by this Agreement.
Section 9.05. Effect of Supplemental Agreements. Upon the execution
of any agreement supplemental to this Agreement under this Article, this
Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every
Certificateholder theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
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 authenticated and delivered after the execution of any supplemental
agreement 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 after
proper presentation and demand.
ARTICLE X
AMENDMENTS TO INDENTURES AND FINANCING DOCUMENTS
Section 10.01 Amendments and Supplement to Indentures and Other Note
Documents. In the event that the Trustee, as holder (or beneficial owner through
the Subordination Agent) of any Equipment Note in trust for the benefit of the
Certificateholders or as Controlling Party, receives a request for a consent to
any amendment, modification, waiver or supplement under any Indenture or other
Note Document or other related document, the Trustee shall forthwith send a
notice of such proposed amendment, modification, waiver or supplement to each
Certificateholder registered on the Register as of the date of such notice. The
Trustee shall request from the Certificateholders a Direction as to (a) whether
or not to take or refrain from taking (or to direct the Subordination Agent to
take or refrain from taking) any action which a holder of such Equipment Note or
the Controlling Party has the option to direct, (b) whether or not to give or
execute (or to direct the Subordination Agent to give or execute) any waivers,
consents, amendments, modifications or supplements as a holder of such Equipment
Note or as Controlling Party and (c) how to vote or direct
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the Subordination Agent 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 (or in directing the Subordination
Agent in any of the foregoing), (i) other than as Controlling Party, 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 (x) the aggregate face amount of all
Certificates actually voted in favor of or for giving consent to such action by
such direction of Certificateholders to (y) the aggregate face amount of all
outstanding Certificates of the Trust and (ii) as the Controlling Party, the
Trustee shall vote as directed in such Certificateholder direction by the
Certificateholders evidencing fractional undivided interests aggregating not
less than a majority in interest in the Trust. 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 prior to two Business Days before the Trustee
directs such action or casts such vote or gives such consent. Notwithstanding
the foregoing, but subject to Section 6.04 and the Intercreditor Agreement, the
Trustee may, in its own discretion and at its own direction, consent and notify
the relevant Loan Trustee of such consent (or direct the Subordination Agent to
consent and notify the relevant Loan Trustee of such consent) to any amendment,
modification, waiver or supplement under the relevant Indenture or any other
Note Document or other related document, if an Event of Default hereunder shall
have occurred and be continuing, or if such amendment, modification or waiver
will not materially adversely affect the interests of the Certificateholders.
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. Termination of the Trust. The respective obligations
and responsibilities of the Company and the Trustee with respect to the Trust
shall terminate upon the earlier of (A) the completion of the assignment,
transfer and discharge described in the first sentence of the immediately
following paragraph and (B) distribution to all Certificateholders 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; provided, however, that in no event shall the Trust continue beyond
one hundred ten (110) years following the date of the execution of this
Agreement.
Not later than (but in the case of clause (i), following the
Delivery Period Termination Date) the earlier of (i) the first Business Day
following September 30, 1999, or, if later, the fifth Business Day following the
Delivery Period Termination Date and (ii) the fifth Business Day following the
date on which a Triggering Event occurs (such date, the "Transfer Date"), or, if
later, the date on which all of the conditions set forth in the immediately
following sentence have been satisfied, the Trustee is hereby
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directed (subject only to the immediately following sentence) to, and the
Company shall direct the institution that will serve as the Related Trustee
under the Related Pass Through Trust Agreement to, execute and deliver the
Assignment and Assumption Agreement, pursuant to which the Trustee shall assign,
transfer and deliver all of the Trustee's right, title and interest to the Trust
Property to the Related Trustee under the Related Pass Through Trust Agreement.
The Trustee and the Related Trustee shall execute and deliver the Assignment and
Assumption Agreement upon the satisfaction of the following conditions:
(i) The Trustee, the Related Trustee and each of the Rating Agencies
then rating the Certificates shall have received an Officer's Certificate
and an Opinion of Counsel dated the date of the Assignment and Assumption
Agreement and each satisfying the requirements of Section 1.02, which
Opinion of Counsel shall be substantially to the effect set forth below
and may be relied upon by the Beneficiaries (as defined in the Assignment
and Assumption Agreement):
(a) upon the execution and delivery thereof by the parties
thereto in accordance with the terms of this Agreement and the
Related Pass Through Trust Agreement, the Assignment and Assumption
Agreement will constitute the valid and binding obligation of each
of the parties thereto enforceable against each such party in
accordance with its terms;
(b) upon the execution and delivery of the Assignment and
Assumption Agreement in accordance with the terms of this Agreement
and the Related Pass Through Trust Agreement, each of the
Certificates then Outstanding will be entitled to the benefits of
the Related Pass Through Trust Agreement;
(c) the Related Trust is not required to be registered as an
investment company under the Investment Company Act of 1940, as
amended;
(d) the Related Pass Through Trust Agreement constitutes the
valid and binding obligation of the Company enforceable against the
Company in accordance with its terms; and
(e) neither the execution and delivery of the Assignment and
Assumption Agreement in accordance with the terms of this Agreement
and the Related Pass Through Trust Agreement, nor the consummation
by the parties thereto of the transactions contemplated to be
consummated thereunder on the date thereof, will violate any law or
governmental rule or regulation of the State of New York or the
United States of America known to such counsel to be applicable to
the transactions contemplated by the Assignment and Assumption
Agreement.
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(ii) The Trustee and the Company shall have received (x) a copy of
the articles of incorporation and bylaws of the Related Trustee certified
as of the Transfer Date by the Secretary or Assistant Secretary of such
institution and (y) a copy of the filing (including all attachments
thereto) made by the institution serving as the Related Trustee with the
Office of the Superintendent, State of New York Banking Department for the
qualification of the Related Trustee under Section 131(3) of the New York
Banking Law.
Upon the execution of the Assignment and Assumption Agreement by the
parties thereto, the Trust shall be terminated, the Certificateholders shall
receive beneficial interests in the Related Trust in exchange for their
interests in the Trust equal to their respective beneficial interests in the
Trust, and the Outstanding Certificates representing Fractional Undivided
Interests in the Trust shall be deemed for all purposes of this Agreement and
the Related Pass Through Trust Agreement, without further signature or action of
any party or Certificateholder, to be certificates representing the same
fractional undivided interests in the Related Trust and its trust property. By
acceptance of its Certificate, each Certificateholder consents to such
assignment, transfer and delivery of the Trust Property of the trustee of the
Related Trust upon the execution and delivery of the Assignment and Assumption
Agreement.
In connection with the occurrence of the event set forth in clause
(B) above, notice of any termination, specifying the Regular Distribution Date
(or Special Distribution Date, as the case may be) upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be mailed promptly, upon
notice to the Trustee, by the Trustee to Certificateholders not earlier than the
60th day and not later than the 20th day next 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 will
be made upon presentation and surrender of Certificates at the office or agency
of the Trustee therein specified, (B) the amount of any such proposed final
payment, and (C) that the Record Date otherwise applicable to such Regular
Distribution Date (or Special Distribution Date, as the case may be) is not
applicable, payments being made only upon presentation and surrender of the
Certificates 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. Upon presentation and surrender of the Certificates in
accordance with such notice, the Trustee shall cause to be distributed to
Certificateholders such final distribution pursuant to Section 4.02.
In the event that all of the Certificateholders 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 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
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the Trustee for the payment of distributions on the Certificates 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 Loan Trustee the appropriate
amount of money relating to such Loan Trustee and shall give written notice
thereof to the related Owner Trustees, the Owner Participants and the Company.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01. Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate this
Agreement or the 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. Certificates Nonassessable and Fully Paid. Except as
set forth in the last sentence of this Section 12.02, Certificateholders shall
not be personally liable for obligations of the Trust, the Fractional Undivided
Interests represented by the Certificates shall be nonassessable for any losses
or expenses of the Trust or for any reason whatsoever, and Certificates, upon
authentication thereof by the Trustee pursuant to Section 3.03, are and shall be
deemed fully paid. No Certificateholder shall have any right (except as
expressly provided herein) to vote or in any manner otherwise control the
operation and management of the Trust Property, the Trust, or the obligations of
the parties hereto, nor shall anything set forth herein, or contained in the
terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association.
Neither the existence of the Trust nor any provision herein is intended to or
shall limit the liability the Certificateholders would otherwise incur if the
Certificateholders owned Trust Property as co-owners, or incurred any
obligations of the Trust, directly rather than through the Trust.
Section 12.03. Notices. (a) Unless otherwise specifically provided
herein, all notices required under the terms and provisions of this Agreement
shall be in English and in writing, and any such notice may be given by United
States mail, courier service or telecopy, and any such notice shall be effective
when delivered or received or,
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<PAGE>
if mailed, three days after deposit in the United States mail with proper
postage for ordinary mail prepaid,
if to the Company, to:
Midway Airlines Corporation
300 W. Morgan Street, Suite 1200
Durham, North Carolina 27701
Attention: General Counsel
Facsimile: (919) 956-7568
Telephone: (919) 956-4810
if to the Trustee, to:
The First National Bank of Maryland
25 South Charles Street
Mail Code 101-591
Baltimore, Maryland 21201
Attention: Corporate Trust Department
Facsimile: (410) 244-4236
Telephone: (410) 244-4626
(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 shall be
mailed by first-class mail to the addresses for Certificateholders shown on the
Register kept by the Registrar. 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.
(d) If a notice or communication is mailed in the manner provided
above within the time prescribed, it is conclusively presumed to have been duly
given, whether or not the addressee receives it.
(e) If the Company mails a notice or communication to the
Certificateholders, it shall mail a copy to the Trustee and to the Paying Agent
at the same time.
(f) 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.
(g) 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 Loan Trustee.
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Section 12.04. Governing Law. THIS AGREEMENT AND THE CERTIFICATES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
MARYLAND.
Section 12.05. 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 the Trust, or of the
Certificates or the rights of the Certificateholders thereof.
Section 12.06. 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 12.07. 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 assigns, whether so
expressed or not.
Section 12.08. Benefits of Agreement. Nothing in this Agreement or
in the Certificates, express or implied, shall give to any Person, other than
the parties hereto and their successors hereunder, and the Certificateholders,
any benefit or any legal or equitable right, remedy or claim under this
Agreement.
Section 12.09. Legal Holidays. In any case where any Regular
Distribution Date or Special Distribution Date relating to any Certificate shall
not be a Business Day, 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 12.10. 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 12.11. Communication by Certificateholders with Other
Certificateholders. Certificateholders may communicate with other
Certificateholders with respect to their rights under this Agreement or the
Certificates pursuant to Section 312(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.
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Section 12.12. Intention of Parties. The parties hereto intend that
the Trust be classified for U.S. federal income tax purposes as a grantor trust
under Subpart E, Part I of Subchapter J of the Internal Revenue Code of 1986, as
amended, and not as a trust or association taxable as a corporation or as a
partnership. Each Certificateholder, by its acceptance of its Certificate or a
beneficial interest therein, agrees to treat the Trust as a grantor trust for
all U.S. federal, state and local income tax purposes. The powers granted and
obligations undertaken pursuant to this Agreement shall be so construed so as to
further such intent.
Section 12.13. Trust Indenture Act Controls. Upon the qualification
of this Agreement under the Trust Indenture Act, this Agreement shall be subject
to the provisions of the Trust Indenture Act and shall, to the extent
applicable, be governed by such provisions. If any provision of this Agreement
limits, qualifies or conflicts with another provision which is required to be
included in this Agreement by the Trust Indenture Act, the required provision
shall control.
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first written above.
MIDWAY AIRLINES CORPORATION
By: /s/ Jonathan S. Waller
--------------------------------------
Name: Jonathan S. Waller
Title: Senior Vice President
General Counsel
THE FIRST NATIONAL BANK OF
MARYLAND, as Trustee
By: /s/ Robert D. Brown
--------------------------------------
Name: Robert D. Brown
Title: Assistant Vice President
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Exhibit A
FORM OF CERTIFICATE
REGISTERED
No. ______________
[THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, ANY PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY
ITS ACQUISITION HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT), (B) IT IS AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) OF REGULATION D UNDER THE
SECURITIES ACT) (AN "INSTITUTIONAL ACCREDITED INVESTOR") OR (C) IT IS NOT
A U.S. PERSON AND IS ACQUIRING THIS CERTIFICATE IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT; (2) AGREES THAT
IT WILL NOT WITHIN TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUANCE OF
THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS CERTIFICATE WAS HELD BY
MIDWAY AIRLINES CORPORATION ("MIDWAY") OR ANY AFFILIATE OF MIDWAY, RESELL
OR OTHERWISE TRANSFER THIS CERTIFICATE EXCEPT (A) TO MIDWAY OR ANY
SUBSIDIARY THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED
INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT,
(C) INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR
ACQUIRING $100,000 OR MORE AGGREGATE PRINCIPAL AMOUNT OF SUCH CERTIFICATE
THAT, PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS CERTIFICATE (THE FORM OF WHICH LETTER CAN
BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED STATES IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
A-1
<PAGE>
UNDER THE SECURITIES ACT (IF AVAILABLE) OR (F) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT; AND (3) AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS CERTIFICATE IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN CONNECTION WITH ANY
TRANSFER OF THIS CERTIFICATE WITHIN TWO YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE OF THIS CERTIFICATE OR THE LAST DATE ON WHICH THIS
CERTIFICATE WAS HELD BY MIDWAY OR ANY AFFILIATE OF MIDWAY, THE HOLDER MUST
CHECK THE APPROPRIATE BOX SET FORTH ON THE REVERSE HEREOF RELATING TO THE
MANNER OF SUCH TRANSFER AND SUBMIT THIS CERTIFICATE TO THE TRUSTEE. IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE HOLDER
MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND MIDWAY SUCH
CERTIFICATIONS, LEGAL OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY
REASONABLY REQUIRE TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO
AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION", "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
THEM BY REGULATION S UNDER THE SECURITIES ACT. THE PASS THROUGH TRUST
AGREEMENT CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER
ANY TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING
RESTRICTIONS.]*
BY ITS ACQUISITION HEREOF, THE HOLDER REPRESENTS FOR THE BENEFIT OF MIDWAY
AIRLINES CORPORATION AND EACH OWNER PARTICIPANT THAT (A) IT IS NOT A PLAN
TRANSFEREE (AS DEFINED IN THE PASS THROUGH TRUST AGREEMENT) OR (B) ONE OR
MORE PROHIBITED TRANSACTION STATUTORY OR ADMINISTRATIVE EXEMPTIONS APPLIES
SUCH THAT THE USE OF PLAN ASSETS TO PURCHASE AND HOLD THIS PASS THROUGH
CERTIFICATE WILL NOT CONSTITUTE A NON-EXEMPT PROHIBITED TRANSACTION UNDER
ERISA OR SECTION 4975 OF THE CODE. THE PASS THROUGH TRUST AGREEMENT
CONTAINS A PROVISION REQUIRING THE TRUSTEE TO REFUSE TO REGISTER ANY
TRANSFER OF THIS CERTIFICATE IN VIOLATION OF THE FOREGOING RESTRICTIONS.
- - --------
* Not to be included on the face of the Permanent Offshore Global
Certificate.
A-2
<PAGE>
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
TRUSTEE OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IN EXCHANGE FOR THIS CERTIFICATE 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 HEREON 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.
TRANSFERS OF THIS GLOBAL CERTIFICATE SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR
SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
CERTIFICATE SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN SECTIONS 3.05 AND 3.06 OF THE PASS THROUGH TRUST
AGREEMENT REFERRED TO HEREIN.]*
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* To be included on the face of each Global Certificate.
A-3
<PAGE>
[GLOBAL CERTIFICATE]*
MIDWAY AIRLINES 1998-1D-O PASS THROUGH TRUST
8.86% Midway Airlines [Initial/Exchange] Pass Through Certificate
Series 1998-1D-O
Final Expected Distribution Date: January 2, 2003
evidencing a fractional undivided interest in a trust, the property of which
includes certain equipment notes each secured by an Aircraft leased to or owned
by Midway Airlines Corporation.
$__________ Fractional Undivided Interest
representing ._____% of the Trust per $1,000 face amount
THIS CERTIFIES THAT _______________, for value received, is the
registered owner of a $________ (_______ dollars) Fractional Undivided Interest
in Midway Airlines 1998-1D-O Pass Through Trust (the "Trust") created pursuant
to a Pass Through Trust Agreement, dated as of August 13, 1998 (the
"Agreement"), between The First National Bank of Maryland (the "Trustee") and
Midway Airlines Corporation, a corporation incorporated under Delaware law (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 "8.86%
Midway Airlines [Initial/Exchange] Pass Through Certificates Series 1998-1D-O"
(herein called the "Certificates"). This Certificate is issued under and is
subject to the terms, provisions, and conditions of the Agreement. By virtue of
its acceptance hereof the Certificateholder of this Certificate assents to and
agrees to be bound by the provisions of the Agreement and the Intercreditor
Agreement. 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, among other things, a security interest in the 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 assets or property other than the Trust Property.
Subject to and in accordance with the terms of the Agreement and the
Intercreditor Agreement, from and to the extent of funds then available to the
Trustee,
- - --------
* To be included on the face of each Global Certificate.
A-4
<PAGE>
there will be distributed on each January 2 and July 2 (a "Regular Distribution
Date"), commencing on January 2, 1999, 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 and the Intercreditor Agreement, in the event that Special Payments on
the Equipment Notes are received by the Trustee, from funds then available to
the Trustee, there shall be distributed on the applicable Special Distribution
Date, to the Person in whose name this Certificate is registered at the close of
business on the 15th day preceding the Special Distribution Date, an amount in
respect of such Special Payments on the Equipment Notes, the receipt of which
has been confirmed by the Trustee, equal to the product of the percentage
interest in the Trust evidenced by this Certificate and an amount equal to the
sum of such Special Payments so received. If a Regular Distribution Date or
Special Distribution Date is not a Business Day, distribution shall be made on
the immediately following Business Day with the same force and effect as if made
on such Regular Distribution Date or Special Distribution Date and no interest
shall accrue during the intervening period. The Trustee shall mail notice of
each Special Payment and the Special Distribution Date therefor to the
Certificateholder of this Certificate.
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 AGREEMENT AND, UNTIL THE TRANSFER, THIS CERTIFICATE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MARYLAND
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS. THE RELATED PASS THROUGH TRUST
AGREEMENT AND, FROM AND AFTER THE TRANSFER, THIS CERTIFICATE SHALL BE GOVERNED
AND 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.
Reference is hereby made to the further provisions of this
Certificate set forth in the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
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.
A-5
<PAGE>
IN WITNESS WHEREOF, the Trustee has caused this Certificate to be
duly executed.
Dated: ____________ __, 1998 MIDWAY AIRLINES
1998-1D-O PASS THROUGH TRUST
By: The First National Bank of
Maryland, as Trustee
By: ________________________________
Name:
Title:
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<PAGE>
[FORM OF THE TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Certificates referred to in the
within-mentioned Agreement.
The First National Bank of Maryland,
as Trustee
By: __________________________________
Authorized Officer
A-7
<PAGE>
[REVERSE OF CERTIFICATE]
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
of their affiliates. 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 Agreement and reference is made to
the Agreement for information with respect to the interests, rights, benefits,
obligations, proceeds, and duties evidenced hereby. A copy of the Agreement may
be examined during normal business hours at the principal office of the Trustee,
and at such other places, if any, designated by the Trustee, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Certificateholders under the Agreement at any time
by the Company and the Trustee with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust. Any such consent by the
Certificateholder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Certificateholders of this Certificate and
of any Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Certificateholders of any of
the Certificates.
As provided in the Agreement and subject to certain limitations
therein 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, in the Borough of Manhattan, the City of New York,
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.
A-8
<PAGE>
Under certain circumstances set forth in Section 11.01 of the
Agreement, all of the Trustee's right, title and interest to the Trust Property
may be assigned, transferred and delivered to the Related Trustee of the Related
Trust pursuant to the Assignment and Assumption Agreement. Upon the
effectiveness of such assignment and Assumption Agreement (the "Transfer"), the
Trust shall be terminated, the Certificateholders shall receive beneficial
interests in the Related Trust in exchange for their interests in the Trust
equal to their respective beneficial interests in the Trust, the Certificates
representing Fractional Undivided Interests in the Trust shall be deemed for all
purposes of the Agreement and the Related Pass Through Trust Agreement to be
certificates representing the same fractional undivided interests in the Related
Trust and its trust property. Each Certificateholder, by its acceptance of this
Certificate or a beneficial interest herein, agrees to be bound by the
Assignment and Assumption Agreement and subject to the terms of the Related Pass
Through Trust Agreement as a certificateholder thereunder. From and after the
Transfer, unless and to the extent the context otherwise requires, references
herein to the Trust, the Agreement and the Trustee shall constitute references
to the Related Trust, the Related Pass Through Trust Agreement and trustee of
the Related Trust, respectively.
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $100,000 Fractional Undivided
Interest and integral multiples of $1,000 in excess thereof. 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 by the Holder 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.
A-9
<PAGE>
FORM OF TRANSFER NOTICE
FOR VALUE RECEIVED the undersigned registered holder hereby sell(s),
assign(s) and transfer(s) unto
Insert Taxpayer Identification No.
____________________________________
____________________________________
please print or typewrite name and address including zip code of assignee
____________________________________
the within Certificate and all rights thereunder, hereby irrevocably
constituting and appointing
____________________________________
attorney to transfer said Certificate on the books of the Trustee with full
power of substitution in the premises.
[THE FOLLOWING PROVISION TO BE INCLUDED
ON ALL CERTIFICATES
EXCEPT PERMANENT OFFSHORE GLOBAL AND
OFFSHORE PHYSICAL CERTIFICATES]
In connection with any transfer of this Certificate occurring prior
to __________, the undersigned confirms that without utilizing any general
solicitation or general advertising that:
[Check One]
[ ] (a) this Certificate is being transferred in compliance with the
exemption from registration under the Securities Act of 1933, as
amended, provided by Rule 144A thereunder.
or
[ ] (b) this Certificate is being transferred other than in accordance
with (a) above and documents are being furnished that comply with
the conditions of transfer set forth in this Certificate and the
Agreement.
A-10
<PAGE>
If neither of the foregoing boxes is checked, the Trustee or other Registrar
shall not be obligated to register this Certificate in the name of any Person
other than the Holder hereof unless and until the conditions to any such
transfer of registration set forth herein and in Section 3.06 of the Agreement
shall have been satisfied.
Date: _____________________ [Name of Transferor]
----------------------------------------
NOTE: The signature must correspond with
the name as written upon the face of the
within-mentioned instrument in every
particular, without alteration or any
change whatsoever.
Signature Guarantee: ___________________
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this
Certificate for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated: ____________________ ________________________________________
NOTE: To be executed by an executive
officer.
A-11
<PAGE>
Exhibit B
FORM OF CERTIFICATE FOR UNLEGENDED CERTIFICATES
[Date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1D-O Pass Through Trust (the "Trust"), 8.86%
Midway Airlines Pass Through Certificates Series 1998-1D-O (the
"Certificates")
Dear Sirs:
This letter relates to U.S. $__________ Fractional Undivided
Interest of Certificates represented by a Certificate (the "Legended
Certificate") which bears a legend outlining restrictions upon transfer of such
Legended Certificate. Pursuant to Section 3.01 of the Pass Through Trust
Agreement relating to the Certificates dated as of August 13, 1998 (the "Trust
Agreement"), between Midway Airlines Corporation ("Midway") and you, we hereby
certify that we are (or we will hold such securities on behalf of) a person
outside the United States to whom the Certificates could be transferred in
accordance with Rule 904 of Regulation S promulgated under the U.S. Securities
Act of 1933, as amended. Accordingly, you are hereby requested to exchange the
legended certificate for an unlegended certificate representing an identical
principal amount of Certificates, all in the manner provided for in the Trust
Agreement.
You and Midway are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.
Very truly yours,
[Name of Certificateholder]
By: ___________________________________
Authorized Signature
B-1
<PAGE>
Exhibit C
FORM OF CERTIFICATE TO BE DELIVERED IN CONNECTION
WITH TRANSFERS PURSUANT TO REGULATION S
[date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1D-O Pass Through Trust (the "Trust"), 8.86%
Midway Airlines Pass Through Certificates Series 1998-1D-O (the
"Certificates")
Sirs:
In connection with our proposed sale of $_______ Fractional Undivided Interest
of the Certificates, we confirm that such sale has been effected pursuant to and
in accordance with Regulation S under the Securities Act of 1933, as amended,
and, accordingly, we represent that:
(1) the offer of the Certificates was not made to a person in the
United States;
(2) either (a) at the time the buy order was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the United
States or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United States
in contravention of the requirements of Rule 903(b) or Rule 904(b) of
Regulation S, as applicable; and
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act.
C-1
<PAGE>
In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
You, Midway Airlines Corporation are entitled to rely upon this
letter and are irrevocably authorized to produce this letter or a copy hereof to
any interested party in any administrative or legal proceedings or official
inquiry with respect to the matters covered hereby. Terms used in this
certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By: _______________________________
Authorized Signature
C-2
<PAGE>
Exhibit D
FORM OF CERTIFICATE TO BE
DELIVERED IN CONNECTION WITH
TRANSFERS TO NON-QIB ACCREDITED INVESTORS
[date]
[Name and address of Trustee]
Attention: Corporate Trust Department
Re: Midway Airlines 1998-1D-O Pass Through Trust (the "Trust"), 8.86%
Midway Airlines Pass Through Certificates Series 1998-1D-O (the
"Certificates")
Dear Sirs:
In connection with our proposed purchase of $_______________
aggregate principal amount of the Certificates, we confirm that:
1. We understand that any subsequent transfer of the Certificates is
subject to certain restrictions and conditions set forth in the Pass
Through Trust Agreement dated as of August 13, 1998 relating to the
Certificates (the "Pass Through Trust Agreement") and the undersigned
agrees to be bound by, and not to resell, pledge or otherwise transfer the
Certificates except in compliance with, such restrictions and conditions
and the Securities Act of 1933, as amended (the "Securities Act").
2. We are purchasing Certificates having an aggregate principal
amount of not less than $100,000 and each account (if any) for which we
are purchasing Certificates is purchasing Certificates having an aggregate
principal amount of not less than $100,000.
3. We understand that the Certificates have not been registered
under the Securities Act, and that the Certificates may not be offered or
sold except as permitted in the following sentence. We agree, on our own
behalf and on behalf of any accounts for which we are acting as
hereinafter stated, that if we should sell any Certificate, we will do so
only (A) in accordance with Rule 144A under the Securities Act to a
"qualified institutional buyer" (as defined therein), (B) to an
institutional "accredited investor" (as defined below) that, prior to such
transfer, furnishes to you and Midway Airlines Corporation a signed letter
substantially in the form of this letter, (C) outside the United States in
D-1
<PAGE>
accordance with Rule 904 of Regulation S under the Securities Act, (D)
pursuant to the exemption from registration provided by Rule 144 under the
Securities Act, or (E) pursuant to an effective registration statement
under the Securities Act, and we further agree to provide to any person
purchasing any of the Certificates from us a notice advising such
purchaser that resales of the Notes are restricted as stated herein. We
further understand that the Certificates purchased by us will bear a
legend to the foregoing effect.
4. We understand that, on any proposed resale of any Certificates,
we will be required to furnish to you, Midway Airlines Corporation
("Midway") such certifications, legal opinions and other information as
you, Midway may reasonably require to confirm that the proposed sale
complies with the foregoing restrictions. We further understand that the
Certificates purchased by us will bear a legend to the foregoing effect.
5. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) and
have such knowledge and experience in financial and business matters as to
be capable of evaluating the merits and risks of our investment in the
Certificates and we and any accounts for which we are acting are each able
to bear the economic risk of our or its investment.
6. We are acquiring the Certificates purchased by us for our own
account or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You and Midway are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby.
Very truly yours,
[Name of Transferor]
By: _________________________________
Authorized Signature
D-2
<PAGE>
Exhibit E
FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
Midway Airlines Pass Through Trust 1998-1D
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated _________, 199_ (the
"Assignment Agreement"), between The First National Bank of Maryland, a national
banking association, not in its individual capacity except as expressly provided
herein, but solely as trustee under the Pass Through Trust Agreement dated as of
August 13, 1998 (as amended or modified from time to time, the "Agreement"), in
respect of the Midway Airlines Pass Through Trust 1998-1D-O (the "Assignor"),
and The First National Bank of Maryland, a national banking association, not in
its individual capacity except as expressly provided herein, but solely as
trustee under the Agreement (the "New Agreement") in respect of the Midway
Airlines Pass Through Trust 1998-1D-S (the "Assignee").
W I T N E S S E T H:
WHEREAS, the parties hereto desire to effect on the date hereof (the
"Transfer Date" (a) the transfer by the Assignor to the Assignee of all of the
right, title and interest of the Assignor in, under and with respect to, among
other things, the Trust Property and each of the documents listed in Schedule I
hereto (the "Scheduled Documents") and (b) the assumption by the Assignee of the
obligations of the Assignor (i) under the Scheduled Documents and (ii) in
respect of the Certificates issued under the Agreement; and
WHEREAS, the Scheduled Documents permit such transfer upon
satisfaction of certain conditions heretofore or concurrently herewith being
complied with;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements herein contained, the parties hereto do hereby agree as
follows (capitalized terms used herein without definition having the meaning
ascribed thereto in the Agreement):
1. Assignment. The Assignor does hereby sell, assign, convey,
transfer and set over unto the Assignee as of the Transfer Date all of its
present and future right, title and interest in, under and with respect to the
Trust Property and the Scheduled Documents and each other contract, agreement,
document or instrument relating to the Trust Property or the Scheduled Documents
(such other contracts, agreements, documents or instruments, together with the
Scheduled Documents, to be referred to as the "Assigned Documents"), and any
proceeds therefrom, together with all documents and instruments evidencing any
of such right, title and interest.
1
<PAGE>
2. Assumption. The Assignee hereby assumes for the benefit of the
Assignor and each of the parties listed in Schedule II hereto (collectively, the
"Beneficiaries") all of the duties and obligations of the Assignor, whenever
accrued, pursuant to the Assigned Documents and hereby confirms that it shall be
deemed a party to each of the Assigned Documents to which the Assignor is a
party and shall be bound by all the terms thereof (including the agreements and
obligations of the Assignor set forth therein) as if therein named as the
Assignor. Further, the Assignee hereby assumes for the benefit of the Assignor
and the Beneficiaries all of the duties and obligations of the Assignor under
the Outstanding Certificates and hereby confirms that the Certificates
representing Fractional Undivided Interests under the Agreement shall be deemed
for all purposes of the Agreement and the New Agreement equal to their
respective beneficial interests in the trust created under the Agreement.
3. Effectiveness. This Assignment Agreement shall be effective upon
the execution and delivery hereof by the parties hereto, and each
Certificateholder, by its acceptance of its Applicable Certificate or a
beneficial interest therein, agrees to be bound by the terms of this Assignment
Agreement.
4. Payments. The Assignor hereby covenants and agrees to pay over to
the Assignee, if and when received following the Transfer Date, any amounts
(including any sums payable as interest in respect thereof) paid to or for the
benefit of the Assignor that, under Section 1 hereof, belong to the Assignee.
5. Further Assurances. The Assignor shall, at any time and from time
to time, upon the request of the Assignee, promptly and duly execute and deliver
any and all such further instruments and documents and take such further action
ad the Assignee may reasonably request to obtain the full benefits of this
Assignment Agreement and of the right and powers herein granted. The Assignor
agrees to deliver any Certificates, and all Trust Property, if any, then in the
physical possession of the Assignor, to the Assignee.
6. Representation and Warranties. (a) The Assignee represents and
warrants to the Assignor and each of the Beneficiaries that:
(i) 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 obligations of the "Pass Through Trustee" under the
Assigned Documents; and
(ii) on and as of the date hereof, the representations and
warranties of the Assignee set forth in Section 7.15 of the New Agreement
are true and correct.
(b) The Assignor represents and warrants to the Assignee that:
2
<PAGE>
(i) it is duly incorporated, validly existing and in good standing
under the laws of the State of Maryland and the United States pertaining
to its trust and fiduciary powers to execute and deliver this Assignment
Agreement;
(ii) the execution and delivery by it of this Assignment Agreement
and the performance by it of its obligations hereunder have been duly
authorized by it and will not violate its articles of association or
by-laws or the provisions of any indenture, mortgage, contract or other
agreement to which it is a party or by which it is bound; and
(iii) this Assignment Agreement constitutes the legal, valid and
binding obligations of it enforceable against it in accordance with its
terms, except and 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.
7. GOVERNING LAW. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK INCLUDING MATTERS
OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
8. Counterparts. This Assignment Agreement may be executed in any
number of counterparts, all of which together shall constitute a single
instrument. It shall not be necessary that any counterpart be signed by both
parties so long as each party shall sign at least one counterpart.
9. Third Party Beneficiaries. The Assignee hereby agrees, for the
benefit of the Beneficiaries, that is representations,, warranties and covenants
contained herein are also intended to be for the benefit of each Beneficiary,
and each Beneficiary shall be deemed to be an express third party beneficiary
with respect thereto, entitled to enforce directly and in its own name any
rights or claims it may have against such party as such beneficiary.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto, through their respective
officers thereunto duly authorized, have duly executed this Assignment Agreement
as of the day and year first above written.
ASSIGNOR:
THE FIRST NATIONAL BANK OF MARYLAND, not in its
individual capacity except as expressly provided
herein, but solely as trustee under the Pass
Through Trust Agreement and Trust Supplement in
respect of the Midway Airlines Pass
Through Trust 1998-1D-O
By: __________________________________________
Title:
ASSIGNEE:
THE FIRST NATIONAL BANK OF MARYLAND, not in its
individual capacity except as expressly provided
herein, but solely as trustee under the Pass
Through Trust Agreement and Trust Supplement in
respect of the Midway Airlines Pass
Through Trust 1998-1D-S
By: __________________________________________
Title:
4
<PAGE>
SCHEDULE 1
Schedule of Assigned Documents
(1) Intercreditor Agreement dated as of August 13, 1998 among the
Trustee, the Other Trustees, the Liquidity Providers, the liquidity provider, if
any, relating to the Certificates issued under (and as defined in) each of the
Other Pass Through Trust Agreements and the Subordination Agent.
(2) Escrow and Paying Agent Agreement (Class D) dated as of August
13, 1998 among the Escrow Agent, the Underwriters, the Trustee and the Paying
Agent.
(3) Note Purchase Agreement dated as of August 13, 1998 among the
Company, the Trustee, the Other Trustees, the Depositary, the Escrow Agent, the
Paying Agent and the Subordination Agent.
(4) Deposit Agreement (Class D) dated as of August 13, 1998 between
the Escrow Agent and the Depositary.
(5) Each of the Operative Agreements (as defined in the
Participation Agreement for each Aircraft) in effect as of the Transfer Date.
<PAGE>
SCHEDULE 2
Schedule of Beneficiaries
The First National Bank of Maryland, not in its individual capacity but solely
as Subordination Agent
The First National Bank of Maryland, not in its individual capacity but solely
as Paying Agent
ABN AMRO Bank N.V., acting through its Chicago branch, as Liquidity Provider
Midway Airlines Corporation
Morgan Stanley & Co. Incorporated, as Initial Purchaser
Credit Suisse First Boston Corporation, as Initial Purchaser
First Union Trust Company, National Association, as Escrow Agent
Each of the other parties to the Assigned Documents
- - --------------------------------------------------------------------------------
NOTE PURCHASE AGREEMENT
Dated as of August 13, 1998
Among
MIDWAY AIRLINES CORPORATION,
THE FIRST NATIONAL BANK OF MARYLAND,
as Pass Through Trustee under each of the
Pass Through Trust Agreements
THE FIRST NATIONAL BANK OF MARYLAND,
as Subordination Agent
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
as Escrow Agent
and
THE FIRST NATIONAL BANK OF MARYLAND,
as Paying Agent
- - --------------------------------------------------------------------------------
<PAGE>
INDEX TO NOTE PURCHASE AGREEMENT
Page
SECTION 1. Financing of New Aircraft..................................2
SECTION 2. Conditions Precedent.......................................6
SECTION 3. Representations and Warranties.............................7
SECTION 4. Covenants................................................ 11
SECTION 5. Notices.................................................. 11
SECTION 6. Expenses................................................. 11
SECTION 7. Further Assurances....................................... 12
SECTION 8. Miscellaneous............................................ 12
SECTION 9. Governing Law............................................ 13
Schedules
Schedule I New Aircraft and Scheduled Delivery Months
Schedule II Pass Through Trust Agreements
Schedule III Deposit Agreements
Schedule IV Escrow and Paying Agent Agreements
Schedule V Mandatory Document Terms
Schedule VI Mandatory Economic Terms
Schedule VII Aggregate Amortization Schedule
Annex
Annex A Definitions
Exhibits
Exhibit A-1 Form of Leased Aircraft Participation Agreement
Exhibit A-2 Form of Lease
Exhibit A-3 Form of Leased Aircraft Indenture
Exhibit A-4 Form of Leased Aircraft Trust Agreement
Exhibit B Form of Delivery Notice
Exhibit C-1 Form of Owned Aircraft Participation Agreement
Exhibit C-2 Form of Owned Aircraft Indenture
<PAGE>
NOTE PURCHASE AGREEMENT
This NOTE PURCHASE AGREEMENT, dated as of August 13, 1998, among (i)
MIDWAY AIRLINES CORPORATION, a Delaware corporation (the "Company"), (ii) THE
FIRST NATIONAL BANK OF MARYLAND ("FNBM"), a national banking association, not in
its individual capacity except as otherwise expressly provided herein, but
solely as trustee (in such capacity together with its successors in such
capacity, the "Pass Through Trustee") under each of the four separate Pass
Through Trust Agreements (as defined below), (iii) THE FIRST NATIONAL BANK OF
MARYLAND, a national banking association, as subordination agent and trustee (in
such capacity together with its successors in such capacity, the "Subordination
Agent") under the Intercreditor Agreement (as defined below), (iv) FIRST UNION
TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association as Escrow
Agent (in such capacity together with its successors in such capacity, the
"Escrow Agent"), under each of the Escrow and Paying Agent Agreements (as
defined below) and (v) THE FIRST NATIONAL BANK OF MARYLAND, a national banking
association, as Paying Agent (in such capacity together with its successors in
such capacity, the "Paying Agent") under each of the Escrow and Paying Agent
Agreements.
W I T N E S S E T H:
WHEREAS, capitalized terms used but not defined herein shall have
the meanings ascribed to such terms in Annex A hereto;
WHEREAS, the Company has obtained commitments from the Manufacturer
pursuant to the Aircraft Purchase Agreement for the delivery of the eight
aircraft listed in Schedule I hereto (together with any aircraft substituted
therefor in accordance with an Aircraft Purchase Agreement prior to the delivery
thereof, the "New Aircraft");
WHEREAS, pursuant to the Pass Through Trust Agreements set forth in
Schedule II hereto, and concurrently with the execution and delivery of this
Agreement, separate grantor trusts (collectively, the "Pass Through Trusts" and,
individually, a "Pass Through Trust") have been created to facilitate certain of
the transactions contemplated hereby, including, without limitation, the
issuance and sale of pass through certificates pursuant thereto (collectively,
the "Certificates") to provide for a portion of the financing of the New
Aircraft;
WHEREAS, the Company has entered into the Purchase Agreement dated
as of August 6, 1998 (the "Purchase Agreement") with the two initial purchasers
(the "Initial Purchasers") named therein, which provides that the Company will
cause each Pass Through Trustee to issue and sell the Certificates to the
Initial Purchasers;
WHEREAS, concurrently with the execution and delivery of this
Agreement, (i) the Escrow Agents and the Depositary entered into the Deposit
Agreements set forth in Schedule III hereto (the "Deposit Agreements") whereby
the applicable Escrow Agent agreed to direct the Initial Purchasers to make
certain deposits
<PAGE>
referred to therein on the Issuance Date (the "Initial Deposits") and to permit
the applicable Pass Through Trustee to make additional deposits from time to
time thereafter (the Initial Deposits together with such additional deposits are
collectively referred to as the "Deposits") and (ii) the Pass Through Trustees,
the Initial Purchasers, the Paying Agents and the Escrow Agents entered into the
Escrow and Paying Agent Agreements set forth in Schedule IV hereto (the "Escrow
and Paying Agent Agreements") whereby, among other things, (a) the Initial
Purchasers agreed to deliver an amount equal to the amount of the Initial
Deposits to the Depositary on behalf of the applicable Escrow Agent and (b) the
applicable Escrow Agent, upon the Depositary receiving such amount, has agreed
to deliver escrow receipts to be affixed to each Certificate;
WHEREAS, prior to the delivery of each New Aircraft, the Company
will determine whether to enter into a leveraged lease transaction as lessee
with respect to such New Aircraft (a "Leased Aircraft") or to purchase as owner
such New Aircraft (an "Owned Aircraft") and will give to the Pass Through
Trustee a Delivery Notice (as defined below) specifying its election;
WHEREAS, upon receipt of a Delivery Notice with respect to a New
Aircraft, subject to the terms and conditions of this Agreement, the applicable
Pass Through Trustees will enter into the applicable Financing Agreements
relating to such New Aircraft;
WHEREAS, upon the delivery of each New Aircraft, each Pass Through
Trustee will fund its purchase of Equipment Notes with the proceeds of one or
more Deposits withdrawn by the applicable Escrow Agent under the related Deposit
Agreement bearing the same interest rate as the Certificates issued by such Pass
Through Trust; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, (i) ABN AMBRO Bank, N.V., acting through its Chicago branch (the
"Liquidity Provider"), has entered into three revolving credit agreements (each,
a "Liquidity Facility"), one each for the benefit of the Certificateholders of
each Pass Through Trust (other than the Class D Pass Through Trust), 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
Providers and the Subordination Agent have entered into the Intercreditor
Agreement, dated as of the date hereof (the "Intercreditor Agreement");
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. Financing of New Aircraft. (a) The Company confirms that
it has entered into the Aircraft Purchase Agreement with the Manufacturer
pursuant
-2-
<PAGE>
to which the Company has agreed to purchase, and the Manufacturer has agreed to
deliver, the New Aircraft in the months specified in Schedule I hereto, all on
and subject to terms and conditions specified in the applicable Aircraft
Purchase Agreement. The Company agrees to finance the New Aircraft in the manner
provided herein, all on and subject to the terms and conditions hereof and of
the relevant Financing Agreements.
(b) In furtherance of the foregoing, the Company agrees to give the
parties hereto, the Depositary and each of the Rating Agencies not less than two
Business Days' prior notice substantially in the form of Exhibit B hereto (a
"Delivery Notice") of the scheduled financing date (the "Scheduled Delivery
Date") (or, in the case of a substitute Delivery Notice under Section 1(d) or
(e) hereof, one Business Day's prior notice) in respect of each New Aircraft
under the Aircraft Purchase Agreement, which notice shall:
(i) specify whether the Company has elected to treat such New
Aircraft as a Leased Aircraft or an Owned Aircraft;
(ii) specify the Scheduled Delivery Date of such New Aircraft
(which shall be a Business Day before the Cut-off Date and, except
as provided in Section 1(e) hereof, the date (the "Funding Date") on
which the financing therefor in the manner provided herein shall be
consummated);
(iii) instruct the Pass Through Trustee to instruct the
relevant Escrow Agent to provide a Notice of Purchase Withdrawal to
the Depositary with respect to the Equipment Notes to be issued in
connection with the financing of such New Aircraft;
(iv) instruct the Pass Through Trustee to enter into the
Participation Agreement included in the Financing Agreements with
respect to such Aircraft in such form and at such a time on or
before the Funding Date specified in such Delivery Notice and to
perform its obligations thereunder;
(v) specify the aggregate principal amount of each series of
Equipment Notes to be issued, and purchased by the Pass Through
Trustees, in connection with the financing of such New Aircraft
scheduled to be delivered on such Funding Date (which shall in all
respects comply with the Mandatory Economic Terms); and
(vi) if such New Aircraft is to be a Leased Aircraft, certify
that the related Owner Participant (A) is not an Affiliate of the
Company and (B) based on the representations of such Owner
Participant, is either (1) a Qualified Owner Participant or (2) any
other person the obligations of which under the Owner Participant
Agreements (as defined in the
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<PAGE>
applicable Participation Agreement) are guaranteed by a Qualified
Owner Participant.
(c) Upon receipt of a Delivery Notice, the Pass Through Trustees
shall, and shall cause the Subordination Agent to, enter into and perform their
obligations under the Participation Agreement specified in such Delivery Notice;
provided that, such Participation Agreement and the other Lease Financing
Agreements or Owner Financing Agreements to be entered into pursuant to such
Participation Agreement shall be in the forms thereof annexed hereto in all
material respects with such changes therein as shall have been requested by the
related Owner Participant (in the case of Lease Financing Agreements), agreed to
by the Company, the Pass Through Trustees and the Subordination Agent (to the
extent the interests of the Pass Through Trustees or the Subordination Agent are
adversely affected thereby) and, if modified in any material respect, as to
which Rating Agency Confirmation shall have been obtained from each Rating
Agency by the Company (to be delivered by the Company to the applicable Pass
Through Trustee on or before the relevant Delivery Date, it being understood
that if Rating Agency Confirmation shall have been received with respect to any
Financing Agreements and such Financing Agreements are utilized for subsequent
New Aircraft without material modifications, no additional Rating Agency
Confirmation shall be required); provided, however, that the relevant Financing
Agreements as executed and delivered shall not vary the Mandatory Economic Terms
and shall contain the Mandatory Document Terms. Notwithstanding the foregoing,
if any Financing Document annexed hereto shall not have been reviewed by either
Rating Agency prior to the Issuance Date, then, prior to the use thereof in
connection with the financing of any Aircraft hereunder, the Company shall
obtain from each Rating Agency a confirmation that the use of such Financing
Documents 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. With
respect to each New Aircraft, the Company shall cause FNBM (or such other person
that meets the eligibility requirements to act as loan trustee under the Leased
Aircraft Indenture or Owned Aircraft Indenture) to execute as Loan Trustee the
Financing Agreements relating to such Aircraft to which such Loan Trustee is
intended to be a party, and shall concurrently therewith execute such Financing
Agreements to which the Company is intended to be a party and perform its
respective obligations thereunder. Upon the request of either Rating Agency, the
Company shall deliver or cause to be delivered to each Rating Agency a true and
complete copy of each Financing Agreement relating to the financing of each New
Aircraft together with a true and complete set of the closing documentation
(including legal opinions) delivered to the related Loan Trustee, Subordination
Agent and Pass Through Trustee under the related Participation Agreement.
(d) If after giving any Delivery Notice, there shall be a delay in
the delivery of a New Aircraft, or if on the Scheduled Delivery Date of a New
Aircraft the financing thereof in the manner contemplated hereby shall not be
consummated for whatever reason, the Company shall give the parties hereto
prompt notice thereof. Concurrently with the giving of such notice of
postponement or subsequently, the
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<PAGE>
Company shall give the parties hereto a substitute Delivery Notice specifying
the date to which such delivery and related financing shall have been
re-scheduled (which shall be a Business Day before the Cut-off Date on which the
Escrow Agents shall be entitled to withdraw one or more Deposits under each of
the applicable Deposit Agreements to enable each applicable Pass Through Trustee
to fund its purchase of the related Equipment Notes). Upon receipt of any such
notice of postponement, each applicable Pass Through Trustee shall comply with
its obligations under Section 2.01 of each of the Pass Through Trust Agreements
and thereafter the financing of the relevant New Aircraft shall take place on
the re-scheduled Delivery Date therefor (all on and subject to the terms and
conditions of the relevant Financing Agreements) unless further postponed as
provided herein.
(e) Anything in this Section 1 to the contrary notwithstanding, the
Company shall have the right at any time on or before the Scheduled Delivery
Date of any New Aircraft, and subsequent to its giving a Delivery Notice
therefor, to postpone the Scheduled Delivery Date of such New Aircraft so as to
enable the Company to change its election to treat such New Aircraft as a Leased
Aircraft or an Owned Aircraft by written notice of such postponement to the
other parties hereto. The Company shall subsequently give the parties hereto a
substitute Delivery Notice complying with the provisions of Section l(b) hereof
and specifying the new Funding Date for such postponed New Aircraft (which shall
be a Business Day occurring before the Cut-off Date and on which the Escrow
Agent shall be entitled to withdraw Deposits under each of the applicable
Deposit Agreements sufficient to enable each applicable Pass Through Trustee to
fund its purchase of the related Equipment Notes). In addition, the Company
shall have the further right, anything in this Section 1 to the contrary
notwithstanding, to accept delivery of a New Aircraft under the applicable
Aircraft Purchase Agreement on the Delivery Date thereof by utilization of
bridge financing of such New Aircraft and thereafter give the parties hereto a
Delivery Notice specifying a Funding Date not later than 60 days after the
Delivery Date of such New Aircraft and no later than the Cut-off Date and
otherwise complying with the provisions of Section 1(b) hereof. All other terms
and conditions of this Note Purchase Agreement shall apply to the financing of
any such New Aircraft on the re-scheduled Funding Date therefor except (i)the
re-scheduled Funding Date shall be deemed the Delivery Date of such New Aircraft
for all purposes of this Section 1 and (ii)the related Financing Agreements
shall be amended to reflect the original delivery of such New Aircraft to the
Company.
(f) The Company shall have no liability for the failure of the Pass
Through Trustees to purchase Equipment Notes with respect to any New Aircraft,
other than the Company's obligation, if any, to pay the Deposit Make- Whole
Premium pursuant to Section 4(a)(i) of this Agreement.
(g) The parties agree that if, in connection with the delivery of a
New Aircraft, any Owner Participant who is to be a party to any Lease Financing
Agreement shall not be a "Citizen of the United States" within the meaning of
Section 40102(a)(15) of the Act, then the applicable Lease Financing Agreements
shall be modified,
-5-
<PAGE>
consistent with the Mandatory Document Terms, to require such Owner Participant
to enter into a voting trust, voting powers or similar arrangement satisfactory
to the Company that (A) enables such New Aircraft to be registered in the United
States and (B) complies with the FAA regulations issued under the Act applicable
thereto.
(h) Anything herein to the contrary notwithstanding, the Company
shall not have the right, and shall not be entitled, at any time to request the
issuance of Equipment Notes of any series to any Pass Through Trustee in an
aggregate principal amount in excess of the amount of the Deposits then
available for withdrawal by the Escrow Agent under and in accordance with the
provisions of the related Deposit Agreement.
(i) The Company hereby agrees to give notice to the Pass Through
Trustee on the date on which Equipment Notes issued with respect to all New
Aircraft have been purchased by the Pass Through Trustee in accordance with this
Agreement; the Pass Through Trustee hereby agrees to give a copy of such notice
to the Escrow Agent and the Paying Agent.
(j) In the event that an increase in the interest rate applicable to
the Certificates shall become effective pursuant to the Registration Rights
Agreement, the Company shall give immediate notice thereof to the Escrow Agent
and the Pass Through Trustee, indicating the effective date of such increase.
Immediately upon receipt of such notice, the Escrow Agent shall deliver the
Increase Notice (in the form of Exhibit C to the Deposit Agreement) to the
Depositary. In the event that, at any time thereafter, the foregoing increase in
interest rate is no longer required by the terms of the Registration Rights
Agreement, the Company shall give immediate notice thereof to the Escrow Agent
and the Pass Through Trustee, indicating, the effective date of such decrease.
Immediately upon receipt of such notice, the Escrow Agent shall deliver the
Rescission Notice (in the form of Exhibit D to the Deposit Agreement) to the
Depositary.
SECTION 2. Conditions Precedent. The obligation of the Pass Through
Trustees to enter into, and to cause the Subordination Agent to enter into, any
Participation Agreement as directed pursuant to a Delivery Notice and to perform
its obligations under such Participation Agreement is subject to satisfaction of
the following conditions:
(a) no Triggering Event shall have occurred; and
(b) the Company shall have delivered a certificate to each such Pass
Through Trustee, the Subordination Agent and each Liquidity Provider stating
that (i) such Participation Agreement and the other Financing Agreements to be
entered into pursuant to such Participation Agreement do not vary the Mandatory
Economic Terms and contain the Mandatory Document Terms and (ii)any substantive
modification of such Financing Agreements from the forms thereof attached to
this Agreement do not materially and adversely affect the Certificateholders or
the Pass Through Trustee, and
-6-
<PAGE>
such certification shall be true and correct (it being agreed that a shortening
of (x) any grace period specified in the definition of "Event of Loss" or (y)
any of the grace periods relating to Events of Default, in each case in the form
of Lease attached hereto, would not materially adversely affect the
Certificateholders). The Pass Through Trustee shall be entitled to rely upon
such certificate and shall have no duty to determine the truth or accuracy of
any representation made therein.
Anything herein to the contrary notwithstanding, the obligation of
each Pass Through Trustee to purchase Equipment Notes shall terminate on the
Cut-off Date.
SECTION 3. Representations and Warranties. (a) The Company
represents and warrants that:
(i) the Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Delaware and is a "citizen of the United States" as defined in 49
U.S.C. Section 40102, and has the full corporate power, authority
and legal right under the laws of the State of Delaware to execute
and deliver this Agreement and each Financing Agreement to which it
will be a party and to carry out the obligations of the Company
under this Agreement and each Financing Agreement to which it will
be a party;
(ii) the execution and delivery by the Company of this
Agreement and the performance by the Company of its obligations
under this Agreement have been duly authorized by the Company and
will not violate its Certificate of Incorporation or by-laws or the
provisions of any indenture, mortgage, contract or other agreement
to which it is a party or by which it is bound; and
(iii) this Agreement constitutes the legal, valid and binding
obligation of the 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.
(b) FNBM represents and warrants that:
(i) FNBM is a national banking association duly incorporated,
validly existing and in good standing under the laws of the United
States, and has the full corporate power, authority and legal right
under the laws of the State of Maryland and the United States
pertaining to its banking and trust powers to execute and deliver
this Agreement and each Financing Agreement to which it will be a
party and to carry out the obligations of FNBM, in its capacity as
Subordination Agent, Pass
-7-
<PAGE>
Through Trustee or Paying Agent, as the case may be, under this
Agreement and each Financing Agreement to which it will be a party;
(ii) the execution and delivery by FNBM, in its capacity as
Subordination Agent, Pass Through Trustee or Paying Agent, as the
case may be, of this Agreement and the performance by FNBM, in its
capacity as Subordination Agent, Pass Through Trustee or Paying
Agent, as the case may be, of its obligations under this Agreement
have been duly authorized by FNBM, in its capacity as Subordination
Agent, Pass Through Trustee or Paying Agent, as the case may be, and
will not violate its articles of association or by-laws or the
provisions of any indenture, mortgage, contract or other agreement
to which it is a party or by which it is bound;
(iii) this Agreement constitutes the legal, valid and binding
obligations of FNBM, in its capacity as Subordination Agent, Pass
Through Trustee or Paying Agent, as the case may be, enforceable
against it in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the rights of creditors
generally and by general principles of equity, whether considered in
a proceeding at law or in equity; and
(iv) FNBM has made a filing with the New York State Banking
Department pursuant to Section 131(3) of the New York State Banking
Law with respect to each Pass Through Trust.
(c) The Pass Through Trustee hereby confirms to each of the other
parties hereto that its representations and warranties set forth in Section 7.15
of the Pass Through Trust Agreements are true and correct as of the date hereof.
(d) The Subordination Agent represents and warrants that:
(i) the Subordination Agent is a national banking association
duly incorporated, validly existing and in good standing under the
laws of the United States, and has the full corporate power,
authority and legal right under the laws of the State of Maryland
and the United States pertaining to its banking and trust powers to
execute and deliver this Agreement and each Financing Agreement to
which it is or will be a party and to perform its obligations under
this Agreement and each Financing Agreement to which it is or will
be a party;
(ii) this Agreement has been duly authorized, executed and
delivered by the Subordination Agent; this Agreement constitutes the
legal, valid and binding obligations of the Subordination Agent
enforceable against it in accordance with its terms, except as the
same may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or
-8-
<PAGE>
similar laws affecting the rights of creditors generally and by
general principles of equity, whether considered in a proceeding at
law or in equity;
(iii) none of the execution, delivery and performance by the
Subordination Agent of this Agreement contravenes any law, rule or
regulation of the State of Maryland or any United States
governmental authority or agency regulating the Subordination
Agent's banking or trust powers or any judgment or order applicable
to or binding on the Subordination Agent and do not contravene the
Subordination Agent's articles of association or by- laws or result
in any breach of, or constitute a default under, any agreement or
instrument to which the Subordination Agent is a party or by which
it or any of its properties may be bound;
(iv) neither the execution and delivery by the Subordination
Agent of this Agreement nor the consummation by the Subordination
Agent of any of the transactions contemplated hereby 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
Maryland governmental authority or agency or any federal
governmental authority or agency regulating the Subordination
Agent's banking or trust powers;
(v) there are no Taxes payable by the Subordination Agent
imposed by the State of Maryland or any political subdivision or
taxing authority thereof in connection with the execution, delivery
and performance by the Subordination Agent of this 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), and
there are no Taxes payable by the Subordination Agent imposed by the
State of Maryland or any political subdivision thereof in connection
with the acquisition, possession or ownership by the Subordination
Agent of any of the Equipment Notes (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); and
(vi) 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.
(e) The Escrow Agent represents and warrants that:
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<PAGE>
(i) the Escrow Agent is a national banking association duly
incorporated, validly existing and in good standing under the laws
of the United States and has the full corporate power, authority and
legal right under the laws of the United States pertaining to its
banking, trust and fiduciary powers to execute and deliver this
Agreement, each Deposit Agreement and each Escrow and Paying Agent
Agreement (collectively, the "Escrow Agent Agreements") and to carry
out the obligations of the Escrow Agent under each of the Escrow
Agent Agreements;
(ii) the execution and delivery by the Escrow Agent of each of
the Escrow Agent Agreements and the performance by the Escrow Agent
of its obligations hereunder and thereunder have been duly
authorized by the Escrow Agent and will not violate its articles of
association or by-laws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it is
bound; and
(iii) each of the Escrow Agent Agreements constitutes the
legal, valid and binding obligations of the Escrow Agent 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.
(f) The Paying Agent represents and warrants that:
(i) the Paying Agent is a national banking association duly
incorporated, validly existing and in good standing under the laws
of the United States and has the full corporate power, authority and
legal right under the laws of Maryland and the United States
pertaining to its banking and trust powers to execute and deliver
this Agreement and the Escrow and Paying Agent Agreement
(collectively, the "Paying Agent Agreements") and to carry out the
obligations of the Paying Agent under each of the Paying Agent
Agreements;
(ii) the execution and delivery by the Paying Agent of each of
the Paying Agent Agreements and the performance by the Paying Agent
of its obligations hereunder and thereunder have been duly
authorized by the Paying Agent and will not violate its articles of
association or by-laws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it is
bound; and
(iii) each of the Paying Agent Agreements constitutes the
legal, valid and binding obligations of the Paying Agent enforceable
against it in accordance with its terms, except as the same may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar
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<PAGE>
laws affecting the rights of creditors generally and by general
principles of equity, whether considered in a proceeding at law or
in equity.
SECTION 4. Covenants. The Company covenants with each of the other
parties hereto that:
(i) on the date that the Depositary is obligated to pay the
amount of the Final Withdrawal to the Paying Agent pursuant to a
Deposit Agreement relating to any Trust, the Company shall pay to
the Pass Through Trustee of such Trust no later than 12:30 p.m. (New
York time) an amount equal to the Deposit Make-Whole Premium, if
any, required to be paid in respect of such Final Withdrawal amount;
(ii) Sections 5.01 and 5.02 of each Pass Through Trust
Agreement are hereby incorporated by reference herein; and
(iii) the Company agrees to provide written notice to each of
the parties hereto of the occurrence of the Cut-off Date no later
than one Business Day after the date thereof; such notice to refer
specifically to the Pass Through Trustee's obligation to assign,
transfer and deliver all of its right, title and interest to the
Trust Property (as defined in each Pass Through Trust Agreement) to
the trustee of the Related Trust (as defined in each Pass Through
Trust Agreement) in accordance with Section 11.01 of each of the
Pass Through Trust Agreement.
SECTION 5. 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 any such notice shall become effective upon being
delivered personally or, if promptly confirmed by mail, when dispatched by
facsimile or other written telecommunication, addressed to such party hereto at
its address or facsimile number set forth below the signature of such party at
the foot of this Agreement.
SECTION 6. Expenses. (a) The Company agrees to pay to the
Subordination Agent when due an amount or amounts equal to the fees payable to
the relevant Liquidity Provider under Section 2.3 of each Liquidity Facility
multiplied by a fraction the numerator of which shall be the then outstanding
aggregate amount of the Deposits under the Deposit Agreements and the
denominator of which shall be the sum of (x) the then outstanding aggregate
principal amount of the Series A Equipment Notes, Series B Equipment Notes and
Series C Equipment Notes issued under all of the Indentures and (y) the then
outstanding aggregate amount of the Deposits under the Deposit Agreements.
(b) So long as no Equipment Notes have been issued in respect of any
Aircraft, the Company agrees to pay (i) to the Subordination Agent when due (A)
the amount equal to interest on any Downgrade Advance (other than any Applied
Downgrade Advance) payable under Section 3.7(a) of each Liquidity Facility minus
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<PAGE>
Investment Earnings while such Downgrade Advance shall be outstanding, (B) the
amount equal to interest on any Non Extension Advance (other than any Applied
Non-Extension Advance) payable under Section 3.7(a) of each Liquidity Facility
minus Investment Earnings while such Non-Extension Advance shall be outstanding
and (C) any other amounts owed to the Liquidity Provider by the Subordination
Agent as borrower under each Liquidity Facility (other than amounts due as
repayment of advances thereunder or as interest on such advances, except to the
extent payable pursuant to clause (A) or (B) above), (ii) all compensation and
reimbursement of expenses, disbursements and advances payable by the Company
under the Pass Through Trust Agreements, (iii) all compensation and
reimbursement of expenses and disbursements payable to the Subordination Agent
under the Intercreditor Agreement except with respect to any income or franchise
taxes incurred by the Subordination Agent in connection with any fees or other
compensation payable to the Subordination Agent for services rendered by it
pursuant to the terms of the Intercreditor Agreement or the Participation
Agreement and (iv) in the event the Company requests any amendment to any
Operative Agreement, all reasonable fees and expenses (including, without
limitation, fees and disbursements of counsel) of the Pass Through Trustee, the
Subordination Agent, the Escrow Agent and/or the Paying Agent in connection
therewith. For purposes of this Section 6(b), the terms "Applied Downgrade
Advance", "Applied Non-Extension Advance", "Downgrade Advance", "Investment
Earnings" and Non-Extension Advance" shall have the meanings specified in each
Liquidity Facility.
SECTION 7. Further Assurances. Each party hereto shall duly execute,
acknowledge and deliver, or shall cause to be executed, acknowledged and
delivered, all such further agreements, instruments, certificates or documents,
and shall do and cause to be done such further acts and things, in any case, as
any other party hereto shall reasonably request in connection with its
administration of, or to carry out more effectually the purposes of, or to
better assure and confirm unto it the rights and benefits to be provided under,
this Agreement.
SECTION 8. Miscellaneous. (a) Provided that the transactions
contemplated hereby have been consummated, and except as otherwise provided for
herein, the representations, warranties and agreements herein of the Company,
the Subordination Agent, the Escrow Agent, the Paying Agent and the Pass Through
Trustee, and the Company's, the Subordination Agent's, the Escrow Agent's, the
Paying Agent's and the Pass Through Trustee's obligations under any and all
thereof, shall survive the expiration or other termination of this Agreement and
the other agreements referred to herein.
(b) 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 the party against which the
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<PAGE>
enforcement of the termination, amendment, supplement, waiver or modification is
sought. 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
Company 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 Escrow Agent and its
successors as Escrow Agent under the Escrow and Paying Agent Agreements, the
Paying Agent and its successors as Paying Agent under the Escrow and Paying
Agent Agreement and the Subordination Agent and its successors as Subordination
Agent under the Intercreditor Agreement.
(c) This Agreement is not intended to, and shall not, provide any
person not a party hereto (other than the Initial Purchasers and each of the
beneficiaries of Section 6 hereof) with any rights of any nature whatsoever
against any of the parties hereto, and no person not a party hereto (other than
the Initial Purchasers and each of the beneficiaries of Section 6 hereof) shall
have any right, power or privilege in respect of, or have any benefit or
interest arising out of, this Agreement.
SECTION 9. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. THIS AGREEMENT
IS BEING DELIVERED IN THE STATE OF NEW YORK.
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<PAGE>
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.
MIDWAY AIRLINES CORPORATION
By /s/ Jonathan S. Waller
---------------------------------------
Name: Jonathan S. Waller
Title: Senior Vice President
General Counsel
Address: 300 W. Morgan Street
Suite 1200
Durham, North Carolina 27701
Attention: General Counsel
Telefax: (919) 956-7568
THE FIRST NATIONAL BANK OF MARYLAND, not
in its individual capacity, except as
otherwise provided herein, but solely as
Pass Through Trustee, Subordination Agent
and Paying Agent
By /s/ Robert D. Brown
---------------------------------------
Name: Robert D. Brown
Title: Assistant Vice President
Address: 25 South Charles Street
Mail Code 101-591
Baltimore, Maryland 21201
Attention: Corporate Trust
Department
Telefax: (410) 244-4236
<PAGE>
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
as Escrow Agent
By /s/ Stephen J. Kaba
---------------------------------------
Name: STEPHEN J. KABA
Title: VICE PRESIDENT
Address: One Rodney Square
920 King Street
Suite 102
Wilmington, Delaware 19801
Attention: Corporate Trust
Administration
Telefax: (302) 888-7544
<PAGE>
SCHEDULE I TO
NOTE PURCHASE AGREEMENT
NEW AIRCRAFT AND SCHEDULED DELIVERY MONTHS
New Aircraft Aircraft Tail Scheduled
Type Number* Delivery Months**
- - ------------------- ---------------- ----------------------
Canadian
Regional Jet
Series 200 ER N575ML September 1998
Canadian
Regional Jet
Series 200 ER N576ML September 1998
Canadian
Regional Jet
Series 200 ER N577ML November 1998
Canadian
Regional Jet
Series 200 ER N578ML November 1998
Canadian
Regional Jet
Series 200 ER N579ML December 1998
Canadian
Regional Jet
Series 200 ER N580ML January 1999
Canadian
Regional Jet
Series 200 ER N581ML April 1999
Canadian
Regional Jet
Series 200 ER N582ML June 1999
- - ----------
* The tail number identified with respect to each Aircraft is a projection only,
based on the current manufacturing schedule of the manufacturer. A different
aircraft may actually be delivered to the Company by the manufacturer on any
delivery date and in such case such substituted aircraft shall be an "Aircraft"
for purposes of the Note Purchase Agreement.
** The dates reflect the scheduled delivery months under the Aircraft Purchase
Agreement. The actual delivery date for any such Aircraft may be subject to
delay by the manufacturer.
<PAGE>
SCHEDULE II TO
NOTE PURCHASE AGREEMENT
PASS THROUGH TRUST AGREEMENTS
Pass Through Trust Agreement dated as of the Issuance Date between the Company
and the Pass Through Trustee in respect of Midway Airlines Pass Through Trust,
Series 1998-1A-O.
Pass Through Trust Agreement dated as of the Issuance Date between the Company
and the Pass Through Trustee in respect of Midway Airlines Pass Through Trust,
Series 1998-1B-O.
Pass Through Trust Agreement dated as of the Issuance Date between the Company
and the Pass Through Trustee in respect of Midway Airlines Pass Through Trust,
Series 1998-1C-O.
Pass Through Trust Agreement dated as of the Issuance Date between the Company
and the Pass Through Trustee in respect of Midway Airlines Pass Through Trust,
Series 1998-1D-O.
<PAGE>
SCHEDULE III TO
NOTE PURCHASE AGREEMENT
DEPOSIT AGREEMENTS
Deposit Agreement (Class A) dated as of the Issuance Date between the Depositary
and the Escrow Agent.
Deposit Agreement (Class B) dated as of the Issuance Date between the Depositary
and the Escrow Agent.
Deposit Agreement (Class C) dated as of the Issuance Date between the Depositary
and the Escrow Agent.
Deposit Agreement (Class D) dated as of the Issuance Date between the Depositary
and the Escrow Agent.
<PAGE>
SCHEDULE IV TO
NOTE PURCHASE AGREEMENT
ESCROW AND PAYING AGENT AGREEMENTS
Escrow and Paying Agent Agreement (Class A) dated as of the Issuance Date among
the Escrow Agent, the Initial Purchasers, the Pass Through Trustee and the
Paying Agent.
Escrow and Paying Agent Agreement (Class B) dated as of the Issuance Date among
the Escrow Agent, the Initial Purchasers, the Pass Through Trustee and the
Paying Agent.
Escrow and Paying Agent Agreement (Class C) dated as of the Issuance Date among
the Escrow Agent, the Initial Purchasers, the Pass Through Trustee and the
Paying Agent.
Escrow and Paying Agent Agreement (Class D) dated as of the Issuance Date among
the Escrow Agent, the Initial Purchasers, the Pass Through Trustee and the
Paying Agent.
<PAGE>
SCHEDULE V TO
NOTE PURCHASE AGREEMENT
MANDATORY DOCUMENT TERMS
1. May not modify in any material adverse respect the Granting Clause of the
Indenture Form so as to deprive the Holders of a first priority security
interest in and mortgage lien on the Aircraft, the Lease and certain of
Midway's rights under the Aircraft Purchase Agreement or to eliminate any
of the obligations secured thereby or otherwise modify in any material
adverse respect as regards the interests of the Holders, the Subordination
Agent, the Liquidity Providers or the Loan Trustee the provisions of
Article II, V, or VI or Section 7.01, 7.02, 7.10, 7.11, 9.08, 13.01,
13.02, 13.07, 15.04, 15.13 or Article VIII of the Indenture Form;
2. May not modify in any material adverse respect as regards the interests of
the Holders, the Subordination Agent, the Liquidity Providers or the
Indenture Trustee the provisions of Section 3(b), 3(e), 3(f), 3(g),
8(d)(vii), the first sentence of Section 9(c), 20(b) or 23(e) of the Lease
or otherwise modify the terms of the Lease so as to deprive the Loan
Trustee of rights expressly granted to the "Indenture Trustee" therein;
3. May not modify in any material adverse respect as regards the interests of
the Holders, the Subordination Agent, the Pass Through Trustee the
Liquidity Providers or the Loan Trustee the provisions of Section 3.01(i),
3.01(j), 3.01(k), 3.01(l), 3.01(r), 4.02(a), 15.08, 15.09 or 15.10 of the
Participation Agreement or of the provisions of Section 3.01(b)(xviii) of
the Participation Agreement so as to eliminate the requirement to deliver
to the Loan Trustee the legal opinions to be provided to such Persons
thereunder (recognizing that the lawyers rendering such opinions may be
changed) or of the provisions of Section 4.02(b) of the Participation
Agreement as regards the rights of the Loan Trustee thereunder or
otherwise modify the terms of the Participation Agreement to deprive, the
Pass Through Trustee, the Subordination Agent, the Liquidity Providers or
the Loan Trustee of any indemnity or right of reimbursement in its favor
for Expenses or Taxes; and
4. May not modify in any material adverse respect as regards the interests of
the holders of the Pass Through Certificates, the Pass Through Trustee,
the Subordination Agent, the Liquidity Providers or the Loan Trustee, the
definition of "Supplemental Rent" in Appendix A to the Participation
Agreement.
Notwithstanding the foregoing, any such Mandatory Document Term may be
modified to correct or supplement any such provision which may be defective or
to cure any ambiguity or correct any mistake, provided that any such action
shall not materially adversely affect the interests of the Holders, the Pass
Through Trustee the Subordination Agent, the Liquidity Providers, the Indenture
Trustee or the holders of the Pass Through Certificates.
<PAGE>
SCHEDULE VI TO
NOTE PURCHASE AGREEMENT
MANDATORY ECONOMIC TERMS
Equipment Notes
(i) The maximum principal amount of all the Equipment Notes issued with
respect to an Aircraft shall not exceed the maximum principal amount of
Equipment Notes indicated for each such Aircraft as set forth in the Offering
Memorandum under "Offering Memorandum Summary -- Equipment Notes and the
Aircraft" under the column "Maximum Principal Amount of Equipment Notes";
(ii) The initial loan to aircraft value with respect to an Aircraft (with
the value of any Aircraft for these purposes to equal the value for such
Aircraft set forth in the Offering Memorandum under "Offering Memorandum Summary
- - -- Equipment Notes and the Aircraft" under the column "Appraised Value"), shall
not exceed 36.7% in the case of Series A Equipment Notes, 52.6% in the case of
Series B Equipment Notes, 65.5% in the case of Series C Equipment Notes, and
69.0% in the case of the Series D Equipment Notes;
(iii) The initial average life of the Series A Equipment Notes shall not
extend beyond 11.8 years, of the Series B Equipment Notes shall not extend
beyond 10.8 years, of the Series C Equipment Notes shall not extend beyond 5.5
years and of the Series D Equipment Notes shall not extend beyond 3.6 years, in
each case from the Issuance Date;
(iv) As of the first Regular Distribution Date immediately following the
Delivery Period Termination Date (or if earlier, the date of the occurrence of a
Triggering Event), and after giving effect to any Regular Distribution required
to be made on such date, the average life of the Class A Certificates, the Class
B Certificates, the Class C Certificates and the Class D Certificates shall not
extend beyond, respectively, 11.3 years, 10.3 years, 5.0 years and 3.1 years
from the Issuance Date (computed without regard to the acceleration of any
Equipment Notes and after giving effect to any special distribution on the
Certificates thereafter required in respect of unused Deposits);
(v) The final maturity date of (a) the Series A Equipment Notes shall not
be in excess of 16.4 years after the Issuance Date, (b) the Series B Equipment
Notes shall not be in excess of 14.4 years after the Issuance Date, (c) the
Series C Equipment Notes shall not be in excess of 9.4 years after the Issuance
Date and (d) the Series D Equipment Notes shall not be in excess of 4.4 years
after the Insurance Date;
(vi) The original aggregate principal amount of all of the Equipment Notes
of each Series shall not exceed the original aggregate face amount of the
Certificates issued by the corresponding Trust;
(vii) The interest rate and the January 2 and July 2 payment dates for the
Equipment Notes may not be changed;
<PAGE>
(viii) Basic Rent and Termination Values under the related Lease must be
sufficient to pay amounts due with respect to the Equipment Notes;
(ix) The amounts payable under the all-risk aircraft hull insurance
maintained with respect to the Aircraft must be sufficient to pay the
Termination Value, subject to certain rights of self-insurance; and
(x) (i) the Past Due Rate in the Indenture and the Lease;
(ii) the Make-Whole Premium payable under the Indenture;
(iii) the provisions relating to the prepayment and purchase of the
Equipment Notes in the Indenture;
(iv) the Minimum Liability Amount; and
(v) the indemnification of the Loan Trustee, Subordination Agent,
Liquidity Providers, the Escrow Agents, the Pass-Through
Trustee and the Holders of the Equipment Notes with respect to
certain taxes and expenses;
in each case, must be provided as set forth in the Participation
Agreement, Lease and Indenture, as the case may be (or in the case of
clause (iv), may be in a greater amount, or in the case of clause (v), may
provide for modifications to such indemnification provisions so long as
such modifications are not materially adverse to the Loan Trustee,
Subordination Agent, Liquidity Providers or the Pass Through Trustee).
-2-
<PAGE>
SCHEDULE VII TO
NOTE PURCHASE AGREEMENT
AGGREGATE AMORTIZATION SCHEDULE
<TABLE>
<CAPTION>
1998-A Trust 1998-1B Trust 1998-1C Trust 1998-1D Trust
Equipment Equipment Equipment Equipment
Notes Notes Notes Notes
Scheduled Scheduled Scheduled Scheduled
Payments of Payments of Payments of Payments of
Date Principal Principal Principal Principal
- - ------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
January 2, 1999 $ 0.00 $ 0.00 $3,140,641.00 $ 0.00
July 2, 1999 0.00 0.00 1,282,476.90 31,848.28
January 2, 2000 1,752,101.00 758,368.00 1,151,227.67 215,115.53
January 2, 2001 1,752,801.00 758,968.00 358,457.45 1,872,580.82
January 2, 2002 1,752,801.00 758,968.00 0.00 2,818,189.45
January 2, 2003 1,752,801.00 758,968.00 2,766,930.58 564,265.92
January 2, 2004 1,752,801.00 1,041,906.00 3,544,570.09 0.00
January 2, 2005 1,752,801.00 3,204,040.03 1,919,236.35 0.00
January 2, 2006 1,752,801.00 2,311,568.47 2,118,822.86 0.00
January 2, 2007 3,171,660.38 1,504,236.81 670,413.99 0.00
January 2, 2008 880,785.00 1,308,256.00 3,575,223.11 0.00
January 2, 2009 5,372,889.53 1,133,734.08 0.00 0.00
January 2, 2010 8,360,092.14 0.00 0.00 0.00
January 2, 2011 7,993,667.25 0.00 0.00 0.00
January 2, 2012 5,376,025.87 2,842,465.90 0.00 0.00
January 2, 2013 0.00 8,887,525.93 0.00 0.00
January 2, 2014 9,591,782.06 0.00 0.00 0.00
January 2, 2015 5,410,190.77 0.00 0.00 0.00
</TABLE>
<PAGE>
ANNEX A TO
NOTE PURCHASE AGREEMENT
DEFINITIONS
"Act" means 49 U.S.C. ss. ss. 40101-46507.
"Adjusted Treasury Yield" means the Treasury Yield plus, in the case of a
distribution to holders of Class A Certificates, 170 basis points, in the case
of a distribution to holders of Class B Certificates 270 basis points and in the
case of a distribution to holders of Class C Certificates and the Class D
Certificates, 350 basis points.
"Affiliate" means, with respect to any person, any other person directly or
indirectly controlling, controlled by or under common control with such person.
For 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 "controlling," "controlled by" and "under common control with"
have correlative meanings.
"Aircraft Purchase Agreement" means Bombardier Regional Aircraft Division
Purchase Agreement No. PA-0393 dated September 17, 1997, as amended, between the
Company and the Manufacturer (including all exhibits thereto, together with all
letter agreements entered into that by their terms constitute part of any such
Purchase Agreement).
"Aircraft Purchase Agreement Assignment" means a Purchase Agreement and Engine
Warranties Assignment substantially in the form of Exhibit A-4 to the Note
Purchase Agreement.
"Assumed Amortization Schedule" means Schedule VII to the Note Purchase
Agreement.
"Average Life Date" means, for any Equipment Note, the date which follows the
time of determination by a period equal to the Remaining Weighted Average Life
of such Equipment Note.
"Bankruptcy Code" means the United States Bankruptcy Code, 11 U.S.C. ss. ss. 102
et seq.
"Business Day" means any day, other than a Saturday, Sunday or other day on
which commercial banks are authorized or required by law to close in New York,
New York, Durham, North Carolina, Baltimore, Maryland or Wilmington, Delaware.
"Certificate" has the meaning set forth in the third recital to the Note
Purchase Agreement.
"Certificateholder" means the Person in whose name a Certificate is registered
in the Register.
<PAGE>
"Class" means the class of Certificates issued by each Pass Through Trust.
"Company" means Midway Airlines, Inc., a Delaware corporation.
"Corporate Trust Office" with respect to any Pass Through Trustee or any Loan
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" means the earlier of (a) the day after the Delivery Period
Termination Date and (b) the date on which a Triggering Event occurs.
"Delivery Period Termination Date" means the earlier of (a) September 30, 1999
(provided that, if a labor strike occurs at the Manufacturer prior to such date,
such date shall be extended by adding thereto the number of days that such
strike has continued in effect) and (b) the date on which Equipment Notes issued
with respect to all of the New Aircraft have been purchased by the Pass Through
Trustees in accordance with the Note Purchase Agreement.
"Delivery Date" means the Business Day on which a New Aircraft is delivered to
and accepted by the Company as contemplated by the Note Purchase Agreement
(subject to the provisions of Section 1(e)).
"Delivery Notice" has the meaning set forth in Section 1(b) of the Note Purchase
Agreement.
"Deposit" has the meaning set forth in the fifth recital to the Note Purchase
Agreement.
"Deposit Agreement" has the meaning set forth in the fifth recital to the Note
Purchase Agreement.
"Deposit Make-Whole Premium" means, with respect to the distribution of unused
Deposits to holders of any Class of Certificates as of any date of
determination, an amount equal to the excess, if any, of (a) the present value
of the excess of (i) the scheduled payment of principal and interest to maturity
of the Equipment Notes, assuming the maximum principal amount thereof (the
"Maximum Amount") minus such Class of Certificates' Pro Rata Share were issued,
on each remaining Regular Distribution Date for such Class under the Assumed
Amortization Schedule (assuming for purposes of giving effect to the subtraction
above, if such Class of Certificates' Pro Rata Share is greater than zero, that
each scheduled payment of principal on such Schedule is reduced in an amount
equal to such scheduled payment multiplied by a fraction, the numerator of which
shall be the Pro Rata Share and the denominator of which shall be the Maximum
Amount) over (ii) the scheduled payment of principal and interest to maturity of
the Equipment Notes actually acquired by the Pass Through Trustee for such Class
on each such Regular Distribution Date, such present value computed by
discounting such excess on a semiannual basis on each Regular Distribution Date
(assuming a 360-day year of twelve 30-day months) using a discount
A-2
<PAGE>
rate equal to the Adjusted Treasury Yield over (b) the amount of such unused
Deposits to be distributed to the holders of such Certificates minus such Class
of Certificates' Pro Rata Share (the remainder of such subtraction, the "Net
Deposits") plus accrued and unpaid interest on the Net Deposits to but excluding
such date of determination from and including the preceding Regular Distribution
Date (or if such date of determination precedes the first Regular Distribution
Date, the Issuance Date).
"Depositary" means First Union National Bank.
"Equipment Notes" means and includes any equipment notes issued under any
Indenture in the form specified in Section 2.01 thereof (as such form may be
varied pursuant to the terms of such Indenture) and any Equipment Note issued
under any Indenture in exchange for or replacement of any other Equipment Note.
"Escrow Agent" has the meaning set forth in the Preamble of the Note Purchase
Agreement.
"Escrow and Paying Agent Agreement" has the meaning set forth in the fifth
recital to the Note Purchase Agreement.
"FAA" means the Federal Aviation Administration of the United States.
"Final Withdrawal" with respect to each Escrow and Paying Agent Agreement, has
the meaning set forth in Section 1.02 thereof.
"Financing Agreements" means, collectively, the Lease Financing Agreements and
the Owner Financing Agreements.
"FNBM" has the meaning set forth in the Preamble of the Note Purchase Agreement.
"Funding Date" has the meaning specified in Section 1(b)(ii).
"Government Entity" means (a) any federal, state, provincial or similar
government, and any body, board, department, commission, court, tribunal,
authority, agency or other instrumentality of any such government or otherwise
exercising any executive, legislative, judicial, administrative or regulatory
functions of such government or (b) any other government entity having
jurisdiction over any matter contemplated by the Operative Agreements or
relating to the observance or performance of the obligations of any of the
parties to the Operative Agreements.
"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.
"Indentures" means, collectively, the Leased Aircraft Indentures and the Owned
Aircraft Indentures.
A-3
<PAGE>
"Initial Purchasers" has the meaning set forth in the fourth recital to the Note
Purchase Agreement.
"Intercreditor Agreement" has the meaning set forth in the ninth recital to the
Note Purchase Agreement.
"Issuance Date" means the date of the original issuance of the Certificates.
"Law" means (a) any constitution, treaty, statute, law, decree, regulation,
order, rule or directive of any Government Entity, and (b) any judicial or
administrative interpretation or application of, or decision under, any of the
foregoing.
"Lease" means a Lease Agreement substantially in the form of Exhibit A-2 to the
Note Purchase Agreement.
"Lease Financing Agreements" means, collectively, the Aircraft Purchase
Agreement Assignment, the Leased Aircraft Participation Agreement, the Lease,
the Leased Aircraft Indenture, the Equipment Notes issued thereunder and the
Trust Agreement relating to the financing of a Leased Aircraft.
"Leased Aircraft" means a New Aircraft subject to a Lease.
"Leased Aircraft Indenture" means a Trust Indenture and Security Agreement
substantially in the form of Exhibit A-3 to the Note Purchase Agreement.
"Leased Aircraft Participation Agreement" means a Participation Agreement
substantially in the form of Exhibit A-1 to the Note Purchase Agreement.
"Liquidity Facility" has the meaning set forth in the ninth recital to the Note
Purchase Agreement.
"Liquidity Provider" has the meaning set forth in the ninth recital to the Note
Purchase Agreement.
"Loan Trustee" means (i) in the case of the Lease Financing Agreements, the
"Indenture Trustee" as defined therein and (ii) in the case of the Owner
Financing Agreements, the "Indenture Trustee" as defined therein.
"Mandatory Document Terms" means the terms set forth on Schedule V to the Note
Purchase Agreement.
"Mandatory Economic Terms" means the terms set forth on Schedule VI to the Note
Purchase Agreement.
"Manufacturer" means Bombardier Inc, a Canadian company, solely in its capacity
as manufacturer or seller of New Aircraft.
A-4
<PAGE>
"New Aircraft" has the meaning set forth in the second recital to the Note
Purchase Agreement.
"Note Purchase Agreement" means the Note Purchase Agreement to which this Annex
A is attached.
"Notice of Purchase Withdrawal" with respect to each Deposit Agreement, has the
meaning set forth in Section 2.3 thereof.
"Offering Memorandum" means the Offering Memorandum dated August 6, 1998 of
Midway relating to the Certificates.
"Operative Agreements" means, collectively, the Pass Through Trust Agreements,
the Escrow and Paying Agent Agreements, the Deposit Agreements, the Liquidity
Facilities, the Intercreditor Agreement, the Trust Agreements, the Equipment
Notes, the Certificates and the Financing Agreements.
"Owned Aircraft" means a New Aircraft subject to an Owned Aircraft Indenture.
"Owned Aircraft Indenture" means a Trust Indenture and Mortgage substantially in
the form of Exhibit C-2 to the Note Purchase Agreement.
"Owned Aircraft Participation Agreement" means a Participation Agreement
substantially in the form of Exhibit C-1 to the Note Purchase Agreement.
"Owner Financing Agreements" means, collectively, the Owned Aircraft
Participation Agreement, the Owned Aircraft Indenture and the Equipment Notes
issued thereunder.
"Owner Participant" means, with respect to any Leased Aircraft, the Person named
as the Owner Participant in the Participation Agreement with respect to such
Leased Aircraft.
"Owner Trust" means with respect to any Leased Aircraft, the trust created by
the "Trust Agreement" referred to in the Leased Aircraft Indenture related
thereto.
"Owner Trustee" means with respect to any Leased Aircraft, the "Owner Trustee"
party to the "Trust Agreement" referred to in the Leased Aircraft Indenture
related thereto.
"Participation Agreements" means, collectively, the Leased Aircraft
Participation Agreements and the Owned Aircraft Participation Agreements.
"Pass Through Trusts" has the meaning set forth in the third recital to the Note
Purchase Agreement.
A-5
<PAGE>
"Pass Through Trust Agreements" means each of the four separate Pass Through
Trust Agreements, each dated as of the Issuance Date, by and between the Company
and Pass Through Trustee.
"Pass Through Trustee" has the meaning set forth in the Preamble of the Note
Purchase Agreement.
"Paying Agent" has the meaning set forth in the first Preamble of the Note
Purchase Agreement.
"Person" means any individual, firm, partnership, joint venture, trust, trustee,
Government Entity, organization, association, corporation, government agency,
committee, department, authority and other body, corporate or incorporate,
whether having distinct legal status or not, or any member of any of the same.
"Pro Rata Share" means, with respect to any Class of Certificates, if any
Aircraft has not been delivered by the Manufacturer on or prior to the Delivery
Period Termination Date due to any reason not occasioned by the Company's fault
or negligence, an amount equal to the maximum principal amount of Equipment
Notes with respect to such Aircraft that could have been issued and acquired by
the Pass Through Trust that issued such Class of Certificates in accordance with
the Mandatory Economic Terms.
"Qualified Owner Participant" means any bank, trust company, insurance company,
financial institution or corporation (other than, without the Company's consent,
a commercial air carrier, a commercial aircraft operator, a freight forwarder or
Affiliate of any of the foregoing), in each case with a combined capital and
surplus or net worth of at least $50,000,000.
"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. The initial Rating Agencies will be
Moody's Investors Service, Inc. and Standard & Poor's Ratings Services, a
division of McGraw-Hill Inc.
"Rating Agency Confirmation" means, with respect to any Financing Agreement that
has been modified in any material respect from the forms thereof attached to the
Note Purchase Agreement, a written confirmation from each of the Rating Agencies
that the use of such Financing Agreement with such modifications 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.
"Register" means the register maintained pursuant to Sections 3.04 and 7.12 of
the Pass Through Trust Agreements.
"Regular Distribution Dates" shall mean January 2 and July 2 of each year,
commencing January 2, 1999.
A-6
<PAGE>
"Remaining Weighted Average Life" means, on a given date with respect to any
Equipment Note, the number of days equal to the quotient obtained by dividing
(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 by
(ii) the number of days from and including such determination date to but
excluding the date on which such payment of principal is scheduled to be made,
by (b) the then outstanding principal amount of such Equipment Note.
"Section 1110" means 11 U.S.C. ss. 1110 of the Bankruptcy Code or any successor
or analogous Section of the federal bankruptcy Law in effect from time to time.
"Series A Equipment Notes" means Equipment Notes issued under an Indenture and
designated as "Series A" thereunder.
"Series B Equipment Notes" means Equipment Notes issued under an Indenture and
designated as "Series B" thereunder.
"Series C Equipment Notes" means Equipment Notes issued under an Indenture and
designated as "Series C" thereunder.
"Series D Equipment Notes" means Equipment Notes issued under an Indenture and
designated as "Series D" thereunder.
"Subordination Agent" has the meaning set forth in the Preamble of the Note
Purchase Agreement.
"Taxes" means all license, recording, documentary, registration and other
similar fees and all taxes, levies, imposts, duties, charges, assessments or
withholdings of any nature whatsoever imposed by any Taxing Authority, together
with any penalties, additions to tax, fines or interest thereon or additions
thereto.
"Taxing Authority" means any federal, state or local government or other taxing
authority in the United States, any foreign government or any political
subdivision or taxing authority thereof, any international taxing authority or
any territory or possession of the United States or any taxing authority
thereof.
"Treasury Yield" means, as of any date of determination, with respect to any
Equipment Note (utilizing the Assumed Amortization Schedule applicable thereto),
the interest rate (expressed 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 turning as close as possible to, but
A-7
<PAGE>
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).
"Triggering Event" has the meaning assigned to such term in the Intercreditor
Agreement.
"Trust Agreement" means a Trust Agreement substantially in the form of Exhibit
A-5 to the Note Purchase Agreement.
A-8
<PAGE>
================================================================================
PARTICIPATION AGREEMENT [N ___]
Dated as of __________ __, 199_
among
MIDWAY AIRLINES CORPORATION,
Lessee
---------------------------
as Owner Participant,
FIRST UNION TRUST COMPANY NATIONAL ASSOCIATION,
not in its individual capacity (except as otherwise
expressly set forth herein) but solely as,
Owner Trustee
THE FIRST NATIONAL BANK OF MARYLAND,
Indenture Trustee
THE FIRST NATIONAL BANK OF MARYLAND,
Pass-Through Trustee
and
THE FIRST NATIONAL BANK OF MARYLAND
Subordination Agent
================================================================================
COVERING ONE CANADAIR REGIONAL JET SERIES 200ER
AIRCRAFT BEARING U.S. REGISTRATION NO. N___
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE 1. INTERPRETATION.................................................... 2
Section 1.01. Definitions........................................ 2
Section 1.02. References......................................... 2
Section 1.03. Headings........................................... 2
Section 1.04. Appendices Schedules and Exhibits.................. 2
ARTICLE 2. SALE, LEASING AND SECURED LOAN TRANSACTIONS....................... 2
Section 2.01. Participation...................................... 2
(a) Sale and Purchase.................................. 2
(b) Leasing............................................ 3
(c) Owner Participant's Equity Investment.............. 3
(d) Secured Loan....................................... 3
(e) Delivery Date...................................... 3
Section 2.02. Closing Procedure.................................. 4
(a) Time and Place..................................... 4
(b) Actions of the Owner Trustee....................... 4
(c) Actions of the Lessee.............................. 4
ARTICLE 3. CONDITIONS PRECEDENT.............................................. 5
Section 3.01. Conditions Precedent to Obligations of
Participants....................................... 5
(a) Notice............................................. 5
(b) Delivery of Documents.............................. 5
(c) Airworthiness...................................... 8
(d) Other Commitments.................................. 9
(e) Violation of Law................................... 9
(f) Tax Law Change..................................... 9
(g) No Event of Default................................ 9
(h) No Event of Loss................................... 9
(i) Title.............................................. 9
(j) Certification...................................... 9
(k) Section 1110....................................... 9
(l) Filings............................................ 9
(m) Financing Statements............................... 10
(n) Precautionary Financing Statements................. 10
(o) No Proceedings..................................... 10
(p) Governmental Action................................ 10
(q) Note Purchase Agreement............................ 10
(r) Perfected Security Interest........................ 10
Section 3.02. Conditions Precedent to Obligations of
Lessee............................................. 10
-i-
<PAGE>
(a) Documents.......................................... 11
(b) Other Conditions Precedent......................... 11
(c) Tax Law Change..................................... 11
Section 3.03. Post-Registration Opinion.......................... 11
ARTICLE 4. LESSEE'S REPRESENTATIONS, WARRANTIES AND
COVENANTS......................................................... 11
Section 4.01. Lessee's Representations and Warranties............ 11
Section 4.02. Certain Covenants of Lessee........................ 14
(a) Filings and Recordings............................. 14
(b) Registration....................................... 14
(c) Information........................................ 16
(d) Corporate Existence................................ 16
(e) Merger and Consolidation........................... 16
(f) Change of Location................................. 17
(g) Financial Statements............................... 18
(h) Notice of Sublease................................. 19
Section 4.03. Survival of Representations and Warranties......... 19
ARTICLE 5. OTHER PARTIES' REPRESENTATIONS, WARRANTIES
AND COVENANTS..................................................... 19
Section 5.01. Representations, Warranties and Covenants
of Owner Participant............................... 19
(a) Representations and Warranties..................... 19
(b) Lessor's Liens..................................... 20
(c) Assignment of Interests of Owner
Participant........................................ 21
(d) Actions with Respect to Lessor's Estate, Etc....... 22
(e) Citizenship........................................ 22
Section 5.02. Citizenship........................................ 23
(a) Generally.......................................... 23
(b) Owner Trustee...................................... 23
Section 5.03. Representations, Warranties and Covenants
of Trust Company and the Owner Trustee............. 23
(a) Representations and Warranties..................... 23
(b) Lessor's Liens..................................... 25
(c) Indemnity for Lessor's Liens....................... 25
(d) Securities Act..................................... 26
(e) Actions With Respect to Lessor's Estate, Etc....... 26
Section 5.04. Representations, Warranties and Covenants
of the Indenture Trustee........................... 26
(a) Representations and Warranties..................... 26
(b) Indenture Trustee's Liens.......................... 27
(c) Indemnity for Indenture Trustee's Liens............ 27
-ii-
<PAGE>
Section 5.05. Indenture Trustee's Notice of Default
Trustee's Notice of Default........................ 27
Section 5.06. Releases from Indenture............................ 27
Section 5.07. The Lessee's Right of Quiet Enjoyment.............. 28
Section 5.08. Pass-Through Trustee's Representations and
Warranties......................................... 28
Section 5.09. Survival of Representations, Warranties and
Covenants.......................................... 29
Section 5.10. Lessee's Assumption of the Equipment
Notes.............................................. 29
Section 5.11. Compliance with Trust Agreement, Etc............... 31
Section 5.12. Subordination Agent's Representations,
Warranties and Covenants........................... 32
(a) Representations and Warranties..................... 32
(b) Covenants.......................................... 33
Section 5.13. Amendments to the Indenture........................ 34
ARTICLE 6. TAXES............................................................. 34
Section 6.01. Lessee's Obligation to Pay Taxes................... 34
(a) Generally.......................................... 34
(b) Exceptions......................................... 35
(c) Withholding........................................ 38
Section 6.02. After-Tax Basis.................................... 38
Section 6.03. Time of Payment.................................... 39
Section 6.04. Contests........................................... 39
Section 6.05. Refunds............................................ 41
Section 6.06. Reports............................................ 42
Section 6.07. Survival of Obligations............................ 43
Section 6.08. Payment of Taxes................................... 43
Section 6.09. Reimbursements by Indemnities Generally............ 43
Section 6.10. Forms.............................................. 43
Section 6.11. Verification....................................... 43
Section 6.12. Non-Parties........................................ 44
ARTICLE 7. GENERAL INDEMNITY ................................................ 44
Section 7.01. Generally.......................................... 44
(a) Indemnity.......................................... 44
(b) Exceptions......................................... 45
Section 7.02. Notice and Payment................................. 46
Section 7.03. Defense of Claims.................................. 47
Section 7.04. Insured Claims..................................... 47
Section 7.05. Subrogation........................................ 48
Section 7.06. Survival of Obligations............................ 48
Section 7.07. Effect of Other Indemnities........................ 48
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Section 7.08. Waiver of Certain Claims........................... 48
Section 7.09. Certain Limitations................................ 48
ARTICLE 8. TRANSACTION COSTS................................................. 49
Section 8.01. Transaction Costs and Other Costs.................. 49
(a) Transaction Costs.................................. 49
(b) Continuing Expenses................................ 49
(c) Amendments and Supplements......................... 49
ARTICLE 9. SUCCESSOR OWNER TRUSTEE .......................................... 50
Section 9.01. Appointment of Successor Owner Trustee............. 50
(a) Resignation and Removal............................ 50
(b) Conditions to Appointment.......................... 50
ARTICLE 10.LIABILITIES AND INTERESTS OF THE OWNER
PARTICIPANT AND HOLDERS........................................... 51
Section 10.01. Liabilities of the Owner Participant............... 51
Section 10.02. Interest of Holders of Equipment Notes............. 51
ARTICLE 11.OTHER DOCUMENTS................................................... 52
Section 11.01. Consent of Lessee to Other Documents............... 52
Section 11.02. Pass-Through Trustee's and Subordination
Agent's Acknowledgment............................. 52
ARTICLE 12.NOTICES........................................................... 52
Section 12.01. Notices............................................ 52
ARTICLE 13.REFINANCING....................................................... 53
Section 13.01. Refinancing........................................ 53
ARTICLE 14.[RESERVED]........................................................ 56
ARTICLE 15.MISCELLANEOUS .................................................... 56
Section 15.01. Counterparts....................................... 56
Section 15.02. No Oral Modifications.............................. 56
Section 15.03. Captions........................................... 56
Section 15.04. Successors and Assigns............................. 56
Section 15.05. Concerning the Owner Trustee, Indenture
Trustee and the Pass-Through Trustee............... 57
Section 15.06. Severability....................................... 57
Section 15.07. Certain Limitations on Reorganization.............. 57
Section 15.08. GOVERNING LAW...................................... 58
Section 15.09. Section 1110 Compliance............................ 58
Section 15.10. Reliance of Liquidity Providers.................... 58
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Schedule I Commitments
Appendix A Definitions
Exhibit A-1(a) Form of Opinion of General Counsel of Lessee
Exhibit A-1(b) Form of Opinion of Special North Carolina counsel
Exhibit A-2 Form of Opinion of Fulbright & Jaworski L.L.P.
Exhibit A-3 Form of Opinion of Ober, Kaler, Grimes & Shriver, as
special counsel to Indenture Trustee, Subordination
Agent and Pass-Through Trustee
Exhibit A-4 Form of Opinion of Morris, James, Hitchens & Williams,
as special counsel to the Owner Trustee
Exhibit A-5 Form of Opinion of Crowe & Dunlevy P.C.
Exhibit B Form of Assignment and Assumption Agreement
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PARTICIPATION AGREEMENT [N____] dated as of __________, 199_ (this
"Agreement") among MIDWAY AIRLINES CORPORATION, a Delaware corporation (herein,
together with its successors and permitted assigns, the "Lessee"), FIRST UNION
TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity, except as otherwise expressly stated herein, but solely as
owner trustee under the Trust Agreement referred to below (in such capacity as
trustee, together with its successors and permitted assigns, the "Owner
Trustee"), ____________________, a _____________________ (together with its
successors and permitted assigns, the "Owner Participant", THE FIRST NATIONAL
BANK OF MARYLAND, a national banking association, as indenture trustee under the
Indenture referred to below (together with its successors and permitted assigns,
the "Indenture Trustee"), THE FIRST NATIONAL BANK OF MARYLAND, a national
banking association, as pass-through trustee of four separate Pass-Through
Trusts (together with its successors and permitted assigns, the "Pass-Through
Trustee"), and THE FIRST NATIONAL BANK OF MARYLAND, a national banking
association, as subordination agent (together with its successors and permitted
assigns, the "Subordination Agent").
W I T N E S S E T H:
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article 1 hereof.
WHEREAS, pursuant to the Purchase Agreement the Manufacturer agreed
to manufacture and sell to the Lessee and the Lessee agreed to purchase from the
Manufacturer the Aircraft; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant and First Union Trust Company, National
Association, are entering into the Trust Agreement whereby, among other things,
First Union Trust Company, National Association, is appointed as Owner Trustee
and has undertaken to acquire and hold the Trust Estate in trust for the benefit
of the Owner Participant; and
WHEREAS, subject to the terms and conditions of this Agreement, the
Lessee has assigned to the Owner Trustee, pursuant to the Purchase Agreement
Assignment, the Lessee's right to take title to the Aircraft from the
Manufacturer and the Owner Trustee is willing to purchase the Aircraft from the
Manufacturer for immediate lease to the Lessee pursuant to the Lease; and
WHEREAS, subject to the terms and conditions of this Agreement and
the Trust Agreement, the Owner Participant is willing to make the equity
investment provided for herein to fund such purchase by the Owner Trustee; and
WHEREAS, the Owner Trustee and the Indenture Trustee are
concurrently entering into the Indenture for the benefit of the holders of the
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Equipment Notes, pursuant to which Indenture the Owner Trustee shall, subject to
the terms and conditions set forth therein, issue to the Pass-Through Trustee
under each of the Pass-Through Trust Agreements, as a Loan Participant,
Equipment Notes substantially in the form set forth in the Indenture as evidence
of the loan to be made by each such Loan Participant to the Owner Trustee to
finance a portion of Lessor's Cost for the Aircraft, all as more particularly
described herein and in the Indenture;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration and receipt and adequacy of
which is hereby acknowledged, and intending to be legally bound, the parties do
hereby agree as follows:
ARTICLE 1.
INTERPRETATION
Section 1.01. Definitions. Capitalized terms used herein and defined
in Appendix A shall, except as such definitions may be specifically modified in
the body of this Agreement for the purposes of a particular section, paragraph
or clause, have the meanings given such terms in Appendix A.
Section 1.02. References. References in this Agreement to sections,
paragraphs, clauses, appendices, schedules and exhibits are to sections,
paragraphs, clauses, appendices, schedules and exhibits in and to this Agreement
unless otherwise specified.
Section 1.03. Headings. The headings of the various sections,
paragraphs and clauses of this Agreement and the table of contents are for
convenience of reference only and shall not modify, define, expand or limit any
of the terms or provisions hereof.
Section 1.04. Appendices Schedules and Exhibits. The appendices,
schedules and exhibits are part of this Agreement.
ARTICLE 2.
SALE, LEASING AND SECURED LOAN TRANSACTIONS
Section 2.01. Participation. Subject to all of the terms and
conditions of this Agreement, the parties agree to participate in the sale,
leasing and secured loan transactions with respect to the Aircraft provided for
in this Section 2.
(a) Sale and Purchase. The Lessee agrees to assign, pursuant to the
Purchase Agreement Assignment, to the Owner Trustee the right to take title to
the Aircraft from the Manufacturer under the Purchase Agreement and the Owner
Trustee agrees to purchase from the Manufacturer, the Aircraft on the Delivery
Date for a purchase price equal to Lessor's Cost.
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(b) Leasing. The Owner Trustee agrees to lease to the Lessee, and
the Lessee agrees to lease from the Owner Trustee, the Aircraft pursuant to the
Lease, such leasing to take place concurrently with the purchase of the Aircraft
by the Owner Trustee on the Delivery Date.
(c) Owner Participant's Equity Investment. The Owner Participant
agrees to provide immediately available funds in the amount determined by
multiplying Lessor's Cost by the percentage set forth opposite its name on
Schedule I (the Owner Participant's "Commitment") by paying such amount to the
Owner Trustee by 11:00 a.m. New York City local time on the Delivery Date at the
account specified by the Lessee on or prior to the Delivery Date, such amount to
be held and applied toward the Owner Trustee's payment to the Lessee of Lessor's
Cost for the Aircraft on the Delivery Date (and if not so applied, to be
promptly returned to the Owner Participant). Such funds, once so applied, shall
constitute an equity investment by the Owner Participant in the Trust Estate.
(d) Secured Loan. Each Loan Participant agrees to provide
immediately available funds in the amount determined by multiplying Lessor's
Cost by the percentage set forth opposite its name on Schedule I (each such
commitment being referred to as a Loan Participant's "Commitment") to or on
behalf of the Owner Trustee by paying or causing to be paid such amount to the
Owner Trustee, at the account specified by the Lessee on or prior to the
Delivery Date such amount to be held and applied toward the Owner Trustee's
payment to the Lessee of Lessor's Cost for the Aircraft on the Delivery Date
(and if not so applied, to be promptly returned to the Loan Participants). Such
funds, once so applied, shall constitute a loan to the Owner Trustee to be
evidenced by the Equipment Notes and secured as provided in the Indenture.
(e) Delivery Date. The "Delivery Date" shall be the date fixed by
the Lessee in accordance with this Section 2(e) for the closing of the sale,
leasing and loan transactions with respect to the Aircraft contemplated hereby,
except that following such closing the "Delivery Date" shall mean the date on
which such transactions actually closed. The Lessee shall give at least two
Business Days' notice to each other party hereto of the Delivery Date, which
notice shall also specify the amount of the Owner Participant's Commitment and
each Loan Participant's Commitment. The Lessee may postpone a scheduled Delivery
Date from time to time, for any reason by notice given to the other parties
hereto not later than 3:00 p.m. on the date last scheduled as the Delivery Date,
such notice to specify a new Delivery Date. In the event that a Participant
shall have provided the amount of its Commitment to the Owner Trustee prior to
such a postponement, the Owner Trustee shall promptly return such amount to such
Participant unless such Participant shall have agreed otherwise in writing. The
making available by the Owner Participant of its Commitments at the closing
shall be deemed a waiver of notice of the Delivery Date by the Owner Participant
and the Owner Trustee, and the making available by the Loan Participants of
their Commitment at the closing shall be deemed a waiver of notice of the
Delivery Date by such Loan Participants respectively and the Indenture Trustee.
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Section 2.02. Closing Procedure.
(a) Time and Place. The closing shall take place at 11:00 a.m. New
York City local time on the Delivery Date at the offices of Fulbright & Jaworski
L.L.P., 666 Fifth Avenue, New York, New York or at such other time and place as
the parties may agree. The closing shall be preceded by a pre-closing at the
same place, the time for which shall be fixed by the Lessee, at which the forms
of the Operative Agreements to be executed, the certificates and other documents
to be delivered and the forms of the legal opinions to be delivered at the
closing by each party or its counsel pursuant to this Agreement shall be
available for inspection by the parties and their respective counsel.
(b) Actions of the Owner Trustee. Upon receipt in full by the Owner
Trustee (or tender by a Participant to the Lessee on behalf of the Owner
Trustee) of the Commitment of each Participant together with instructions (which
may be oral) from each Participant or its special counsel that the applicable
conditions precedent set forth in Section 3.01 have been satisfied or waived by
such Participant, the Owner Trustee on the Delivery Date shall purchase the
Aircraft from the Manufacturer, lease the Aircraft to the Lessee, issue the
Equipment Notes to the Pass-Through Trustee and make a security assignment of
all of its right, title and interest in and to the Trust Indenture Estate to the
Indenture Trustee. To accomplish such transactions, the Owner Trustee shall,
concurrently with the actions of the Lessee pursuant to Section 2.02(c), take
the following actions: (i) pay or cause to be paid an amount equal to Lessor's
Cost to the Lessee (or at the direction of the Lessee, to the Manufacturer) for
the purchase of the Aircraft by transferring such amount in immediately
available funds to the account specified by the Lessee on or prior to the
Delivery Date; (ii) authorize its representative or representatives, who shall
be a person or persons designated by the Lessee and acceptable to the Owner
Trustee, to accept delivery of the Aircraft pursuant to this Agreement; (iii)
accept the Bills of Sale for the Aircraft; (iv) execute, and cause to be
authenticated and delivered to each Loan Participant with respect to each
Pass-Through Trust Agreement, the Equipment Notes specified, by reference to
principal amounts, maturity dates and interest rates, in the Indenture; (v)
execute and deliver the Lease, the Lease Supplement, the Indenture and the
Indenture Supplement; (vi) deliver the Aircraft to the Lessee pursuant to the
Lease; and (vii) execute and deliver all other documents or certificates and
take such other actions as may be required of the Owner Trustee on or before the
Delivery Date pursuant to any Operative Agreement. In addition, the Owner
Trustee shall take such actions as may be requested by the Lessee to effect the
due registration of the Aircraft with the FAA in the name of the Owner Trustee
and to file and perfect the security interest of the Loan Trustee in all or any
part of the Indenture Estate.
(c) Actions of the Lessee. Upon satisfaction or waiver by the Lessee
of the conditions precedent set forth in Section 3.02, the Lessee shall on the
Delivery Date assign to the Owner Trustee pursuant to the Purchase Agreement
Assignment the Lessee's right to take title to the Aircraft and lease the
Aircraft from the Owner Trustee pursuant to the Lease. To accomplish such
transactions the Lessee shall,
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concurrently with the actions of the Owner Trustee pursuant to Section 2.02(b),
take the following actions:
(i) execute and deliver the Lease and the Lease Supplement;
(ii) authorize its representative or representatives (who shall be
the same person or persons designated by the Lessee for purposes of clause
(ii) of Section 2.02(b)), to accept delivery of the Aircraft from the
Owner Trustee pursuant to the Lease; and
(iii) execute and deliver all other documents or certificates and
take such other actions as may be required of the Lessee on or before the
Delivery Date pursuant to any Operative Agreement.
ARTICLE 3.
CONDITIONS PRECEDENT
Section 3.01. Conditions Precedent to Obligations of Participants.
The obligation of each Participant to make the Dollar amount of its respective
Commitment available for payment as directed by the Owner Trustee on the
Delivery Date is subject to satisfaction or waiver by each such Participant, on
or prior to the Delivery Date, of the conditions precedent set forth below in
this Section 3.01; provided, that it shall not be a condition precedent to the
obligation of any Participant that any document be produced or action taken that
is to be produced or taken by such Participant or by a Person within such
Participant's control; provided, further, that Sections 3.01(b)(iii), (xii) and
(xviii)(H) shall not be conditions precedent to the obligation of Loan
Participant and Sections 3.01(q) and 3.01(r) shall not be conditions precedent
to the obligation of Owner Participant:
(a) Notice. Such Participant shall have received the notice of the
Delivery Date as provided in Section 2(e), or shall have waived such notice.
(b) Delivery of Documents. Such Participant shall, except as noted
below, have received executed counterparts of the following agreements,
instruments, certificates or documents, and such counterparts (a) shall have
been duly authorized, executed and delivered by the respective party or parties
thereto, (b) shall be reasonably satisfactory in form and substance to such
Participant and (c) shall be in full force and effect:
(i) the Lease; provided that, only the Indenture Trustee shall
receive the sole executed chattel paper original thereof;
(ii) Lease Supplement No. 1; provided that, only the Indenture
Trustee shall receive the sole executed chattel paper original thereof;
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<PAGE>
(iii) the Tax Indemnity Agreement; provided that, only Owner
Participant and Lessee shall receive copies of the Tax Indemnity
Agreement;
(iv) the Trust Agreement;
(v) the Indenture;
(vi) Indenture Supplement No. 1;
(vii) the Purchase Agreement Assignment and the Engine Warranty
Assignment;
(viii) the Consent and Agreement and the Engine Consent and
Agreement;
(ix) the Equipment Notes dated the Delivery Date; provided that,
only the Subordination Agent shall receive the authenticated Equipment
Notes;
(x) the Bills of Sale;
(xi) the broker's report and insurance certificates required by
Section 11 of the Lease;
(xii) an appraisal or appraisals from an Appraiser, which appraisal
or appraisals shall be satisfactory in form and substance to Owner
Participant; provided, that only Owner Participant and Lessee shall
receive copies of such appraisal or appraisals;
(xiii) (A) a copy of the Certificate of Incorporation and By-Laws of
Lessee and resolutions of the board of directors of Lessee and/or the
executive committee thereof, in each case certified as of the Delivery
Date, by the Secretary or an Assistant Secretary of Lessee, duly
authorizing the execution, delivery and performance by Lessee of the
Operative Agreements required to be executed and delivered by Lessee on or
prior to the Delivery Date in accordance with the provisions hereof and
thereof; (B) an incumbency certificate of Lessee, Owner Participant, FNBM
and Trust Company as to the person or persons authorized to execute and
deliver the relevant Operative Agreements on behalf of such party; and (C)
a copy of the Certificate of Incorporation or Articles of Incorporation
and By-Laws and general authorizing resolutions of the boards of directors
(or executive committees) or other satisfactory evidence of authorization
of Owner Participant, FNBM and Trust Company, certified as of the Delivery
Date by the Secretary or an Assistant or Assistant Secretary of Owner
Participant, FNBM and Trust Company, respectively,
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<PAGE>
which authorize the execution, delivery and performance by Owner
Participant, FNBM and Trust Company, respectively, of each of the
Operative Agreements to which it is a party, together with such other
documents and evidence with respect to it as Lessee or any Participant may
reasonably request in order to establish the consummation of the
transactions contemplated by this Agreement and the taking of all
corporate proceedings in connection therewith;
(xiv) an Officer's Certificate of Lessee, dated as of the Delivery
Date, stating that its representations and warranties set forth in this
Agreement are true and correct as of the Delivery Date (or, to the extent
that any such representation and warranty expressly relates to an earlier
date, true and correct as of such earlier date);
(xv) an Officer's Certificate of Trust Company, dated as of the
Delivery Date, stating that its representations and warranties, in its
individual capacity and as Owner Trustee, set forth in this Agreement are
true and correct as of the Delivery Date (or, to the extent that any such
representation and warranty expressly relates to an earlier date, true and
correct as of such earlier date);
(xvi) an Officer's Certificate of Owner Participant, dated as of the
Delivery Date, stating that its representations and warranties set forth
in this Agreement are true and correct as of the Delivery Date (or, to the
extent that any such representation and warranty expressly relates to an
earlier date, true and correct as of such earlier date);
(xvii) an Officer's Certificate of FNBM, dated as of the Delivery
Date, stating that its representations and warranties, in its individual
capacity or as Indenture Trustee, a Pass-Through Trustee or Subordination
Agent, as the case may be, set forth in the Agreement are true and correct
as of the Delivery Date (or, to the extent that any such representation
and warranty expressly relates to an earlier date, true and correct as of
such earlier date);
(xviii) the following opinions of counsel, in each case dated the
Delivery Date:
(A) (I) Jonathan Waller, Senior Vice President and General
Counsel of the Lessee substantially in the form of Exhibit A-1(a) hereto
and (II) Kennedy Covington, Lobdell & Hickman, special North Carolina
counsel to the Lessee, substantially in the form of Exhibit A-1(b) hereto,
in each case addressed to the Owner Participant, the Owner Trustee, the
Pass-Through Trustee, each Liquidity Provider and the Indenture Trustee.
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<PAGE>
(B) Fulbright & Jaworski, L.L.P. special counsel for the
Lessee substantially in the form of Exhibit A-2 hereto addressed to the
Owner Participant, the Indenture Trustee, the Owner Trustee, the
Pass-Through Trustee, each Liquidity Provider and the Lessee;
(C) Morris, James, Hitchens & Williams, special counsel for
the Owner Trustee substantially in the form of Exhibit A-3 hereto
addressed to the Owner Participant, the Indenture Trustee, the Owner
Trustee, the Pass-Through Trustee, each Liquidity Provider and the Lessee;
(D) Ober, Kaler, Grimes & Shriver, special counsel for the
Indenture Trustee, Pass-Through Trustee and Subordination Agent in the
form of Exhibit A-4 hereto and addressed to the Indenture Trustee, the
Owner Participant, the Owner Trustee, the Pass-Through Trustee, each
Liquidity Provider and the Lessee;
(E) Crowe & Dunlevy P.C., special aviation counsel,
substantially in the form of Exhibit A-5 hereto and addressed to the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass-Through
Trustee, each Liquidity Provider and the Lessee;
(F) special counsel for the Manufacturer, in a form reasonably
acceptable to the Owner Participant and addressed to the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass-Through
Trustee, each Liquidity Provider and the Lessee;
(G) counsel for the Engine Manufacturer, in a form reasonably
acceptable to the Owner Participant and addressed to the Owner
Participant, the Indenture Trustee, the Owner Trustee, the Pass-through
Trustee, each Liquidity Provider and the Lessee;
(H) in the case of the Owner Participant only, tax counsel to
the Owner Participant, addressed to the Owner Participant, with respect to
tax matters; and
(I) special counsel for the Owner Participant and the Owner
Participant Guarantor, if any, and the General Counsel's Office of the
Owner Participant and the Owner Participant, if any, in each case in
customary form, addressed to the Indenture Trustee, the Owner Trustee, the
Pass-Through Trustee, each Liquidity Provider and the Lessee.
(c) Airworthiness. Each Participant shall receive a copy of a
current, valid Standard Certificate of Airworthiness for the Aircraft duly
issued by the FAA.
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(d) Other Commitments. Each other Participant shall have made
available the Dollar amount of its Commitment as directed by Owner Trustee in
accordance with Section 2.01(c) or 2.01(d), as the case may be.
(e) Violation of Law. No change shall have occurred after the date
of this Agreement in any Applicable Law that makes it a violation of Law for (a)
Lessee, any Participant, Subordination Agent, Owner Trustee or the Indenture
Trustee to execute, deliver and perform the Operative Agreements to which any of
them is a party or (b) any Participant to make the Dollar amount of its
Commitment available or, in the case of any Loan Participant, to acquire an
Equipment Note or to realize the benefits of the security afforded by the
Indenture.
(f) Tax Law Change. In the case of the Owner Participant, there
shall not have occurred since _____________________ any Change in Tax Law which,
in the reasonable opinion of the Owner Participant, renders it disadvantageous
or inadvisable for the Owner Participant to consummate the transactions
contemplated hereby, including, without limitation, its judgment that the
assumed tax benefits set forth in Section 1 of the Tax Indemnity are rendered
doubtful or invalid.
(g) No Event of Default. On the Delivery Date, no event shall have
occurred and be continuing, or would result from the sale, mortgage or lease of
the Aircraft, which constitutes a Default, Event of Default, Indenture Default
or Indenture Event of Default.
(h) No Event of Loss. No Event of Loss with respect to the Airframe
or any Engine shall have occurred and no circumstance, condition, act or even
that, with the giving of notice or lapse of time or both, would give rise to or
constitute an Event of Loss with respect to the Airframe or any Engine shall
have occurred.
(i) Title. Owner Trustee shall have good title (subject to filing
and recordation of the FAA Bill of Sale with the FAA) to the Aircraft, free and
clear of Liens, except Permitted Liens.
(j) Certification. The Aircraft shall have been duly certificated by
the FAA as to type and airworthiness as required by the terms of the Lease.
(k) Section 1110. Owner Trustee, as lessor under the Lease (and
Indenture Trustee, as assignee of Owner Trustee under the Indenture), shall be
entitled to the benefits of Section 1110 (as currently in effect) with respect
to the right to take possession of the Airframe and Engines as provided in the
Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which
Lessee is a debtor.
(l) Filings. On the Delivery Date (i) application for registration
of the Aircraft in the name of the Owner Trustee shall have been duly made with
the FAA in compliance with the provisions of the Transportation Code; and (ii)
the Indenture, Indenture Supplement No. 1, the Lease, Lease Supplement No. 1 and
the FAA Bill of
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Sale shall have been duly filed for recordation (or shall be in the process of
being so duly filed for recordation) with the FAA in accordance with the
Transportation Code.
(m) Financing Statements. A Uniform Commercial Code financing
statement or statements covering the security interest contemplated by the
Indenture shall have been executed and delivered by the Owner Trustee as debtor
and by the Indenture Trustee as secured party, and such financing statement or
statements shall have been duly filed in all places necessary or desirable
within the State of Delaware.
(n) Precautionary Financing Statements. A Uniform Commercial Code
"precautionary" financing statement or statements describing the Lease as a
lease but covering any security interest in favor of the Owner Trustee (and the
Loan Trustee as assignee of the Owner Trustee) which may be created thereby,
shall have been executed and delivered by the Lessee and the Owner Trustee
(naming the Owner Trustee as Lessor and secured party and Loan Trustee as
assignee), and shall have been duly filed in all places necessary or desirable
within the State of North Carolina.
(o) No Proceedings. No action or proceeding shall have been
instituted, nor shall any action be threatened in writing, before any
governmental authority, nor shall any order, judgment or decree have been issued
or proposed to be issued by any Governmental authority, to set aside, restrain,
enjoin or prevent the completion and consummation of this Agreement or any other
Operative Agreement or the transactions contemplated hereby or thereby.
(p) Governmental Action. All appropriate action required to have
been taken prior to the Delivery Date by the FAA, or any governmental or
political agency, subdivision or instrumentality of the United States, in
connection with the transactions contemplated by this Agreement shall have been
taken, and all orders, permits, waivers, authorizations, exemptions and
approvals of such entities required to be in effect on the Delivery Date in
connection with the transactions contemplated by this Agreement shall have been
issued.
(q) Note Purchase Agreement. The conditions precedent to the
obligations of the Loan Participants and the other requirements relating to the
Aircraft and the Equipment Notes set forth in the Note Purchase Agreement shall
have been satisfied.
(r) Perfected Security Interest. On the Delivery Date, after giving
effect to the filing of the documents referenced in Section 3.01(l)(ii) and the
financing statements referenced in Sections 3.01(m) and (n), the Indenture
Trustee shall have received a duly perfected first priority security interest in
all of Owner Trustee's right, title and interest in the Aircraft and the Lease,
subject only to Permitted Liens.
Section 3.02. Conditions Precedent to Obligations of Lessee. The
obligation of Lessee to lease the Aircraft on the Delivery Date is subject to
the
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satisfaction or waiver by Lessee, on or prior to the Delivery Date, of the
conditions precedent set forth below in this Section 3.02.
(a) Documents. Executed originals of the agreements, instruments,
certificates, documents and opinions described in Section 3.01(b) shall have
been received by Lessee, except as specifically provided therein, and shall be
satisfactory to Lessee, unless the failure to receive any such agreement,
instrument, certificate or document is the result of any action or inaction by
Lessee.
(b) Other Conditions Precedent. Each of the conditions set forth in
Sections 3.01(c), (d) (as to all Participants), (e), (g) (as to Indenture
Defaults and Indenture Events of Default not arising from Defaults or Events of
Default, as the case may be), (h), (i), (j), (k), (l), (m), (n) and (o) shall
have been satisfied or waived by Lessee, unless the failure of any such
condition to be satisfied is the result of any action or inaction by Lessee.
(c) Tax Law Change. There shall not have occurred any Change in Tax
Law since _________ which, in the reasonable opinion of the Lessee, renders it
disadvantageous or inadvisable for the Lessee to consummate the transactions
contemplated hereby, including, without limitation, its judgment that there will
be an increased risk that it may be required to indemnify the Owner Participant
under the Tax Indemnity Agreement.
Section 3.03. Post-Registration Opinion. Promptly upon the
registration of the Aircraft and the recordation of the Documents referenced in
Section 3.01(l)(ii), Lessee will direct Crowe & Dunlevy P.C., special counsel in
Oklahoma City, Oklahoma, to deliver to Lessee, each Participant, Owner Trustee
and the Indenture Trustee a favorable opinion or opinions addressed to each of
them with respect to such registration and recordation.
ARTICLE 4.
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 4.01. Lessee's Representations and Warranties. The Lessee
represents and warrants that, as of the Delivery Date (unless any such
representation and warranty is specifically made as of an earlier date, in which
case the Lessee represents and warrants as of such earlier date):
(a) the Lessee is a corporation duly organized and validly existing
and is in good standing under the laws of Delaware, has its principal place of
business and chief executive office (as such terms are used in Article 9 of the
Uniform Commercial Code) in Durham, North Carolina, and is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the failure to be so qualified or in good standing would have a materially
adverse effect on its business or would impair its ability to perform its
obligations under the Lessee Documents;
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(b) the Lessee has full power, authority and legal right to conduct
its business and operations as currently conducted and to own or hold under
lease its properties and to enter into and perform its obligations under the
Lessee Documents;
(c) the Lessee is an "air carrier" within the meaning of the
Transportation Code and a holder of a certificate under Section 41102(a) of the
Transportation Code and a "citizen of the United States" within the meaning of
Section 40102(a)(15) of the Transportation Code holding an "air carrier
operating certificate" issued under Chapter 447 of the Transportation Code for
aircraft capable of carrying ten or more individuals or 6,000 pounds or more of
cargo, and each such certificate is in full force and effect;
(d) the Lessee possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents (collectively "permits")
which are necessary to the operation of the routes flown by it and the conduct
of its business and operations as currently conducted and each such permit is in
full force and effect, except for any such permits the failure to have or
maintain which would not have a material adverse effect on the Lessee or its
ability to perform its obligations under the Lessee Documents;
(e) the execution, delivery and performance of the Lessee Documents
by the Lessee have been duly authorized by all necessary corporate action on the
part of the Lessee and do not require any stockholder approval, or approval or
consent of any trustee or holder of any indebtedness or obligations of the
Lessee, and each such Lessee Documents has been duly executed and delivered and
constitutes the legal, valid and binding obligations of the Lessee enforceable
against it in accordance with the terms thereof except as such enforceability
may be limited by bankruptcy, insolvency, or other similar laws or by general
equitable principles;
(f) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state governmental
authority or regulatory body is required for the execution, delivery or
performance by the Lessee of the Lessee Documents except for such registrations,
applications and recordings referred to in the opinion of Crowe and Dunlevy P.C.
delivered pursuant to Sections 3.01(b)(xviii)(E) and the filings referred to in
Section 3.01(l)(ii);
(g) neither the execution, delivery or performance by the Lessee of
the Lessee Documents nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a breach
or violation of any of the terms, conditions or provisions of, or will require
any consent (other than the PAA Consent and the Engine Manufacturer's Consent)
or approval under, any law, governmental rule or regulation or the charter
documents, as amended, or bylaws, as amended, of the Lessee or any order, writ,
injunction or decree of any court or governmental authority against the Lessee
or by which it or any of its properties is bound or any indenture, mortgage or
contract or other agreement or instrument to which the Lessee is a party or by
which it or any of its properties is bound, or
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constitutes or will constitute a default thereunder or results or will result in
the imposition of any Lien upon any of its properties (other than Permitted
Liens), except for any such conflict, breach or default which would not have a
material adverse effect on the Lessee or its ability to perform its obligations
under the Lessee Documents;
(h) except as disclosed in the Offering Memo, there are no pending
or, to the knowledge of the Lessee, threatened actions, suits, investigations or
proceedings against or affecting the Lessee or any of its properties before or
by any court or administrative agency which, (A) may reasonably be expected to
have a materially adverse effect on the Lessee's consolidated financial
condition, business, or operations, or (B) would materially adversely affect the
ability of the Lessee to consummate the transactions contemplated by the
Operative Agreements or perform its obligations under the Lessee Documents;
(i) [Reserved].
(j) except for (A) the registration in the Owner Trustee's name of
the Aircraft pursuant to the Transportation Code, (B) the filing with and, where
appropriate, recordation by the FAA pursuant to the Transportation Code of the
Indenture (including Indenture Supplement No. 1), and the Lease (including Lease
Supplement No. 1), (C) the filing of the financing statements referred to in
Sections 3.01(m) and 3.01(n) and (D) the taking of possession by the Indenture
Trustee of the original counterpart of the Lease (including Lease Supplement No.
1), no further action, including any filing or recording of any document, is
necessary or advisable in order (i) to establish the Owner Trustee's title to
and interest in the Aircraft and the Lessor's Estate as against the Lessee and
any third parties, or (ii) to perfect the first security interest in and Lien on
the Trust Indenture Estate in favor of the Indenture Trustee;
(k) the Owner Trustee has received good and marketable title to the
Aircraft, free and clear of all Liens, except Permitted Liens;
(l) assuming the truth of the representations contained in Section
3.12 of the Pass-Through Trust Agreements and compliance with Section 10.06 of
the Indenture, the execution and delivery of this Agreement and the other
Operative Agreements and the consummation of the transactions contemplated
hereby and thereby will not involve any prohibited transaction within the
meaning of Section 406(a) of ERISA or Section 4975(c)(1)(A) through (D) of the
Code;
(m) all premiums which have become due with respect to the insurance
required to be provided by the Lessee on or prior to the Delivery Date under
Section 9 of the Lease have been paid by the Lessee;
(n) no Default exists and no Event of Loss, or event which with the
passage of time would constitute an Event of Loss, exists;
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(o) the Aircraft is in such condition so as to enable the
airworthiness certificate of such Aircraft to be in good standing under the
Transportation Code; the Aircraft has been duly certificated by the FAA as to
type and airworthiness; there is in effect with respect to the Aircraft a
current and valid airworthiness certificate issued by the FAA pursuant to the
Transportation Code;
(p) the Lessee shall not be in default (after any applicable grace
periods) in the performance of any material term or condition of the Purchase
Agreement;
(q) neither the Lessee nor any subsidiary of the Lessee is an
"investment company" or a company "controlled by an investment company" within
the meaning of the Investment Company Act of 1940, as amended;
(r) there are no broker's or underwriter's fees payable on behalf of
the Lessee in connection with the transactions contemplated in the Operative
Agreements, other than those of the Placement Agents and the Lessee Advisor
referred to in Article 8 hereof; and
(s) the Lessee represents and warrants that it has authorized no one
to act on its behalf in connection with the offer or sale of any interest in the
Certificates or the Pass-Through Certificates other than the Placement Agents.
Section 4.02. Certain Covenants of Lessee. The Lessee covenants and
agrees as follows:
(a) Filings and Recordings. The Lessee will cause to be done,
executed, acknowledged and delivered at the Lessee's cost and expense all such
further acts, conveyances and assurances as the Owner Trustee, the Indenture
Trustee, the Pass-Through Trustee or the Owner Participant shall reasonably
require for accomplishing the purposes of the Operative Agreements. Without
limiting the generality of this Section 4.02(a), the Lessee will promptly take,
or cause to be taken, at the Lessee's cost and expense, such action with respect
to the recording, filing, re-recording and re-filing of the Indenture (including
each supplement thereto), the Lease (including each supplement thereto), and any
financing statements or other instruments as may be reasonably requested by the
Indenture Trustee and appropriate, to maintain the perfection of the first
security interest and the Lien created by the Indenture, and the Owner Trustee's
title to and interest in the Aircraft and the Lessor's Estate, as against the
Lessee and any third parties, or if the Lessee cannot take, or cause to be
taken, such action, will furnish to the Indenture Trustee and the Owner Trustee
timely notice of the necessity of such action, together with such instruments,
in execution form, and such other information as may be required to enable
either of them to take such action at the Lessee's cost and expense in a timely
manner.
(b) Registration. From and after the Delivery Date, the Lessee shall
cause the Aircraft to be duly registered, and at all times to remain duly
registered, in
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the name of the Owner Trustee (provided, that the Owner Trustee and the Owner
Participant shall be and remain Citizens of the United States), under the
Transportation Code, and shall furnish to the Owner Trustee such information as
may be required to enable the Owner Trustee to make application for such
registration; provided, however, that the Lessee may, at any time cause the
Aircraft to be appropriately re-registered under the laws of a country with
which at the time of such registration the United States maintains normal
diplomatic relations and is listed on Exhibit E to the Lease; provided that:
(i) at the time of re-registration, no Specified Default exists or
would occur as a result of such re-registration;
(ii) the Lessee shall pay all fees and expenses (including the
reasonable fees and expenses of local counsel in such country) relating to
such reregistration;
(iii) the Lessee shall, at its cost, cause the interest of the Owner
Trustee as owner of the Aircraft and the Indenture Trustee as mortgagee
thereof to be duly registered or recorded under the laws of such country
and at all times thereafter to remain so duly registered or recorded
unless and until the registration of the Aircraft is changed as provided
herein, and shall cause to be done at all times all other acts including
the filing, recording and delivery of any document or instrument and the
payment of any sum necessary or, by reference to prudent industry practice
in such country, advisable in order to create, preserve and protect such
interest in the Aircraft (including the first priority duly perfected Lien
under the Indenture) as against the Lessee or any third parties in such
jurisdiction, and the laws of such country would give effect to the Owner
Trustee's title to the Aircraft and the Indenture Trustee's Lien thereon;
(iv) the obligations of the Lessee and each other party under the
Operative Agreements (and of the Permitted Sublessee, if any, under a
Sublease) shall remain or be, as the case may be, legal, valid, binding
and enforceable in such country;
(v) The Lessee shall ensure that all insurance provided for herein
shall be in full force and effect prior to, at the time of, and after such
change in registration and the Owner Participant, the Owner Trustee, and
the Indenture Trustee shall receive a certificate of Lessee's insurance
broker to such effect;
(vi) the country of such re-registration imposes aircraft
maintenance standards approved by, or at least as stringent as those
approved by, the FAA or the central civil aviation authority of the United
Kingdom, France, Germany, Japan, the Netherlands or Canada;
(vii) it shall not be necessary by reason of such re-registration or
for purposes of enforcing remedies contained in the Lease or the Indenture
or the
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related Sublease for the Owner Trustee, the Indenture Trustee or the Owner
Participant to register or qualify to do business in such country;
(viii) no Liens (except Permitted Liens) shall arise by reason of
such reregistration, and the Indenture shall continue as a first priority
Lien on the collateral thereunder;
(ix) none of the Owner Trustee, the Indenture Trustee and the Owner
Participant shall be subjected to any adverse tax consequences for which
the Lessee is not required to and does not then indemnify such Person in a
manner reasonably satisfactory to such Person as a result of such
re-registration;
(x) any export licenses and certificate of deregistration required
in connection with any repossession or return of the Aircraft will be
readily obtainable in the normal course without material delay or material
burden on the Owner Trustee or the Indenture Trustee, it being agreed that
the Lessee shall be responsible for the cost thereof; and
(xi) the Owner Participant, the Owner Trustee, and the Indenture
Trustee shall have received opinions in scope, form and substance
reasonably satisfactory to them, of counsel, expert in the laws of such
country, to the effect set forth in clauses (iii), (iv) (with respect to
the obligations of the Lessee under the Lease), (vii) and (x).
Lessee agrees to pay on an After-Tax Basis all reasonable out-of-pocket costs
and expenses (including, without limitation, reasonable counsel fees and
disbursements) of the Owner Participant, the Owner Trustee, and the Indenture
Trustee in connection with any re-registration pursuant to this Section.
(c) Information. The Lessee shall promptly furnish to the Owner
Trustee and the Owner Participant such information as may be required to enable
the Owner Trustee and the Owner Participant timely to file any reports required
to be filed by the Owner Trustee as the Lessor and the Owner Participant under
the Lease with any governmental authority as a result of the Owner Trustee's
ownership interest in the Aircraft.
(d) Corporate Existence. The Lessee shall at all times maintain its
corporate existence except as permitted by Section 4.02(e) hereof and all of its
rights, privileges and franchises necessary in the normal conduct of its
business, except for any corporate right, privilege or franchise that it
determines, is no longer necessary or desirable in the conduct of its business.
(e) Merger and Consolidation. The Lessee shall not, during the Term,
enter into any merger with or into or consolidation with, or sell, convey,
transfer, lease or otherwise dispose of in one or a series of transactions all
or substantially all of its assets as an entirety to any Person, unless the
surviving corporation or Person which
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acquires by purchase, conveyance, transfer or lease all or substantially all of
the assets of the Lessee as an entirety (i) is a domestic corporation organized
and existing under the laws of the United States or any State of the United
States (ii) is a Citizen of the United States, (iii) is a Section 1110 Person,
so long as such status is a condition to the availability of Section 1110 of the
Bankruptcy Code, (iv) if not the Lessee, executes a duly authorized, legal,
valid, binding, and enforceable agreement, reasonably satisfactory in form and
substance to Owner Trustee and Owner Participant, containing an effective
assumption of all of the Lessee's, as applicable, obligations hereunder and
under the other Operative Agreements, and each other document contemplated
hereby or thereby and delivers such instrument to the Indenture Trustee, the
Owner Participant and the Owner Trustee, (v) provides an opinion from counsel
(which counsel may be in the Lessee's General Counsel) delivered to the Owner
Trustee, the Indenture Trustee and the Owner Participant, which opinion shall be
reasonably satisfactory to the Owner Participant and the Indenture Trustee, and
an officer's certificate (which may rely, as to legal matters, on such legal
opinion), each stating that such merger, consolidation, conveyance, transfer,
lease or other disposition and the instrument noted in clause (iv) above comply
with this Section 4.02(e), that such instrument is a legal, valid and binding
obligation of, and is enforceable against, such survivor or Person, and that all
conditions precedent herein provided for relating to such transaction have been
complied with, and (vi) such survivor or Person makes such filings and
recordings with the FAA as may be required pursuant to part A of subtitle VII or
Title 49, United States Code to evidence such merger or consolidation; provided
that, no such merger, consolidation or conveyance, transfer or lease shall be
permitted if, immediately after giving effect to such consolidation, merger,
purchase, conveyance, transfer, lease or other disposition, an Event of Default
shall have occurred and be continuing.
Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Lessee and the
satisfaction of the conditions specified in this Section 4.02(e), the successor
corporation formed by such consolidation or into which the Lessee is merged or
the Person 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 Lessee
under this Agreement and the Lease and each other Operative Agreement and any
other document contemplated hereby and thereby to which the Lessee is a party
with the same effect as if such successor corporation had been named as the
Lessee herein and therein. No such conveyance, transfer or lease of all or
substantially all of the assets of the Lessee as an entirety shall have the
effect of releasing the Lessee or any successor corporation which shall
theretofore have become the Lessee hereunder in the manner prescribed in this
Section 4.02(e) from its liability hereunder or under the other Operative
Agreements. Nothing contained herein shall permit any lease, sublease, or other
arrangement for the use, operation or possession of the Aircraft except in
compliance with the applicable provisions of the Lease.
(f) Change of Location. The Lessee agrees to give prompt written
notice to the Owner Participant, the Owner Trustee and the Indenture Trustee of
any
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change in the address of its chief executive office (as such term is used in
Section 9-103(3) of the North Carolina Uniform Commercial Code) or of any change
in its corporate name; provided that, notice is hereby given that the Lessee
plans to so change such address on or about January 1, 1999 to: 2801 Slater
Road, Morrisville, North Carolina 27560;
(g) Financial Statements. The Lessee agrees to furnish to the Owner
Participant during the Term:
(i) within 60 days after the end of each of the first three fiscal
quarters in each fiscal year of the Lessee, unaudited consolidated balance
sheets of the Lessee and its subsidiaries (if any) as of the end of such
quarter and related consolidated statements of income, shareholder's
equity and cash flows of the Lessee and its subsidiaries (if any) for the
period commencing at the end of the previous fiscal year and ending with
the end of such quarter, provided that so long as the Lessee is subject to
the reporting provisions of the Securities Exchange Act of 1934, a copy of
the Lessee's quarterly report on Form 10-Q will satisfy this requirement;
(ii) within 120 days after the end of each fiscal year of the
Lessee, a copy of the annual report for such year for the Lessee or the
affiliated group of which the Lessee is a member (on a consolidated basis,
if applicable) and a balance sheet of the Lessee and its subsidiaries (if
any) as of the end of such fiscal year and related statements of income,
shareholder's equity and cash flows of the Lessee for such fiscal year, in
comparative form with the preceding fiscal year, in each case certified by
independent certified public accountants of national standing as having
been prepared in accordance with generally accepted accounting principles
in the United States, provided that so long as the Lessee is subject to
the reporting provisions of the Securities Exchange Act of 1934, a copy of
the Lessee's annual report on Form 10-K will satisfy this requirement;
(iii) within 120 days after the end of each fiscal year of the
Lessee, an Officer's Certificate of the Lessee, to the effect that the
signer is familiar with or has reviewed the relevant terms of the Lease
and has made, or caused to be made under his supervision, a review of the
transactions and conditions of the Lessee during the preceding fiscal year
and that such review has not disclosed the existence during such period,
nor does the signer have knowledge of the existence as of the date of such
certificate, of any condition or event which constituted or constitutes a
Default or Event of Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what
action the Lessee has taken or is taking or proposes to take with respect
thereof; and
(iv) from time to time, such other non-confidential financial
information as the Lessor the Owner Participant may reasonably request.
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(h) Notice of Sublease. In the event that the Lessee subleases the
Aircraft pursuant to Section 5(b)(x) of the Lease, it shall give notice of such
sublease to each of (i) Moody's Investor Service, 99 Church Street, New York,
New York 10007, Attention: Corporate Rating Division (facsimile no.: (212)
533-1607) and (ii) Standard and Poor's Rating Agency, 26 Broadway, 14th Floor,
New York, New York 10004 (facsimile no. (212) 412-0540).
Section 4.03. Survival of Representations and Warranties. The
representations and warranties of the Lessee provided in Section 4.01 and in any
other Operative Agreement shall survive the delivery of the Aircraft and the
expiration or other termination of this Agreement and the other Operative
Agreements.
ARTICLE 5.
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.01. Representations, Warranties and Covenants of Owner
Participant.
(a) Representations and Warranties. The Owner Participant represents
and warrants that:
(i) it is a corporation duly incorporated and validly existing
in good standing under the laws of the State of __________ and it has full
corporate power, authority and legal right to carry on its present
business and operations, to own or lease its properties and to enter into
and to carry out the transactions contemplated by this Agreement and the
other Operative Agreements to which it is party;
(ii) the execution, delivery and performance by it of this
Agreement and the other Operative Agreements to which it is party have
been duly authorized by all necessary corporate action on its part and, do
not require any governmental approvals that would be required to be
obtained by the Owner Participant;
(iii) neither the execution, delivery or performance by the
Owner Participant of the Operative Agreements to which it is party, nor
compliance with the terms and provisions hereof or thereof, conflicts or
will conflict with or results or will result in a breach or violation of
any of the terms, conditions or provisions of, or will require any consent
or approval under any law, governmental rule or regulation applicable to
the Owner Participant or the charter documents, as amended, or bylaws, as
amended, of the Owner Participant or any order, writ, injunction or decree
of any court or governmental authority against the Owner Participant or by
which it or any of its properties is bound or any indenture, mortgage or
contract or other agreement or instrument to which the Owner Participant
is a party or by which it or any of
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its properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any Lien upon
any of its properties, except for any such conflict, breach or default
which would not have a material adverse effect on the Owner Participant or
its ability to perform its obligations under the Operative Agreements;
(iv) the Operative Agreements to which it is party have been
duly executed and delivered by the Owner Participant and constitute the
legal, valid and binding obligations of the Owner Participant enforceable
against it in accordance with their terms except as such enforceability
may be limited by bankruptcy, insolvency, or other similar laws or general
equitable principles;
(v) there are no pending or, to the knowledge of the Owner
Participant, threatened actions, suits, investigations or proceedings
against the Owner Participant before any court, administrative agency or
tribunal which are expected to materially adversely affect the ability of
the Owner Participant to perform its obligations under this Agreement and
the other Operative Agreements to which it is or is to be a party and the
Owner Participant knows of no pending or threatened actions or proceedings
before any court, administrative agency or tribunal involving it in
connection with the transactions contemplated by the Operative Agreements;
and
(vi) neither the execution and delivery by it of this
Agreement or the other Operative Agreements to which it is a party nor the
performance of obligations hereunder or thereunder requires the consent or
approval of or the giving of notice to, the registration with, or the
taking of any other action in respect of, any governmental authority or
agency that would be required to be obtained or taken by the Owner
Participant except for filings contemplated by this Agreement.
Notwithstanding the foregoing or anything else contained in
this Agreement, the Owner Participant makes no representation or warranty in
this Agreement with respect to laws, rules or regulations relating to aviation
or to the nature or use of the equipment owned by the Owner Trustee, including,
without limitation, the airworthiness, value, condition, workmanship, design,
patent or trademark infringement, operation, merchantability or fitness for use
of the Aircraft, other than such laws, rules or regulations relating to the
citizenship requirements of the Owner Participant under applicable aviation law.
(b) Lessor's Liens. The Owner Participant represents, warrants and
covenants that on the Delivery Date there are no Lessor's Liens attributable to
it (or an Affiliate thereof). The Owner Participant agrees with and for the
benefit of the Lessee, the Owner Trustee, the Indenture Trustee and the
Pass-Through Trustee that the Owner Participant will, at its own cost and
expense, take such action as may be necessary to duly discharge and satisfy in
full, promptly after the same first becomes known to the Owner Participant, any
Lessor's Lien attributable to the Owner
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Participant (or an Affiliate thereof), provided, however, that the Owner
Participant shall not be required to discharge or satisfy such Lessor's Lien
which is being contested by the Owner Participant in good faith and by
appropriate proceedings so long as such proceedings do not involve any material
risk of the sale, forfeiture or loss of the Aircraft or the Lessor's Estate or
the Trust Indenture Estate or any interest in any thereof or otherwise
materially adversely affect the validity or priority of the Lien of the
Indenture.
(c) Assignment of Interests of Owner Participant. At any time after
the Delivery Date and subject to satisfaction of the conditions set forth in
this Section 5.01(c), the Owner Participant may assign, convey or otherwise
transfer to a single institutional investor or an Affiliate of an institutional
investor all (but not less than all) of the Beneficial Interest, provided that
(i) the Owner Participant gives the Lessee and the Indenture Trustee at least 10
days' days' notice of such assignment, conveyance or other transfer, (ii) the
Owner Participant and any Owner Participant Guarantor shall remain liable for
all obligations of the Owner Participant under the Trust Agreement and the
Operative Agreements to which the Owner Participant is a party to the extent
(but only to the extent) relating to the period on or before the date of such
transfer, and (iii) the transferee agrees by a written instrument substantially
in the form attached hereto as Exhibit B to assume liability for, and undertake
performance of, all obligations of the Owner Participant under the Trust
Agreement and the other Operative Agreements to which such Owner Participant is
a party relating to the period after the date of transfer. Any such transferee
shall (a) be (i) a bank, savings institution, finance company, leasing company
or trust company, national banking association acting for its own account or in
a fiduciary capacity as trustee or agent under any pension, retirement, profit
sharing or similar trust or fund, insurance company, fraternal benefit society
or corporation acting for its own account having a combined capital and surplus
(or, if applicable, consolidated net worth or its equivalent) of not less than
$50,000,000, (ii) a subsidiary of any Person described in clause (i) where such
Person provides (A) support for the obligations assumed by such transferee
subsidiary reasonably satisfactory to the Lessee, the Owner Trustee and the
Indenture Trustee or (B) an unconditional guaranty of such transferee
subsidiary's obligations, or (iii) an Affiliate of the transferring Owner
Participant, so long as such Affiliate has a combined capital and surplus (or,
if applicable, consolidated net worth or its equivalent) of not less than
$50,000,000 (unless the Owner Participant remains liable for the obligations of
such Affiliate under the Operative Agreements, in which case there shall be such
net worth requirement), (b) be legally capable of binding itself to the
obligations of the Owner Participant and shall expressly agree to assume all
obligations of the Owner Participant under the Trust Agreement and this
Agreement and (c) provide representations, warranties, and covenants
substantially similar to those contained in clauses (a), (c) and (f) of this
Section 5.01; provided that, without the prior written consent of the Lessee,
such transferee shall not be an airline or other aircraft operator or competitor
of the Lessee or an Affiliate of any thereof; and provided further that neither
such transferee nor any Affiliate thereof shall (x) be a party to any litigation
or arbitration (whether as plaintiff or defendant) with the Lessee or any
Affiliate of the Lessee or (y) be attempting a hostile takeover of the Lessee or
any
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Affiliate of the Lessee. A transferee hereunder shall be a Citizen of the United
States or has established a voting trust, voting powers or other arrangement
reasonably satisfactory to the Indenture Trustee, the Owner Trustee, and the
Lessee to permit the Owner Trustee to be the registered owner of the Aircraft
under the Transportation Code, without in any way restricting the Lessee's use
and operation of the Aircraft. The Owner Trustee shall not be on notice of or
otherwise bound by any such assignment, conveyance or transfer unless and until
it shall have received an executed counterpart of the instrument of such
assignment, conveyance or transfer. Upon any such disposition by the Owner
Participant to a transferee as above provided, the transferee shall be deemed
the "Owner Participant" for all purposes of the Operative Agreements, and shall
be deemed to have acquired the same interest in the Lessor's Estate as
theretofore held by its transferor; and each reference therein to the "Owner
Participant" shall thereafter be deemed a reference to such transferee. No
assignment, conveyance or transfer by the Owner Participant of the Beneficial
Interest shall increase the amount of the liability of the Lessee under Article
6 hereof or under the Tax Indemnity Agreement over the amount of liability the
Lessee would have incurred had such assignment, conveyance or transfer not
occurred. The Owner Participant shall pay all costs (including the Lessee's
costs) in connection with any such assignment, conveyance or transfer.
(d) Actions with Respect to Lessor's Estate, Etc. The Owner
Participant agrees that it will not take any action to subject the Lessor's
Estate or the trust established by the Trust Agreement, as debtor, to the
reorganization or liquidation provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statute.
(e) Citizenship. The Owner Participant agrees, solely for the
benefit of the Lessee, the Pass-Through Trustee, the Indenture Trustee and the
Owner Trustee, that if at any time on or after the Delivery Date when the
Aircraft is registered or the Lessee proposes to register the Aircraft in the
United States (i) either the Owner Participant shall cease to be, or an event
which has been publicly disclosed has occurred of which the Owner Participant
has knowledge and which will cause the Owner Participant to cease to be, a
Citizen of the United States, and (ii) the Aircraft shall or would therefore
become ineligible for registration in the name of the Owner Trustee under the
Transportation Code and regulations then applicable thereunder (such eligibility
to be determined without regard to any provision of law that permits the U.S.
registration of the Aircraft by restricting where it is based or used), then the
Owner Participant shall give notice thereof to the Lessee, the Owner Trustee and
the Indenture Trustee and shall (at its own expense and without any
reimbursement or indemnification from the Lessee) immediately (and in any event
within a period of 20 days) promptly effect (x) effect a voting trust or other
similar arrangement, (y) transfer in accordance with the terms of this Agreement
and the Trust Agreement all its rights, title and interest in and to such Trust
Agreement, the Lessor's Estate and this Agreement, or (z) take any other
alternative action that would prevent any deregistration, or maintain or permit
the United States registration, of the Aircraft (determined without regard to
any provision of law that permits the U.S. registration
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of the Aircraft by restricting where it is based or used). Each party hereto
agrees, upon the request and at the sole expense of the Owner Participant, to
cooperate with the Owner Participant in complying with its obligations under the
provisions of the first sentence of this Section 5.01(e), but without any
obligation on the part of such other party to take any action believed by it in
good faith to be unreasonably burdensome to such party or materially adverse to
its business interests.
Section 5.02. Citizenship.
(a) Generally. The Owner Trustee, in its individual capacity,
represents and warrants that it is and on the Delivery Date will be a Citizen of
the United States. If the Owner Trustee in its individual capacity does not
comply with the requirements of this Section 5.02, the Owner Trustee and the
Indenture Trustee hereby agree that no Default shall be deemed to exist due to
non-compliance by the Lessee with the registration requirements in the Lease or
in Section 4.02(b) hereof occasioned by such noncompliance of the Owner Trustee.
(b) Owner Trustee. The Owner Trustee, in its individual capacity,
covenants that if at any time on or after the Delivery Date any of its
Responsible Officers shall have actual knowledge that it has ceased to be a
Citizen of the United States, it will resign immediately as the Owner Trustee if
such citizenship is necessary for registration of the Aircraft in the Owner
Trustee's name under the Transportation Code as in effect at such time (such
necessity to be determined without regard to any provision of law that permits
the U.S. registration of the Aircraft by restricting where it is based or used)
or, if it is not necessary for such registration, if the Owner Trustee is
informed in writing by the Lessee, the Indenture Trustee or any Owner
Participant that such lack of United States citizenship would have any adverse
effect on the Lessee, the Indenture Trustee, the Holders or any Owner
Participant. The Owner Trustee, in its individual capacity, further covenants
that if at any time it appears reasonably probable that it will cease to be a
Citizen of the United States based on information that is (i) known to a
Responsible Officer of the Owner Trustee or (ii) generally known to the public,
it will promptly so notify, to the extent permitted by law, all parties to this
Agreement.
Section 5.03. Representations, Warranties and Covenants of Trust
Company and the Owner Trustee.
(a) Representations and Warranties. In addition to and without
limiting its other representations and warranties provided for in this Article
5, Trust Company represents and warrants, in its individual capacity with
respect to items (i), (ii), (iii)(A), (iv), (v), (vi), (vii), (viii) and (ix)
below, and as the Owner Trustee with respect to items (iii)(B) and (iv), on the
Delivery Date that:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States with its
principal place of business and chief executive office (as such terms are
used in Article 9
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of the Uniform Commercial Code) in Delaware, and has full corporate power
and authority, in its individual capacity or (assuming the Trust Agreement
has been duly authorized, executed and delivered by the Owner Participant)
as the Owner Trustee, as the case may be, to carry on its business as now
conducted, and to execute, deliver and perform this Agreement and the
Operative Agreements to which it is or is to be a party;
(ii) the execution, delivery and performance by Trust Company,
either in its individual capacity or as the Owner Trustee, as the case may
be, of this Agreement and the Operative Agreements to which it is or is to
be party have been duly authorized by all necessary corporate action on
its part, and do not contravene its articles of association or by-laws;
each of this Agreement and the other Operative Agreements to which it is
or is to be a party has been duly authorized, and has been duly executed
and delivered by Trust Company, either in its individual capacity or as
the Owner Trustee, as the case may be, and neither the execution and
delivery thereof nor Trust Company performance of or compliance with any
of the terms and provisions thereof will violate any federal or Delaware
law or regulation governing Trust Company's banking or trust powers,
(iii) (A) assuming due authorization, execution and delivery by each
other party thereto, each of the Operative Agreements to which it is or is
to be party when duly executed and delivered will, to the extent each such
document is entered into by Trust Company in its individual capacity,
constitute the legal, valid and binding obligation of Trust Company in its
individual capacity enforceable against it in such capacity in accordance
with its respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights (regardless of whether enforceability is considered in a
proceeding in equity or at law), and the performance by Trust Company in
its individual capacity of any of its obligations thereunder does not
contravene any lease, regulation or contractual restriction binding on
Trust Company in its individual capacity;
(B) assuming due authorization, execution and delivery by each
other party thereto, each of the Operative Agreements to which it is or is
to be party when duly executed and delivered will, to the extent each such
document is entered into by the Owner Trustee in its trust capacity,
constitute the legal, valid and binding obligation of the Owner Trustee
enforceable against it in such capacity in accordance with its respective
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws or general equitable
principles, and the performance by the Owner Trustee of any of its
obligations thereunder does not contravene any lease, regulation or
contractual restriction binding on the Owner Trustee;
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(iv) there are no pending or, to its knowledge, threatened actions
or proceedings against Trust Company before any court or administrative
agency which would materially adversely affect the ability of Trust
Company, either in its individual capacity or as the Owner Trustee, as the
case may be, to perform its obligations under the Operative Agreements to
which it is or is to be party;
(v) it shall give the Lessee, the Indenture Trustee and the Owner
Participant at least 30 days' prior written notice in the event of any
change in its chief executive office or name;
(vi) neither the execution and delivery by it, either in its
individual capacity or as the Owner Trustee, as the case may be, of any of
the Operative Agreements to which it is or is to be a party, requires on
the part of Trust Company in its individual capacity or any of its
Affiliates the consent or approval of or the giving of notice to, the
registration with, or the taking of any other action in respect of, any
federal or governmental authority or agency governing its banking or trust
powers; and
(vii) the Owner Trustee holds whatever title to the Aircraft as was
conveyed to it by the Seller and the Aircraft is free of Lessor's Liens
attributable to Trust Company in its individual capacity,
(viii) Trust Company is a Citizen of the United States; and
(ix) Trust Company has made of filing with the New York State
Banking Department under Section 131(3) of the New York State Banking Law
with respect to the trust formed by the Trust Agreement.
(b) Lessor's Liens. Trust Company, in its individual capacity,
further represents, warrants and covenants that there are no Lessor's Liens
attributable to it in its individual capacity on the Delivery Date. The Owner
Trustee, in its trust capacity, and at the cost and expense of the Lessee,
covenants that it will in its trust capacity promptly, and in any event within
30 days after the same shall first become known to it, take such action as may
be necessary to discharge duly any Lessor's Liens attributable to it in its
trust capacity. Trust Company, in its individual capacity, covenants and agrees
that it will at its own expense take such action as may be necessary to duly
discharge and satisfy in full, promptly, and in any event within 30 days after
the same shall first become known to it, any Lessor's Liens attributable to it
in its individual capacity which may arise at any time after the date of this
Agreement.
(c) Indemnity for Lessor's Liens. Trust Company, in its individual
capacity, agrees to indemnify and hold harmless the Lessee, the Indenture
Trustee, the Owner Participant and the Pass-Through Trustee and the Owner
Trustee from and against any loss, cost, expense or damage which may be suffered
by the Lessee, the Indenture Trustee, the Owner Participant, the Pass-Through
Trustee or the Owner
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Trustee as a result of the failure of Trust Company to discharge and satisfy any
Lessor's Liens attributable to it in its individual capacity, as described in
Section 5.03(b) hereof.
(d) Securities Act. None of Trust Company, the Owner Trustee or any
Person authorized by either of them to act on its behalf has directly or
indirectly offered or sold or will directly or indirectly offer or sell any
interest in the Lessor's Estate, or in any similar security relating to the
Lessor's Estate, or in any security the offering of which for purposes of the
Securities Act of 1933, as amended, would be deemed to be part of the same
offering as the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person.
(e) Actions With Respect to Lessor's Estate, Etc. Neither Trust
Company, in its individual capacity, nor the Owner Trustee will take any action
to subject the Lessor's Estate or the trust established by the Trust Agreement,
as debtor, to the reorganization or liquidation provisions of the Bankruptcy
Code or any other applicable bankruptcy or insolvency statute.
Section 5.04. Representations, Warranties and Covenants of the
Indenture Trustee.
(a) Representations and Warranties. The Indenture Trustee in its
individual capacity represents on the Delivery Date as follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
and has the power and authority to enter into and perform its obligations
under the Indenture, this Agreement and the other Operative Agreements to
which it is a party and to authenticate the Equipment Notes to be
delivered on the Delivery Date;
(ii) the Indenture and this Agreement and the other Operative
Agreements to which it is or is to be a party, and the authentication of
the Certificates, have been duly authorized by all necessary corporate
action on its part, and neither the execution and delivery thereof nor its
performance of any of the terms and provisions thereof will violate any
federal or Maryland law or regulation relating to its banking or trust
powers or contravene or result in any breach of, or constitute any default
under, its articles of association or by-laws;
(iii) each of the Indenture and this Agreement, and the other
Operative Agreements to which it is a party, has been duly executed and
delivered by it and, assuming that each such agreement is the legal, valid
and binding obligation of each other party thereto, is (or will be, as the
case may be), the legal, valid and binding obligation of the Indenture
Trustee, enforceable against the Indenture Trustee in accordance with its
terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws or
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equitable principles of general application to or affecting the
enforcement of creditors' rights (regardless of whether enforceability is
considered in a proceeding in equity or at law);
(iv) neither the execution and delivery by it of the Indenture and
this Agreement and the other Operative Agreements to which it is or is to
be a party, nor the performance by it 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 in respect of, any Federal or state governmental authority or
agency governing its banking and trust powers; and
(v) it has made a filing with the New York State Banking Department
under Section 131(3) of the New York Banking Law in respect of the
performance of its duties relating to the Trust Indenture Estate.
(b) Indenture Trustee's Liens. The Indenture Trustee, in its
individual capacity, represents, warrants and covenants that there are no
Indenture Trustee's Liens. The Indenture Trustee, in its individual capacity,
covenants and agrees that it will at its own expense take such action as may be
necessary to duly discharge and satisfy in full, promptly, and in any event
within 30 days, after the same shall first become known to it, any Indenture
Trustee's Liens.
(c) Indemnity for Indenture Trustee's Liens. The Indenture Trustee,
in its individual capacity, agrees to indemnify and hold harmless the Lessee,
the Owner Participant, the Owner Trustee and the Pass-Through Trustee from and
against any actual out-of-pocket loss, cost, expense or damage which may be
suffered by the Lessee, the Indenture Trustee, the Owner Participant, the Owner
Trustee or the Pass-Through Trustee as a result of the failure of the Indenture
Trustee to discharge and satisfy any Indenture Trustee's Liens attributable to
it in its individual capacity, as described in Section 5.04(b) hereof.
Section 5.05. Indenture Trustee's Notice of Default Trustee's Notice
of Default. The Indenture Trustee agrees to give the Lessee and the Owner
Participant notice of any Default or Event of Default promptly upon a
Responsible Officer of the Indenture Trustee having actual knowledge thereof.
Section 5.06. Releases from Indenture. The Indenture Trustee
covenants and agrees, for the benefit of the Lessee and the Owner Participant,
to execute and deliver the instruments of release from the Lien of the Indenture
which it is required to execute and deliver in accordance with the provisions of
Article XIV of the Indenture, and the Owner Participant agrees, for the benefit
of the Lessee, to cause the Owner Trustee to request the Indenture Trustee to
execute and deliver such instruments of release upon written notice from the
Lessee to make such request.
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Section 5.07. The Lessee's Right of Quiet Enjoyment. Notwithstanding
any other provision of any of the Operative Agreements, each other party to this
Agreement agrees, severally and as to its own actions only, that it will not, so
long as no Event of Default shall have occurred and be continuing, take or cause
to be taken any action contrary to the Lessee's rights under the Lease,
including, without limitation, its rights to possession, use and quiet enjoyment
of the Aircraft during the Term.
Section 5.08. Pass-Through Trustee's Representations and Warranties.
The Pass-Through Trustee, in its individual capacity (except with respect to
clause (iii) below), represents and warrants as of the Delivery Date that:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
and has full the power and authority to enter into and perform its
obligations under the Pass-Through Trust Agreements, the Intercreditor
Agreement and this Agreement and to execute and authenticate the
Pass-Through Certificates to be delivered on the Pass-Through Closing
Date;
(ii) the execution, delivery and performance of this Agreement, and
the Pass-Through Trust Agreement and the performance of its obligations
hereunder and thereunder have been fully authorized by all necessary
corporate action on its part, and neither the execution and delivery
thereof nor its performance of any of the terms and provisions thereof
will violate any federal or Maryland law or regulation relating to its
banking or trust powers or contravene or result in any breach of, or
constitute any default under its articles of association, or bylaws or the
provisions of any indenture, mortgage, contract or other agreement to
which it is a party or by which it or its properties may be bound or
affected; and
(iii) each of this Agreement and the Pass-Through Trust Agreement
has been duly executed and delivered by it (in its individual and trust
capacities) and, assuming that each such agreement is the legal, valid and
binding obligation of each other party thereto, is or will be, as the case
may be, the legal, valid and binding obligation of the Pass-Through
Trustee (in its individual and trust capacities), enforceable in
accordance with its respective terms except as limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights generally (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(iv) there are no Taxes payable by the Pass-Through Trustee imposed
by the State of Maryland 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 (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
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the transactions contemplated by the Pass-Through Trust Agreements), and
there are no Taxes payable by the Pass-Through Trustee imposed by the
State of Maryland or any political subdivision thereof in connection with
the acquisition, possession or ownership by the Pass-Through Trustee of
any of the Certificates 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
the Pass-Through Trust Agreements;
Section 5.09. Survival of Representations, Warranties and Covenants.
Representations, warranties and covenants of the Owner Participant, the Owner
Trustee (in its individual or trust capacity), the Pass-Through Trustee (in its
individual or trust capacity), the Indenture Trustee (in its individual or trust
capacity) and the Subordination Agent (in its individual or trust capacity)
provided for in this Article 5, and their respective obligations under any and
all of them, shall survive the delivery of the Aircraft and the expiration or
other termination of this Agreement and the other Operative Agreements.
Section 5.10. Lessee's Assumption of the Equipment Notes.
(a) Subject to compliance by the Lessee with all of its obligations
under the Operative Agreements, each of the Owner Participant, the Owner
Trustee, the Indenture Trustee, the Pass-Through Trustee and the Lessee
covenants and agrees that if the Lessee elects to purchase the Aircraft pursuant
to the terms of the Operative Agreements, if no Event of Default shall exist,
then, upon compliance with the applicable provisions of the Operative
Agreements, the Owner Trustee will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens attributable to the Owner
Trustee) but subject to the Lien of the Indenture, all of the Owner Trustee's
right, title and interest in and to the Aircraft, and if the Lessee, in
connection with such purchase, elects to assume the obligations of the Owner
Trustee to the Indenture Trustee and the Holders under the Indenture, the
Equipment Notes, and hereunder, the Lessee shall so notify the Indenture Trustee
(such notice to be given at least 30 and not more than 60 days prior to the
effective date of such assumption), and each of the parties shall execute and
deliver appropriate documentation permitting the Lessee to assume such
obligations on the basis of full recourse to the Lessee, maintaining for the
benefit of the Holders the security interest in the Aircraft created by the
Indenture, and upon compliance with the provisions of this Section 5.10
releasing the Owner Participant and the Owner Trustee from all obligations in
respect of the Certificates, the Indenture, this Agreement, and the other
Operative Agreements, except any obligations relating to the period prior to
such assumption and take all such other actions, at the Lessee's expense, as are
reasonably necessary to permit such assumption by the Lessee.
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(b) In connection with such assumption:
(i) the Lessee shall execute and deliver an instrument (A) pursuant
to which the Lessee irrevocably and unconditionally assumes and
undertakes, with full recourse to the Lessee, to pay, satisfy, and
discharge when and as due (at the stated maturity thereof, by acceleration
or otherwise) the principal of, Make-Whole Premium, if any, interest, and
all other sums owing on all Outstanding Certificates (or on the Lessee's
substituted obligations) in accordance with their terms, and punctually to
perform and observe all of the covenants and obligations hereunder and
under the Indenture and the Certificates (as the same may be amended in
connection with such assumption) to be performed or observed by the Owner
Trustee, and (B) which contains amendments to the Indenture, in form and
substance as reasonably satisfactory to the Indenture Trustee, that
incorporate therein such provisions from the Lease (or, if the Lease has
not been entered into, the form of Lease attached hereto as Exhibit A) and
this Agreement as may be appropriate, including, without limitation,
events of default substantially identical in scope and effect to those set
forth in the Lease (or such form, as the case may be) and covenants
substantially identical to the covenants of the Lessee hereunder and under
the Lease (or such form, as the case may be);
(ii) the instrument referred to in paragraph (i) of this Section
5.10(b), any Uniform Commercial Code financing statements relating
thereto, and any other documents which shall be necessary (or reasonably
requested by the Indenture Trustee) to establish the Lessee's title to and
interest in the Aircraft or to reflect the substitution of the Lessee for
the Owner Trustee under the Operative Agreements or to continue the
perfection of the security interests in the Aircraft and the other rights,
property, and interests included in the Trust Indenture Estate for the
benefit of the Holders shall be filed in such form, manner, and places as
are necessary or, in the reasonable opinion of the Indenture Trustee,
advisable for such purpose;
(iii) the Indenture Trustee shall have received an insurance report
dated the effective date of such assumption of an independent insurance
broker and certificates of insurance, each in form and substance
satisfactory to the Indenture Trustee, as to the due compliance as of the
effective date of such assumption with the terms of Section 9 of the Lease
(as it relates to the Indenture Trustee) relating to the insurance with
respect to the Aircraft (provided that the required amount of all-risk
hull insurance, subject to the self insurance rights of the Lessee, shall
be in an amount at least equal to the aggregate outstanding amount of the
Equipment Notes plus six months interest);
(iv) the Indenture Trustee shall have received a certificate from
the Lessee that no Specified Default exists as of the effective date of
such assumption; and
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(v) the Indenture Trustee shall have received (A) from counsel for
the Lessee (who may be the Lessee's General Counsel) a legal opinion, in
form and substance as reasonably satisfactory to the Indenture Trustee:
(w) with respect to the compliance of the assumption contemplated hereby
with the terms hereof, (x) with respect to the due authorization,
execution, delivery, validity, and enforceability of the instrument
referred to in paragraph (i) of this Section 7.11(b), (y) with respect to
the continued perfection of the security interest in the Aircraft for the
benefit of the Holders, and (z) with respect to the continued availability
of the benefits of Section 1110 of the Bankruptcy Code to the Indenture
Trustee for the benefit of the Holders with respect to the Aircraft after
giving effect to such assumption (but only to the extent such benefits
would have been available to the Holders prior to such assumption assuming
compliance with the Operative Agreements by the parties thereto), (B) from
counsel to the Indenture Trustee and Lessee's special aviation counsel, a
legal opinion comparable to the respective opinions delivered on the
Delivery Date, as the case may be, with such changes therein as may be
appropriate in light of such assumption, and (C) in the case of each
opinion described in clause (A) or (B) above, covering such additional
matters as the Indenture Trustee shall reasonably request.
(c) The Lessee shall pay all reasonable expenses (including
reasonable fees and expenses of counsel) of the Indenture Trustee, the Owner
Trustee, the Pass-Through Trustee, each Liquidity Provider and the Owner
Participant in connection with such assumption.
Section 5.11. Compliance with Trust Agreement, Etc. Each of the
Owner Participant, Trust Company, and the Owner Trustee agrees with the Lessee,
the Indenture Trustee, the Liquidity Providers and the Pass-Through Trustee that
so long as the Lien of the Indenture shall be in effect it will (i) comply with
all of the terms of the Trust Agreement applicable to it in its respective
capacity, the noncompliance with which would materially adversely affect any
such party and (ii) not take any action, or cause any action to be taken, to
amend, modify or supplement any other provision of the Trust Agreement in a
manner that would materially adversely affect any such party without the prior
written consent of such party. The Owner Trustee confirms for the benefit of the
Lessee, the Indenture Trustee, the Liquidity Providers and the Pass-Through
Trustee that it will comply with the provisions of Article 2 of the Trust
Agreement. Notwithstanding anything else to the contrary in the Trust Agreement,
so long as the Lease remains in effect, the Owner Participant agrees not to
terminate or revoke the trust created by the Trust Agreement without the consent
of the Lessee. If and so long as the Indenture shall not have been discharged
the consent of the Indenture Trustee shall also be required prior to any
termination or revocation of such trust and in addition, the Owner Trustee will,
at the Lessee's expense, promptly and duly execute and deliver to the Indenture
Trustee such documents and assurances including, without limitation,
conveyances, financing statements and continuation statements with respect to
financing statements and take such further action as the Indenture Trustee may
from time to time reasonably request in order to protect the
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rights and remedies created or intended to be created in favor of the Indenture
Trustee under the Indenture and to create for the benefit of the Certificate
Holders a valid first priority Lien with respect to, and a first and prior
perfected security interest in, the Trust Indenture Estate.
Section 5.12. Subordination Agent's Representations, Warranties and
Covenants.
(a) Representations and Warranties. The Subordination Agent
represents and warrants as of the date hereof (except as otherwise provided),
the Pass-Through Closing Date, the Certificate Closing Date, and the Delivery
Date, that:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
and has the corporate power and authority to enter into and perform its
obligations under this Agreement, the Liquidity Facilities and the
Intercreditor Agreement;
(ii) the execution, delivery and performance of this Agreement, each
of the Liquidity Facilities and the Intercreditor Agreement and the
performance of its obligations hereunder and thereunder have been fully
authorized by all necessary, corporate action on its part, and, neither
the execution and delivery thereof nor its performance of any of the terms
and provisions thereof will violate any federal or Maryland law or
regulation relating to its banking or trust powers or contravene or result
in any breach of, or constitute any default under its articles of
association, or bylaws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it or its
properties may be bound or affected;
(iii) each of this Agreement, the Liquidity Facilities and the
Intercreditor Agreement has been duly executed and delivered by it and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is or will be, as the case may be,
the legal, valid and binding obligation of the Subordination Agent,
enforceable in accordance with its respective terms except as limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) there are no Taxes payable by the Subordination Agent imposed
by the State of Maryland 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), and there are no Taxes payable by the
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Subordination Agent imposed by the State of Maryland or any political
subdivision thereof in connection with the acquisition, possession or
ownership by the Subordination Agent of any of the Certificates 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);
(v) to the best of the Subordination Agent's knowledge, 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;
(vi) the Subordination Agent has not directly or indirectly offered
any Certificate for sale to any Person or solicited any offer to acquire
any Certificates from any Person, nor has the Subordination Agent
authorized anyone to act on its behalf to offer directly or indirectly any
Certificate for sale to any Person, or to solicit any offer to acquire any
Certificate from any Person; and the Subordination Agent is not in default
under any Liquidity Facility; and
(vii) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter or the Lessee.
(b) Covenants.
(i) The Subordination Agent agrees not to amend any Liquidity
Facility or the Intercreditor Agreement without the consent of the Lessee.
(ii) At any time when directed by the Lessee, the Subordination
Agent shall replace any Liquidity Provider pursuant to Section 3.6(e) of
the Intercreditor Agreement. Except as otherwise expressly provided in the
Intercreditor Agreement, the Subordination Agent shall not in any other
instance replace any Liquidity Provider in respect of any Liquidity
Facility.
(iii) In connection with the deposit in the applicable Cash Account
of amounts drawn pursuant to any Downgrade Drawing or Non-Extension
Drawing (as defined in the Liquidity Facility) under a Liquidity Facility,
the Subordination Agent agrees, so long as no Event of Default shall have
occurred and be continuing, to pay to the Lessee promptly following each
Regular Distribution Date any Investment Earnings on the amount so
deposited which remain after application of such Investment Earnings
pursuant to Section 2.06 of such Liquidity Facility to the interest
payable on such Downgrade Drawing under Section 3.07 of such Liquidity
Facility. Capitalized terms used in this Section 7.01(b) shall have the
meanings specified in the Intercreditor Agreement.
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(iv) The Subordination Agent agrees, upon the request of the Lessee,
to replace the Liquidity Facility in accordance with Section 3.6(e) of the
Intercreditor Agreement
Section 5.13. Amendments to the Indenture.
Each of the Owner Trustee and the Indenture Trustee agrees that it
will not during the Term enter into any amendment or supplement to the Indenture
without the prior consent of the Lessee, if such amendment or supplement would
have the effect of limiting any right or of increasing any obligation or
liability of the Lessee under the terms of the Lease or any other Operative
Agreement.
ARTICLE 6.
TAXES
Section 6.01. Lessee's Obligation to Pay Taxes.
(a) Generally. The Lessee agrees promptly to pay when due, and to
indemnify and hold each Tax Indemnitee harmless from all license, recording,
documentary, registration and other fees and all taxes (including, without
limitation, income, gross receipts, sales, rental, use, value added, property
(tangible and intangible), ad valorem, excise and stamp taxes), fees, levies,
imposts, recording duties, duties, charges, assessments or withholdings of any
nature whatsoever, together with any assessments, penalties, fines, additions to
tax or interest thereon (individually, a "Tax," and collectively called
"Taxes"), however imposed or asserted (whether imposed upon any Tax Indemnitee,
the Lessee, all or any part of the Aircraft, Airframe, any Engine or any Part or
the Lessor's Estate, the Trust Indenture Estate, Rent, the Equipment Notes or
otherwise upon or with respect to any Operative Agreement, any payments
thereunder or otherwise in connection therewith), by any Federal, state or local
government or taxing authority in the United States, or by any government or
taxing authority of a foreign country or of any political subdivision or taxing
authority thereof or by a territory or possession of the United States or an
international taxing authority relating to or measured by:
(i) the construction, mortgaging, financing, refinancing, purchase,
acceptance, rejection, delivery, nondelivery, transport, location,
ownership, registration, reregistration, deregistration, insuring,
assembly, possession, repossession, operation, use, non-use, condition,
maintenance, repair, improvement, conversion, sale, return, abandonment,
preparation, installation, storage, redelivery, replacement, manufacture,
leasing, subleasing, subsubleasing, modification, alteration, rebuilding,
importation, transfer of title, transfer of registration, exportation or
other application or disposition of, or the imposition of any Lien (or the
incurrence of any liability to refund or pay over any amount as a result
of any Lien) on, the Aircraft, the Airframe, any Engine or any Part or any
interest therein;
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(ii) amounts payable under the Operative Agreements;
(iii) the Aircraft, or the income or other proceeds received with
respect to the Aircraft attributable to the transactions contemplated by
the Operative Agreements, held by the Owner Trustee under the Trust
Agreement or after an Event of Default under the Lease, or by the
Indenture Trustee under the Indenture;
(iv) otherwise with respect to any Operative Agreement, any interest
therein or by reason of the transactions described in or contemplated by
the Operative Agreements;
(v) the principal or interest or other amounts payable with respect
to the Equipment Notes;
(vi) the Pass-Through Certificates or the Equipment Notes or the
issuance, sale, acquisition, reoptimization, or refinancing thereof or the
beneficial interests in the Trust Estate or the Trust Indenture Estate or
the creation thereof under the Trust Agreement or the Indenture, or the
security interest created or perfected thereby or by any filing thereof;
(vii) any assumption by the Lessee pursuant to Section 5.10 of this
Agreement;
(viii) the Aircraft, the Airframe, any Engine or any Part; or
(ix) the rentals (including Basic Rent and Supplemental Rent),
receipts or earnings arising from the Operative Agreements.
(b) Exceptions. The indemnity provided for in Section 6.01 (a) shall
not extend to any of the following:
(i) With respect to a Tax Indemnitee, Taxes, whether imposed by
withholding or otherwise, based upon, measured by or with respect to the
net or gross income, items of tax preference or minimum tax or excess
profits, receipts, capital, franchise, net worth (whether, denominated
income, excise, capital stock, or doing business taxes) or other
similarly-based taxes (other than sales, use, value-added, transfer,
rental, ad valorem, stamp, property, or similar taxes) ("Income Taxes")
imposed by the United States or by any state, local or foreign
jurisdiction in which such Tax Indemnitee is subject to tax without regard
to the transactions contemplated by the Operative Agreement, provided,
however, that this clause (i) shall not exclude from the indemnity
described in Section 6.01(a) above any such Income Taxes to the extent
such taxes are imposed by any jurisdiction other than the United States or
any state or local taxing authority located therein in which the Tax
Indemnitee would not be subject to taxes of such type but for, or would be
subject to such taxes of such type solely as a result
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of, (x) the operation, registration, location, presence, or use of the
Aircraft, Airframe, any Engine or any Part thereof, in such jurisdiction
or (y) the place of incorporation or principal office or the activities of
the Lessee or any Affiliate thereof or any sublessee in such jurisdiction
(it being understood that (A) any such indemnity payable only to the
extent of the net harm incurred by the Tax Indemnitee from such Income
Taxes, taking into account any incremental Tax benefit in another tax
jurisdiction resulting from payment of such Income Taxes and (B) no
indemnity is payable with respect to Income Taxes imposed by any
jurisdiction in which the Tax Indemnitee is already subject to Income Tax;
(ii) Taxes on items of tax preference or any minimum tax or
alternative minimum tax;
(iii) Taxes imposed with respect to any period after the earlier of
(A) the discharge in full of the Lessee's obligation, if any, to pay
Termination Value under and in accordance with the Lease, (B) the
expiration of the Term of the Lease or (C) the termination of the Lease in
accordance with the applicable provisions of the Lease thereof;
(iv) As to the Owner Trustee, Taxes imposed against the Owner
Trustee upon or with respect to any fees for services rendered in its
capacity as Owner Trustee under the Trust Agreement or, as to the
Indenture Trustee, Taxes imposed against the Indenture Trustee upon or
with respect to any fees received by it for services rendered in its
capacity as Indenture Trustee under the Indenture;
(v) With respect to any Tax Indemnitee, Taxes resulting from the
willful misconduct or gross negligence of any Tax Indemnitee or the breach
by any Tax Indemnitee of any representation, warranty or covenant
contained in the Operative Agreements or any document delivered in
connection therewith (unless attributable to a breach of representation,
warranty or covenant of the Lessee);
(vi) Taxes imposed on the Owner Trustee or the Owner Participant or
any successor, assign or Affiliate thereof which became payable by reason
of any voluntary or involuntary transfer or disposition by such Tax
Indemnitee subsequent to the Delivery Date, including revocation of the
Trust, of any interest in some or all of the Aircraft, Airframe, Engines
or Parts thereof or its interest in the Lessor's Estate (not including any
transfers of any Certificates pursuant to Section 13.01 (a) hereof) or a
disposition in connection with a bankruptcy or similar proceedings
involving either the Lessor or the Owner Participant or a transfer or
disposition of shares or other interests in the Owner Trustee or the Owner
Participant or a transfer or disposition of shares or other interests in
the Owner Trustee or the Owner Participant other than (A) transfers
resulting from a loss, substitution or modification of the Aircraft,
Engines or any Part, (B) transfers pursuant to the Lessor's exercise of
remedies
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in accordance with Section 17 of the Lease or (C) a transfer pursuant to
the Lessee's exercise of its rights under Section 3(g) of the Lease; the
parties agree to cooperate to minimize any such Taxes covered by this
provision;
(vii) Taxes subject to indemnification by the Lessee pursuant to the
Tax Indemnity Agreement;
(viii) Taxes imposed on a successor, assign or other transferee of
any interest of any Tax Indemnitee (including, without limitation, a
transferee which is a new lending office of an original Tax Indemnitee) to
the extent that such Taxes would not have been imposed on the original Tax
Indemnitee or exceed the amount of Taxes that would have been imposed and
would have been indemnifiable pursuant to Section 6.01(a) hereof had there
not been a succession, assignment or other transfer by such original Tax
Indemnitee of any such interest of such Tax Indemnitee in the Aircraft or
any Part, any interest in or under any Operative Agreement, or any
proceeds thereunder;
(ix) Taxes imposed by any jurisdiction that would not have been
imposed on the Owner Trustee or the Owner Participant but for the
activities or the status of the Owner Trustee or the Owner Participant in
such jurisdiction unrelated to the transactions contemplated by the
Operative Agreements;
(x) Any Taxes which have been included in the Purchase Price;
(xi) any Taxes which would not have been imposed but for a Lessor's
Lien or an Indenture Trustee's Lien;
(xii) Any Taxes imposed on the Owner Participant arising under or in
connection with any prohibited transaction, within the meaning of Section
406 of ERISA or Section 4975(c)(1) of the Code or any similar provision of
state law ("Prohibited Transaction");
(xiii) Taxes that would not have been imposed but for the existence
or status of any trust used to hold title to the Aircraft;
(xiv) Taxes in the nature of an intangible or similar Tax imposed on
or with respect to the Equipment Notes (or the indebtedness evidenced
thereby), the Pass-Through Certificates, the Trust Estate or the Trust
Agreement;
(xv) Taxes that are being contested in accordance with the
provisions hereof;
(xvi) Any value-added Taxes imposed by the federal government of the
United States; or
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(xvii) United States withholding Taxes imposed on payments to a
foreign person.
(c) Withholding. The Pass-Through Trustee shall withhold any Taxes
required by law to be withheld on payments to any holder of a Pass-Through
Certificate. The Indenture Trustee shall withhold any Taxes required to be
withheld on any payment to a Holder pursuant to Section 5.09 of the Indenture.
If the Indenture Trustee or the Pass-Through Trustee fails to withhold a Tax
required to be withheld with respect to any Holder of a Certificate or any
holder of a Pass-Through Certificate or any claim is otherwise asserted by a
taxing authority against the Owner Trustee or Owner Participant for any
withholding tax, the Lessee will indemnify the Owner Trustee and the Owner
Participant (without regard to the exclusions set forth in Section 6.01(b)
hereof) on an After-Tax Basis against any such Taxes required to be withheld and
any interest and penalties with respect thereto, along with any other costs
(including reasonable attorney's fees) incurred in connection with any such
claim. The Indenture Trustee or the Pass-Through Trustee, as the case may be, in
its individual capacity (and without recourse to the Trust Indenture Estate),
shall indemnify the Lessee (without regard to the exclusions set forth in
Section 6.01(b) hereof) on an After-Tax Basis for any payment the Lessee shall
have made pursuant to the preceding sentence.
Section 6.02. After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Tax indemnified against under Section 6.01
shall be an amount sufficient to restore the Tax Indemnitee, on an After-Tax
Basis, to the same position such party would have been in had such Tax not been
incurred, taking into account any tax benefits recognized by such Tax Indemnitee
as a result of the Indemnifiable Tax. If any Tax Indemnitee realizes a Tax
benefit (whether by credit, deduction or otherwise), or would have realized such
a benefit if properly claimed, by reason of the payment of any Tax paid or
indemnified against by the Lessee, such Tax Indemnitee shall promptly pay to the
Lessee, to the extent such Tax benefit was not previously taken into account in
computing such payment, but not before the Lessee shall have made all payments
then due to such Tax Indemnitee under this Agreement, the Tax Indemnity
Agreement and any other Operative Agreement, an amount equal to the lesser of
(x) the sum of such tax benefit plus any other tax benefit realized by such Tax
Indemnitee that would not have been realized but for any payment made by such
Tax Indemnitee pursuant to this sentence and not already paid to the Lessee, and
(y) the amount of the payment made under Section 6.01 hereof and this Section
6.02 by the Lessee to such Tax Indemnitee plus the amount of any other payments
by the Lessee to such Tax Indemnitee theretofore required to be made under this
Section 6.02 and Sections 6.01 and 6.05 hereof (and the excess, if any, of the
Tax benefit over the applicable amount described in clause (x) or clause (y)
above shall be carried forward and applied to reduce pro tanto any subsequent
obligations of the Lessee to make payments to such Tax Indemnitee pursuant to
Section 6.01 hereof). The Lessee shall reimburse on an After-Tax Basis such Tax
Indemnitee (subject to Section 6.01(b) hereof) for any payment of a tax benefit
pursuant to the preceding sentence (or a tax
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benefit otherwise taken into account in calculating the Lessee's indemnity
obligation hereunder) to the extent that such tax benefit is subsequently
disallowed or reduced.
In determining the order in which any Tax Indemnitee utilizes
withholding or other foreign taxes as a credit against such Tax Indemnitee's
United States income taxes, such Tax Indemnitee shall be deemed to utilize (i)
first, all foreign taxes other than those described in clause (ii) below;
provided, that such other foreign taxes which are carried back to the taxable
year for which a determination is being made shall be deemed utilized after
foreign taxes described in clause (ii) below, and (ii) then, on a pro rata
basis, all foreign taxes with respect to which such Tax Indemnitee is entitled
to obtain indemnification pursuant to an indemnification provision contained in
any lease, loan agreement, or other financing document (including this
Participation Agreement) that is similar to the indemnification provision in
this Article 6.
Notwithstanding the preceding paragraph, if foreign taxes of a Tax
Indemnitee have been indemnified hereunder and all such indemnified foreign
taxes have not been used to produce a credit against such Tax Indemnitee's
United States income taxes resulting in the realization of a tax benefit paid to
the Lessee in accordance with the first paragraph of this Section 6.02, a tax
benefit will be deemed to be attributable to such indemnified foreign taxes to
the extent that an item of income derived from the transactions contemplated in
the Operative Agreements is allocable to sources outside the United States and
such allocation results in an increase in the amount of foreign tax credit such
Tax Indemnitee is entitled to use in any taxable year over the amount of foreign
tax credit such Tax Indemnitee would have been entitled to use if such foreign
source allocation had not occurred.
Section 6.03. Time of Payment. Any amount payable to a Tax
Indemnitee pursuant to this Article 6 shall be paid promptly, but in any event
within 30 days after receipt of a written demand therefor from such Tax
Indemnitee accompanied by a written statement describing in reasonable detail
the basis for such indemnity and the computation of the amount so payable,
provided that in the case of amounts which are being contested by the Lessee in
good faith or by the Tax Indemnitee in either case pursuant to Section 6.04
hereof, or subject to verification proceedings pursuant to Section 6.11 hereof,
such amount shall be payable within 30 days after the time such contest or
verification proceeding, as the case may be, is finally resolved. In no event
shall any amount be payable under Section 6.01 until one Business Day prior to
the due date for Tax in issue.
Section 6.04. Contests. If a written claim is made against any Tax
Indemnitee for Taxes with respect to which the Lessee is liable for a payment or
indemnity hereunder, such Tax Indemnitee shall promptly (but in any event within
30 days of receipt thereof) give the Lessee notice in writing of such claim and
shall furnish the Lessee with copies of any written requests for information
sent to such Tax Indemnitee from any taxing authority to the extent relating to
such Taxes with respect to which the Lessee may be required to indemnify
hereunder; provided, however, that the failure of an Tax Indemnitee to give such
notice or furnish such copy shall not
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terminate any of the rights of such Tax Indemnitee under this Article 6, except
(a) to the extent that the Lessee's contest rights have been materially and
adversely impaired by the failure to provide such notice or copy or (b) to the
extent that such failure results in the imposition of, or an increase in the
amount of, any penalties, interest or additions to Tax related to the Tax which
is the subject of such claim or proceeding. The Lessee may, at its option,
contest in its own name or require the Tax Indemnitee to contest in good faith,
with due diligence and at the Lessee's expense, if timely requested in writing
by the Lessee, the validity, applicability or amount of such Taxes by:
(a) resisting payment thereof if lawful and practicable or not
paying the same except under protest if protest is necessary and proper in each
case so long as non-payment will not result in a material risk of the sale,
forfeiture or loss of, or the creation of a Lien other than a Permitted Lien on
the Aircraft, Airframe or any Engine or any risk of criminal liability; or
(b) if the payment be made, using reasonable efforts to obtain a
refund thereof in appropriate administrative and judicial proceedings.
If requested by the Lessee, the Tax Indemnitee shall appeal any
adverse administrative or judicial decision, except that the Tax Indemnitee
shall not be required to pursue any appeals to the United States Supreme Court.
Notwithstanding the foregoing, the Lessee shall not be permitted or entitled to
contest any such Tax in its own name unless the Tax is reflected in a report or
a return of the Lessee or raised in an audit or other proceeding of the Lessee,
and the Lessee is allowed to contest such Tax under applicable law of the taxing
jurisdiction. If the Lessee is permitted under applicable law to contest a Tax
asserted against the Lessee and the same or similar Tax is also asserted against
the Tax Indemnitee, each of the Lessee and such Tax Indemnitee shall conduct its
contest in its own name and the Lessee and such Tax Indemnitee will cooperate in
a reasonable manner with respect to the respective contests of such Tax.
If the Tax Indemnitee, after reasonable discussion with the Lessee
and consideration in good faith of any suggestion made by the Lessee as to the
method of pursuing such contest, elects to conduct the contest, such Tax
Indemnitee shall control the contest and shall determine the manner in which to
contest such Taxes and shall periodically or upon the Lessee's request advise
the Lessee of the progress of such contest; provided, however, that the Lessee
shall have the right to be consulted in good faith with respect to any contest
of claims subject to indemnification hereunder and to participate in any contest
proceeding, including governmental and judicial conferences, and the right to be
consulted in good faith regarding the relevant portions of all related
submissions to any governmental or other authority; provided, further, that the
Lessee shall be permitted to participate directly in any such contest only (x)
with respect to issues that can be separated on audit from any Taxes for which
the Lessee is not required to indemnify the Tax Indemnitee hereunder, and (y) if
the Tax Indemnitee shall have reasonably determined that neither such
participation nor the separation of
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issues will adversely affect the Tax Indemnitee. Notwithstanding the foregoing
provisions of this paragraph, if the Lessee acknowledges in writing its
liability to the Tax Indemnitee hereunder with respect to the Taxes subject to
the contest if the contest is resolved adversely, the Lessee shall control such
contest. If the Lessee satisfies the conditions imposed on it in this Section
6.04 and a Tax Indemnitee nevertheless fails to contest and refuses to permit
the Lessee to contest under and as and to the extent required by this Section
6.04, then the Lessee shall not be obligated to indemnify such Tax Indemnitee
for such claim or for any other claim for which a successful contest is
adversely affected because of such failure to contest or to permit a contest.
The Tax Indemnitee will not settle a contest that results in a final
determination without consent of the Lessee, unless the Tax Indemnitee waives
its right to indemnification with respect to such contest and any related
contest. Any such settlement, concession, or compromise without the prior
written consent of the Lessee shall constitute a waiver of such Tax Indemnitee's
rights to indemnification hereunder with respect to such claim and any other
claim for which a successful contest is adversely affected because of such
settlement, concession, or compromise. Notwithstanding the preceding sentences
of this Section 6.04, such Tax Indemnitee shall not be required to take or
continue any action unless the Lessee shall have agreed to pay the Tax
Indemnitee on a current basis all reasonable fees and expenses (including
reasonable attorneys' fees and accountants' fees) which such Tax Indemnitee may
incur as a result of contesting such Taxes. In no event shall such Tax
Indemnitee be required or the Lessee be permitted to contest pursuant to this
Section 6.04 the imposition of any Tax for which the Lessee is obligated to
indemnify any Tax Indemnitee hereunder unless (i) such contest will not result
in any material risk of loss, sale or forfeiture of, or the creation of a Lien
(other than Permitted Liens) on, the Aircraft or any part thereof or interest
thereon or in a risk of criminal liability, (ii) if a Specified Default exists,
the Lessee shall have provided security for its obligations hereunder reasonably
satisfactory to the Tax Indemnitee, and (iii) if such contest shall be conducted
in a manner requiring payment of the claim in advance, the Lessee shall have
advanced sufficient funds, on an interest free basis, to make the payment
required, and agreed to indemnify the Tax Indemnitee against any additional net
adverse tax consequences on an After-Tax Basis to such Tax Indemnitee of such
advance; provided, that in the event that such Tax Indemnitee is not required
under this paragraph to contest any Tax liability for which the Lessee is
obligated to indemnify any Tax Indemnitee, the Lessee may contest such Tax
liability in the name of the Lessee, if permitted by law.
Nothing contained in this Section 6.04 shall require any Tax
Indemnitee to contest or continue to contest, or permit Lessee to contest, a
claim which such Tax Indemnitee would otherwise be required to contest pursuant
to this Section 6.04, if such Tax Indemnitee shall waive payment by Lessee of
any amount that might otherwise be payable by Lessee under this Article 6 in
connection with such claim.
Section 6.05. Refunds. When a Tax Indemnitee becomes entitled to
receive a refund or credit against Tax of all or any part of any Taxes which the
Lessee shall have paid for such Tax Indemnitee or for which the Lessee shall
have reimbursed
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or indemnified such Tax Indemnitee, such Tax Indemnitee shall pay to the Lessee
an amount equal to the amount of such refund or credit less (x) all payments
then due to such Tax Indemnitee under this Article 6, and (y) Taxes imposed with
respect to the accrual or receipt thereof, including interest received
attributable thereto, plus any tax benefit realized by such Tax Indemnitee as a
result of any payment by such Tax Indemnitee made pursuant to this sentence;
provided, however, that such amount shall not be payable (a) before such time as
the Lessee shall have made all payments or indemnities then due and payable to
such Tax Indemnitee under this Article 6 and (b) to the extent that the amount
of such payment would exceed (i) the amount of all prior payments by the Lessee
to such Tax Indemnitee pursuant to this Article 6 less (ii) the amount of all
prior payments by such Tax Indemnitee to the Lessee pursuant to this Article 6
(any such excess shall be carried forward to reduce pro tanto any subsequent
obligations of the Lessee to make payments to such Tax Indemnitee pursuant to
Section 6.01 hereof.
Any subsequent loss of such refund or tax benefit shall be treated
as a Tax subject to indemnification under the provisions of this Article 6 (in
the case of any such tax benefit, subject to Section 6.01 (b) hereof).
Section 6.06. Reports. In case any report or return is required to
be made with respect to any Taxes against which the Lessee is or may be
obligated to indemnify the Indemnities under this Article 6, the Lessee shall,
to the extent it has knowledge thereof, make such report or return, except for
any such report or return that the Tax Indemnitee has notified the Lessee that
it intends to file, in such manner as will show the ownership of the Aircraft in
the Owner Trustee and shall send a copy of the applicable portions of such
report or return to the Tax Indemnitee and the Owner Trustee or will notify the
Tax Indemnitee of such requirement and make such report or return in such manner
as shall be satisfactory to such Tax Indemnitee and the Owner Trustee. The
Lessee will provide such information within the possession or control of the
Lessee as the Tax Indemnitee may reasonably request in writing from the Lessee
to enable the Tax Indemnitee to fulfill its tax filing requirements with respect
to the transactions contemplated by the Operative Agreements (without
duplication of any comparable requirements of the Tax Indemnity Agreement) and
any audit information request arising from any such filing. The Tax Indemnitee
will provide such information within its possession or control as the Lessee may
reasonably require from such Tax Indemnitee to enable the Lessee to fulfill its
tax filing requirements with respect to the transactions contemplated by the
Operative Agreements and any audit information request arising from such filing;
provided that in no event shall any Tax Indemnitee be required to provide copies
of any of its tax returns. If an Tax Indemnitee makes any representation
regarding the value of the Aircraft or any part thereof to any taxing authority
without the Lessee's prior written consent as to the value represented (which
consent shall not be unreasonably withheld), that Tax Indemnitee shall be
responsible for any Tax to the extent that it would not have been payable if the
value used were a value reasonably proposed by the Lessee.
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Section 6.07. Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 6 and the Lessee's obligations under any and all of them, in each case,
with respect to events or periods prior to the expiration or termination of the
Lease shall survive the expiration or other termination of the Operative
Agreements.
Section 6.08. Payment of Taxes. With respect to any Tax otherwise
indemnifiable hereunder by the Lessee and applicable to the Aircraft, Airframe,
any Engine or Parts, to the extent permitted by the applicable federal, state,
local or foreign law, the Lessee shall pay such tax directly to the relevant
Taxing authority and file any returns or reports required with respect thereto
to the extent legally entitled to do so in its own name; provided, however, that
the Lessee shall not make any statements or take any action which would indicate
that the Lessee or any Person other than the Owner Trustee or Owner Participant
is the owner of the Aircraft, the Airframe, any Engine or any Part or which
would otherwise be inconsistent with the terms of the Lease or the Tax Indemnity
Agreement and the position thereunder of the Owner Trustee and the Owner
Participant.
Section 6.09. Reimbursements by Indemnities Generally. To the extent
the Lessee is required to pay or withhold any Tax imposed on or with respect to
an Tax Indemnitee in respect of the transactions contemplated by the Operative
Agreements, which Tax is not otherwise the responsibility of the Lessee under
the Operative Agreements, or any other written agreements between the Lessee and
such Tax Indemnitee, then such Tax Indemnitee shall pay to the Lessee within 30
days of the Lessee's demand therefor an amount which equals the amount actually
paid by the Lessee with respect to such Taxes.
Section 6.10. Forms. Each Tax Indemnitee agrees to furnish from time
to time to Lessee or to such other person as Lessee may designate, at Lessee's
request, such duly executed and properly completed forms as may be necessary or
appropriate in order to claim any reduction of or exemption from any withholding
or other Tax imposed by any taxing authority, if (x) such reduction or exemption
is available to such Tax Indemnitee and (y) Lessee has provided such Tax
Indemnitee with any information necessary to complete such form not otherwise
reasonably available to such Tax Indemnitee.
Section 6.11. Verification. At the Lessee's request, the accuracy of
any calculation of amount(s) payable pursuant to this Article 6 shall be
verified by independent public accountants selected by the applicable Tax
Indemnitee and reasonably satisfactory to the Lessee, and such verification
shall bind the applicable Tax Indemnitee and the Lessee. In order, and to the
extent necessary, to enable such independent accountants to verify such amounts,
such Tax Indemnitee shall provide to such independent accountants (for their
confidential use and not to be disclosed to the Lessee or any other person) all
information reasonably necessary for such verification. Verification shall be at
the expense of the Lessee, unless such verification results in an adjustment in
the Lessee's favor of $10,000 or more of the amount of the payment as
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computed by such Tax Indemnitee, in which case the verification shall be at the
expense of the Tax Indemnitee.
Section 6.12. Non-Parties. If an Tax Indemnitee is not a party to
this Agreement, Lessee may require the Tax Indemnitee to agree in writing, in a
form reasonably acceptable to Lessee, to the terms of this Article 6 prior to
making any payment to such Tax Indemnitee hereunder.
ARTICLE 7.
GENERAL INDEMNITY
Section 7.01. Generally.
(a) Indemnity. The Lessee agrees to indemnify each Indemnitee
against and agrees to protect, defend, save and keep harmless each Indemnitee
against and in respect of, and will pay on an After-Tax Basis, from any and all
liabilities, obligations, losses, damages, penalties, claims, actions, suits,
costs, disbursements and expenses, demands or judgments (including reasonable
legal fees and expenses) of every kind and nature, whether or not any of the
transactions contemplated by this Agreement are consummated (individually, an
"Expense," collectively, "Expenses"), which may be imposed on, incurred or
suffered by or asserted against any Indemnitee, in any way relating to, arising
out of or in connection with, any one or more of the following:
(i) any Operative Agreement or Pass-Through Document or any
transaction contemplated thereby;
(ii) the operation, possession, use, non-use, maintenance, storage,
overhaul, delivery, non-delivery, control, repair or testing of the
Aircraft, Airframe, or any Engine or any engine used in connection with
the Airframe, or any Part thereof by the Lessee, any sublessee or any
other Person whatsoever, whether or not such operation, possession, use,
non-use, maintenance, storage, overhaul, delivery, non-delivery, control,
repair or testing is in compliance with the terms of the Lease, including,
without limitation, claims for death, personal injury or property damage
or other loss or harm to any Person whatsoever, including, without
limitation, any passengers, shippers or other Persons wherever located,
and claims or penalty relating to any laws, rules or regulations,
including, without limitation, environmental control, noise and pollution
laws, rules or regulation;
(iii) the manufacture, design, sale, return, purchase, acceptance,
rejection, delivery, non-delivery, condition, repair, modification,
servicing, rebuilding, airworthiness, registration, reregistration,
deregistration, ownership, financing, import, export, performance,
non-performance, lease, sublease, transfer, merchantability, fitness for
use, alteration, substitution or replacement
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of any Airframe, Engine, or Part or other transfer of use or possession,
or other disposition of the Aircraft, the Airframe, any Engine or any Part
including, without limitation, latent and other defects, whether or not
discoverable, strict tort liability, and any claims for patent, trademark
or copyright infringement;
(iv) any breach of or failure to perform or observe, or any other
non-compliance with, any condition, covenant or agreement to be performed,
or other obligations of the Lessee under any of the Operative Agreements
or any Pass-Through Trust Agreement, or the falsity or inaccuracy of any
representation or warranty of the Lessee in any of the Operative
Agreements or any Pass-Through Trust Agreement (other than representations
and warranties in the Tax Indemnity Agreement);
(v) the enforcement of the terms of the Operative Agreements; and
(vi) the offer, issuance, sale or delivery of any Equipment Note,
any Pass-Through Certificate or interest in the Lessor's Estate or the
Trust Agreement or any similar interest.
(b) Exceptions. The indemnity provided for in Section 7.01(a) shall
not extend to any Expense of any Indemnitee to the extent it:
(i) is attributable to the willful misconduct or gross negligence of
such Indemnitee (other than gross negligence or willful misconduct imputed
to such person by reason of its interest in the Aircraft or any
transaction documents);
(ii) is attributable to acts or events (other than the performance
by Lessee of its obligations pursuant to the terms of the Operative
Agreements) which occur after the Aircraft is no longer part of the
Lessor's Estate or, if the Aircraft remains a part of the Lessor's Estate,
after the expiration of the Term (unless the Aircraft is being returned at
such time, in which case after return of physical possession; provided
that if the Lease has been terminated pursuant to Section 17 thereof, the
indemnity provided in Section 7.01(a) hereof shall survive for so long as
Lessor or the Indenture Trustee shall be exercising remedies under such
Section 17), or to acts or events which occur after return of possession
of the Aircraft by the Lessee in accordance with the provisions of the
Lease (subject to the foregoing proviso if the Lessor has terminated the
Lease pursuant to Section 17 of the Lease);
(iii) is a Tax or loss of a Tax benefit, whether or not the Lessee
is required to indemnify therefor pursuant to Article 6 hereof or pursuant
to the Tax Indemnity Agreement;
(iv) is a cost or expense required to be paid by an Indemnitee or
its permitted transferees (and not by the Lessee) pursuant to this
Agreement or any other Operative Agreement and for which the Lessee is not
otherwise obligated
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to reimburse such Indemnitee, directly or indirectly pursuant to the terms
of this Agreement or such other Operative Agreement;
(v) is attributable to the incorrectness or breach by such
Indemnitee of its representations or warranties, under any of the
Operative Agreements;
(vi) is attributable to the failure by such Indemnitee to perform
any of its obligations under any of the Operative Agreements;
(vii) is, in the case of the Owner Participant, Lessor's Liens
attributable to the Owner Participant; in the case of the Owner Trustee,
Lessor's Liens to the extent attributable to the Owner Trustee; in the
case of Trust Company, Lessor's Liens to the extent attributable to Trust
Company; and in the case of the Indenture Trustee, Indenture Trustee's
Liens;
(viii) is, in the case of the Owner Participant or the Owner
Trustee, attributable to the offer or sale by such Indemnitee of any
interest in the Aircraft, the Lessor's Estate or the Trust Agreement or
any similar interest (including an offer or sale resulting from bankruptcy
or other proceedings for the relief of debtors in which such Indemnitee is
the debtor), unless in each case such offer or sale shall occur pursuant
to the exercise of remedies under Section 17 of the Lease;
(ix) is an Expense arising under or in connection with any
"prohibited transaction", within the meaning of Section 406 of ERISA or
Section 4975(c)(1) of the Code or any similar provision of state law;
(x) except during the continuation of an Event of Default, is
attributable to any amendment to any of the Operative Agreements which is
not requested by the Lessee or is not required or made pursuant to the
terms of any of the Operative Agreements;
(xi) is attributable to the exercise by any Indemnitee of any right
to inspect the Aircraft except with respect to any such inspection
conducted while an Event of Default is continuing; and
(xii) constitutes the loss of future profits or losses attributable
to such Indemnitee's overhead.
Section 7.02. Notice and Payment. Each Indemnitee shall give prompt
written notice to the Lessee of any liability for which the Lessee is, or may
be, liable under this Article 7; provided, however, that failure to give such
notice shall not terminate any of the rights of an Indemnitee under this Article
7, except to the extent that such failure adversely affects any applicable
defense or counterclaim, otherwise increases the amount the Lessee would have
been liable for in the absence of such
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failure to provide such notice or adversely affects the ability of Lessee's
insurers to defend such claim.
Section 7.03. Defense of Claims. The Lessee or its insurers shall
have the right (in each such case at the Lessee's sole expense) to investigate,
defend (and control the defense of) any such claim for which indemnification is
sought pursuant to this Article 7 and each Indemnitee shall cooperate with the
Lessee or its insurers with respect thereto, provided that, without limiting the
right of the Lessee's insurers to assume and control the defense of, or to
compromise, any such claim, the Lessee shall not be entitled to assume and
control the defense of or compromise any such claim (A) during the continuance
of any Event of Default arising under Section 14(a) of the Lease, (B) if an
actual or potential material conflict of interest exists making it advisable (on
the basis of prevailing standards of professional responsibility) for such
Indemnitee to be represented by separate counsel or on the grounds that such
proceeding involves the potential imposition of criminal liability on such
Indemnitee or (C) such proceeding will involve any material risk of the sale,
forfeiture or loss of, or the creation of any Lien (other than Permitted Liens)
on the Aircraft or the Trust Estate (unless the Lessee posts a bond or other
security reasonably acceptable in form and substance to such Indemnitee) or
involve any material risk of criminal liability to such Indemnitee for which it
is not indemnified hereunder and, in any such case, the relevant Indemnitee
will, in good faith, undertake the defense of such claim at the expense of the
Lessee. Subject to the immediately foregoing sentence, where the Lessee or the
insurers under a policy of insurance maintained by the Lessee undertake the
defense of an Indemnitee with respect to such a claim, no additional legal fees
or expenses of such Indemnitee in connection with the defense of such claim
shall be indemnified hereunder unless the fees or expenses were incurred at the
written request of the Lessee or such insurers. Subject to the requirement of
any policy of insurance applicable to a claim, an Indemnitee may participate at
its own expense at any judicial proceeding controlled by the Lessee or its
insurers pursuant to the preceding provisions, to the extent that such party's
participation does not, in the opinion of the independent counsel appointed by
the Lessee or its insurers to conduct such proceedings, interfere with such
control; and such participation shall not constitute a waiver of the
indemnification provided in this Section 7.03. No Indemnitee shall enter into
any settlement or other compromise with respect to any claim described in this
Section 7.03 without the prior written consent of the Lessee, unless such
Indemnitee waives its right to be indemnified under this Article 7 with respect
to such claim. The Lessee shall not enter into any settlement or compromise with
respect to which the Lessee has not agreed to indemnify such Indemnitee to such
Indemnitee's satisfaction or which admits any criminal violation, gross
negligence or willful misconduct on the part of any Indemnitee without the prior
written consent of such Indemnitee.
Section 7.04. Insured Claims. Notwithstanding any other provision of
this Article 7 to the contrary, in the case of any claim indemnified by the
Lessee hereunder which is covered by a policy of insurance maintained by the
Lessee pursuant to Section 9 of the Lease or otherwise, it shall be a condition
of such indemnity with respect to any particular Indemnitee that such Indemnitee
shall cooperate with the
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insurers in the exercise of their rights to investigate, defend or compromise
such claim as may be required to retain the benefits of such insurance with
respect to such claim.
Section 7.05. Subrogation. To the extent that an Expense indemnified
by the Lessee under this Article 7 is in fact paid by the Lessee and/or an
insurer under a policy of insurance maintained by the Lessee, the Lessee and/or
such insurer as the case may be shall be subrogated to the extent of such
payment to the rights and remedies of the Indemnitee on whose behalf such
Expense was paid with respect to the transaction or event giving rise to such
Expense. Should an Indemnitee receive any refund, in whole or in part, with
respect to any Expense paid by the Lessee hereunder, it shall promptly pay over
the amount refunded, together with any interest received with respect to such
amount for the period between the indemnification payment and the receipt of
such refund, to the Lessee.
Section 7.06. Survival of Obligations. The indemnities and
agreements of the Lessee provided for in this Article 7 shall survive the
expiration or other termination of this Agreement.
Section 7.07. Effect of Other Indemnities. The Lessee's obligations
under this Article 7 shall be those of a primary obligor whether or not the
Person indemnified shall also be indemnified with respect to the same matter
under the terms of this Agreement, or any other document or instrument, and the
Person seeking indemnification from the Lessee pursuant to any provision of this
Agreement may proceed directly against the Lessee without first seeking to
enforce any other right of indemnification.
Section 7.08. Waiver of Certain Claims. The Lessee hereby waives and
releases any Claim now or hereafter existing against any Indemnified Person
arising out of death or personal injury to personnel of the Lessee, loss or
damage to property of the Lessee, or the loss of use of any property of the
Lessee, which results from or arises out of the condition, use or operation of
the Aircraft during the Term, including, without limitation, any latent or
patent defect whether or not discoverable.
Section 7.09. Certain Limitations. The Lessee does not guarantee and
nothing in the general indemnification provisions of this Article 7 shall be
construed as a guarantee (or an indemnification) by the Lessee (i) that the
principal of, premium, if any, or interest on any "Equipment Note" (as defined
in the Pass-Through Trust Agreements) will be paid or (ii) with respect to the
residual value of the Aircraft or any part thereof.
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ARTICLE 8.
TRANSACTION COSTS
Section 8.01. Transaction Costs and Other Costs.
(a) Transaction Costs. The Owner Participant shall pay (or reimburse
the Lessee if the Lessee shall have previously made such payment) all fees and
expenses of the following persons relating to the offering of the Pass-Through
Certificates contemplated by the Placement Agreement and related to the
transactions contemplated hereby: (i) the reasonable fees and expenses of
counsel for Owner Participant; (ii) the reasonable fees and expenses of the
respective counsel for the Lessee, the Owner Trustee, the Indenture Trustee, the
Manufacturer, the Subordination Agents, the Pass-Through Trustee, each Liquidity
Provider and the Placement Agents (other than those fees, expenses and
disbursements payable by the Placement Agent pursuant to the Placement
Agreement); (iii) the reasonable fees and expenses of special aviation counsel;
(iv) any initial fees and expenses of the Pass-Through Trustee and the initial
fees and expenses of the Owner Trustee, the Subordination Agent, the Indenture
Trustee; (v) any compensation, commissions and discounts payable to the
Placement Agents pursuant to the Placement Agreement; (vi) the fees and expenses
incurred in connection with printing any offering memorandum for the offering of
the Pass-Through Certificates; (vii) the fees and expenses of Moody's and S&P;
(viii) the fees and expenses of The Seabury Group LLC; (ix) any amounts paid in
connection with any appraisal report prepared for the Owner Participant; and (x)
any other amounts approved by the Lessee and the Owner Participant. The fees and
expenses described in clauses (ii) through (viii) of this paragraph shall be
allocable to the Owner Participant under this Agreement (1) to the extent
incurred specifically with respect to the Owner Participant, and (2) to the
extent such fees and expenses are incurred but are not specifically attributable
to the Owner Participant, in the proportion that the principal amount of the
Certificates bears to the total amount of the Pass-Through Certificates.
(b) Continuing Expenses. The Lessee agrees to pay, as Supplemental
Rent, (i) the continuing fees, expenses and disbursements (including reasonable
counsel fees and expenses) of the Owner Trustee, with respect to the
administration of the Lease and the Lessor's Estate; (ii) the continuing fees,
expenses and disbursements (including reasonable counsel fees and expenses) of
the Indenture Trustee, with respect to the administration of the Trust Indenture
Estate; (iii) the continuing fees, expenses and disbursements (including
reasonable counsel fees and expenses) of the Pass-Through Trustee and the
Subordination Agent; and (iv) the continuing fees, expenses and disbursements
(including reasonable counsel fees and expenses) of the Liquidity Providers as
expressly provided in each Liquidity Facility.
(c) Amendments and Supplements. Without limitation of the foregoing,
the Lessee agrees to pay, as Supplemental Rent, to the Owner Trustee, the Owner
Participant, the Indenture Trustee, the Subordination Agent, the Liquidity
Providers and the Pass-Through Trustee all costs and expenses (including
reasonable
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legal fees and expenses) incurred by any of them in connection with any
amendment, supplement, waiver or consent (whether or not entered into) under
this Agreement or any other Operative Agreement or document or instrument
delivered pursuant to any of them, which amendment, supplement, waiver or
consent is required by any provision of any Operative Agreement (including any
adjustment pursuant to Section 3(d) of the Lease) or is requested by the Lessee
or necessitated by the action or inaction of the Lessee; provided, however, that
the Lessee shall not be responsible for fees or expenses incurred in connection
with the offer, sale or other transfer (whether pursuant to Section 5.01(c)
hereof or otherwise) by the Owner Participant, the Owner Trustee, the Indemnitee
Trustee, or any Holder of any interest in the Aircraft, the Lessor's Estate, the
Beneficial Interest or the Trust Agreement or any similar interest (and the
offeror, seller, or transferor shall be responsible for all such fees and
expenses), unless such offer, sale or transfer shall occur (A) pursuant to the
exercise of remedies under Section 17 of the Lease, or (B) in connection with
the termination of the Lease or action or direction of the Lessee pursuant to
Section 8, 13 or 14 of the Lease.
ARTICLE 9.
SUCCESSOR OWNER TRUSTEE
Section 9.01. Appointment of Successor Owner Trustee.
(a) Resignation and Removal. The Owner Trustee or any successor
Owner Trustee may resign or may be removed (with the consent of the Lessee) by
the applicable Owner Participant, and a successor Owner Trustee may be appointed
and a Person may become Owner Trustee under the Trust Agreement only in
accordance with the provisions of Section 3.11 of the Trust Agreement and the
provisions of paragraphs (b) and (c) of this Section 9.01.
(b) Conditions to Appointment. The appointment in any manner of a
successor Owner Trustee pursuant to Section 3.11 of the Trust Agreement shall be
subject to the following conditions:
(i) such successor Owner Trustee shall be a Citizen of the United
States;
(ii) such successor Owner Trustee shall be a bank or a trust company
having combined capital, surplus and undivided profits of at least
$100,000,000 or a bank or trust company fully guaranteed by a direct or
indirect parent thereof having a combined capital, surplus and undivided
profits of at least $100,000,000;
(iii) such appointment shall not violate any provisions of the
Transportation Code or any applicable rule or regulation of the applicable
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered or create a relationship which would be in
violation of the
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Transportation Code or any applicable rule or regulation of the applicable
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered;
(iv) such successor Owner Trustee shall enter into an agreement or
agreements, in form and substance reasonably satisfactory to the Lessee,
the Owner Participant, the Pass-Through Trustee and the Indenture Trustee
whereby such successor Owner Trustee confirms that it shall be deemed a
party to this Agreement and each other Operative Agreement to which the
Owner Trustee is a party and agrees to be bound by all the terms of such
documents applicable to the Owner Trustee and makes the representations
and warranties contained in Section 5.04 hereof (except that it may be
duly incorporated, validly existing and in good standing under the laws of
the United States of America or any State thereof); and
(v) all filings of Uniform Commercial Code financing and
continuation statements, filings in accordance with the Transportation
Code and amendments thereto shall be made and all further actions taken in
connection with such appointment as may be necessary in connection with
maintaining the validity, perfection and priority of the Lien of the
Indenture and the valid and continued registration of the Aircraft in
accordance with the Transportation Code.
ARTICLE 10.
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND
HOLDERS
Section 10.01. Liabilities of the Owner Participant. The Owner
Participant shall not have any obligation or duty to the Lessee or to any Holder
with respect to the transactions contemplated by this Agreement, except those
obligations or duties expressly set forth in this Agreement, the Indenture, the
Trust Agreement, the Tax Indemnity Agreement, the Lease or any other Operative
Agreement to which the Owner Participant is a party and the Owner Participant
shall not be liable for the performance by any other party hereto of such other
party's obligations or duties hereunder.
Section 10.02. Interest of Holders of Equipment Notes. Each Holder
of an Equipment Note shall have no further interest in, or other right with
respect to, the Trust Indenture Estate when and if the principal and interest on
all Certificates held by such Holder and all other sums payable to such Holder
under this Agreement, under the Indenture and under such Equipment Notes shall
have been paid in full.
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ARTICLE 11.
OTHER DOCUMENTS
Section 11.01. Consent of Lessee to Other Documents. The Lessee
hereby consents in all respects to the execution and delivery of the Indenture,
the Trust Agreement, the Intercreditor Agreement and the Liquidity Facilities.
Section 11.02. Pass-Through Trustee's and Subordination Agent's
Acknowledgment. The Pass-Through Trustee and the Subordination Agent hereby
acknowledge and agree to be bound by all of the terms and conditions of the
Indenture, including without limitation, Section 8.02 thereof regarding the
rights of the Owner Participant to purchase the Equipment Notes under the
circumstances specified therein.
ARTICLE 12.
NOTICES
Section 12.01. Notices. All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the appropriate
telephonic confirmation received if transmitted on a Business Day and during
normal business hours of the recipient, and otherwise on the next Business Day
following transmission, or (b) if given by certified mail, return receipt
requested, by courier service, or by any other commercially customary means,
when received or personally delivered, addressed:
(a) if to the Lessee, to its office at 300 W. Morgan Street, Suite
1200, Durham, North Carolina, Attention: General Counsel, telephone (919)
956-4810, facsimile (919) 956-7568; or to such other address as the Lessee
shall from time to time designate in writing to the Lessor, the Indenture
Trustee and any Owner Participant;
(b) if to the Lessor or the Owner Trustee, to its office at One
Rodney Square North, 920 King Street, Suite 103, Wilmington, Delaware
19801, Attention: Corporate Trust Administration, telephone (302)
888-7539, facsimile (302) 888-7544; or to such other address as the Lessor
shall from time to time designate in writing to the Lessee and the
Indenture Trustee, with a copy to the Owner Participant;
(c) if to the Owner Participant to its office at ___________________
_________________, Attention: __________________, telephone ______________
facsimile _______________; or to such other address as the Owner
Participant shall from time to time designate in writing to the Lessee,
and the Owner Trustee and the Indenture Trustee;
(d) if to the Indenture Trustee, the Subordination Agent or the
Pass-Through Trustee, to its office at 25 South Charles Street, Mail Code
101-591,
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Baltimore, Maryland 21201 Attention: Corporate Trust Department, telephone
(410) 244-4626 facsimile (410) 244-4236; or to such other address as the
Indenture Trustee or the Pass-Through Trustee, as the case may be, shall
from time to time designate in writing to the Lessor, the Lessee and the
Owner Participant; and
(e) if to the Liquidity Provider, to its office at _______________,
or to such other address as a Liquidity Provider shall from time to time
designate in writing to the Lessor, the Lessee and the Indenture Trustee.
ARTICLE 13.
REFINANCING
Section 13.01. Refinancing
(a) Subject to the terms and conditions of this Section 13.01, the
Lessee may request the Owner Participant to participate in two refinancings in
whole but not in part, of the Equipment Notes prior to the end of the Basic Term
(a "Refinancing"). Such Refinancing may be placed in either the private or
public markets and shall be denominated in United States dollars and shall be on
terms reasonably satisfactory to the Owner Participant. The Owner Participant
will agree to negotiate promptly in good faith to conclude an agreement with the
Lessee as to the terms of any such Refinancing transaction (including the terms
of any debt to be issued in connection with such refinancing and the
documentation to be executed in connection therewith). Without the prior written
consent of the Owner Participant, the prospectus and other offering materials
relating to any Refinancing in the form of a public offering shall not identify
the Owner Participant and shall not include any financial statements of the
Owner Participant or any Affiliate thereof. In connection with any such
Refinancing in the form of a public offering, the Lessee shall indemnify the
Owner Participant in a manner satisfactory to it for any liabilities under
federal, state or foreign securities laws resulting from such offering. The
aggregate principal amount of the new Certificates issued in connection with any
Refinancing shall be the same as the aggregate principal amount outstanding on
the Equipment Notes being refinanced.
(b) Notwithstanding anything herein to the contrary, no Refinancing
will be permitted unless the Owner Participant and the Indenture Trustee shall
have received at least 15 days' prior written notice of the scheduled closing
date of such Refinancing and the Owner Participant shall have been provided such
longer period as it shall have required for a reasonable opportunity to review
the relevant documentation and the Owner Participant shall have determined in
good faith that neither it nor the Owner Trustee shall suffer any loss or
expense or bear any increased risk as a result of such Refinancing (including,
without limitation, any risk with respect to taxes or other adverse consequences
to the Owner Participant including the application of Revenue Procedures 75-21
and 75-28 and Section 467 of the Code) for
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which it has not been or will not have been indemnified by the Lessee in a
manner reasonably satisfactory to the Owner Participant.
Prior to the consummation of any Refinancing pursuant to this
Section 13.01, the Owner Participant and the Lessee shall agree upon a schedule
setting forth each installment of Basic Rent and setting forth Termination
Values payable pursuant to the Lease as a result of the Refinancing in
accordance with Section 3(d) of the Lease, and thereafter the amounts set forth
in such schedule shall become the amounts payable under the Lease. Upon the
consummation of the Refinancing, the evidence of indebtedness issued pursuant to
the Refinancing shall be considered "Equipment Notes" for purposes of this
Agreement and the Lease.
(c) Notwithstanding the foregoing, the Owner Participant shall have
no obligation to proceed with any Refinancing transaction as contemplated by
this Section 13.01 unless the Lessee indemnifies the Owner Trustee and the Owner
Participant by agreement in form and substance reasonably satisfactory to each
of them, for any liability, obligation (other than the obligation to pay
principal and interest in respect of the refinanced indebtedness), cost or
expense (including, without limitation, reasonable attorneys' fees and
Make-Whole Premium or other amounts due under the Indenture), including any
adverse tax consequences or impact, related to or arising out of any such
Refinancing transaction.
(d) Without the prior written consent of the Owner Participant, no
such refinancing shall (1) cause the aggregate principal amount of the
indebtedness to be substituted for the Equipment Notes to exceed the aggregate
principal amount of the then outstanding Equipment Notes, (2) cause the weighted
average life of such indebtedness to be different by more than six months than
the remaining weighted average life of the then outstanding Equipment Notes, or
(3) cause the date of maturity of such indebtedness to be later than the date of
maturity of the Equipment Notes being refinanced.
(e) Each party agrees to take or cause to be taken all requested
action, including, without limitation, the execution and delivery of any
documents and instruments, including, without limitation, amendments or
supplements to the Lease, which may be reasonably necessary or desirable to
effect such Refinancing, including, in the case of the Owner Participant,
direction to the Owner Trustee by the Owner Participant to prepay the Equipment
Notes then outstanding; provided, however, that such Refinancing shall be
subject to the satisfaction of each of the following conditions:
(i) Payment shall have been made with respect to principal, accrued
interest, Make-Whole Premium, if any, and all other sums due and owing on
the Equipment Notes payable under the Indenture;
(ii) Payment in full of all other amounts then due and owing by the
Lessee under this Agreement, the Indenture, the Lease, the Trust
Agreement, and the Equipment Notes then outstanding shall have been made
by the Lessee;
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(iii) Such party shall have received such opinions of counsel
(including, without limitation, an opinion received by the Owner
Participant from independent tax counsel reasonably satisfactory to the
Lessee that such Refinancing shall not result in any adverse tax
consequences to such Owner Participant, unless the Lessee shall have
agreed to provide an indemnity in respect thereof reasonably satisfactory
in form and substance to the Owner Participant), certificates and other
documents as it may reasonably request, each in form and substance
reasonably satisfactory to such party;
(iv) All authorizations, approvals and consents which in the
reasonable judgment of the Owner Participant are necessary for such
Refinancing shall have been obtained;
(v) No Specified Default shall exist or would occur immediately
after giving effect to such Refinancing;
(vi) In the event the Lessee shall not prohibit the purchase of the
Refinancing loan certificates by, or with the assets of, an employee
benefit plan, as defined in Section 3(3) of ERISA, which is subject to
Title I of ERISA or a plan or individual retirement account, which is
subject to Section 4975(c) of the Code, (individually or collectively, an
"ERISA Plan"), the Lessee will permit the placement of the Refinancing
loan certificates with an ERISA Plan only if either (A) if such placement
is in the form of pass-through certificates, the sole underwriter or the
manager or co-manager of the underwriting syndicate or the selling or
placement agent of such pass-through certificates represents to the Lessee
that it has a prohibited transaction exemption from the U.S. Department of
Labor with respect to Pass-Through certificates (such as Prohibited
Transaction Exemption 89-88 or any other comparable exemption) or (B)
purchasers of the Refinancing loan certificates (or if the Refinancing
involves the issuance and sale of pass-through certificates, purchasers of
such pass-through certificates) provide a representation (which may be in
the form of a deemed representation) regarding their source of funds used
in acquiring the Refinancing loan certificates (or such pass-through
certificates, as the case may be) and, if such purchasers represent that
they are using funds of an ERISA Plan in acquiring the Refinancing loan
certificates (or such pass-through certificates, as the case may be), such
purchasers further represent that (1) either they are relying on a
prohibited transaction exemption from the U.S. Department of Labor with
respect to their purchase and holding of the Refinancing loan certificates
(or such pass-through certificates, as the case may be) or (2) their
purchase and holding of the Refinancing loan certificates (or such
pass-through certificates, as the case may be) will not constitute a
non-exempt prohibited transaction under Section 406 of ERISA or Section
4975 of the Code. The reliance on any such exemption will not be
conditional on the Owner Participant's representation concerning its party
in interest or other status with respect to ERISA Plans; and
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(vii) The Lessee shall pay all costs and expenses (including legal
fees) incurred in connection with any proposed or actually consummated
Refinancing.
ARTICLE 14.
[RESERVED]
ARTICLE 15.
MISCELLANEOUS
Section 15.01. Counterparts. This Agreement may be executed by the
parties 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 15.02. No Oral Modifications. Neither this Agreement nor any
of its terms may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification is sought. No such written termination, amendment, supplement,
waiver or modification shall be effective unless a signed copy shall have been
delivered to and executed by the Owner Trustee and the Indenture Trustee. A copy
of each such termination, amendment, supplement, waiver or modification shall
also be delivered to each other party to this Agreement.
The consent of each of the Pass-Through Trustee and the
Subordination Agent, in its capacity as a party to this Agreement and not as a
Holder, shall not be required to modify, amend or supplement this Agreement or
to give any consent, waiver, authorization or approval with respect to this
Agreement under the circumstances in which the consent of the Indenture Trustee
would not be required for such modification, amendment, supplement, consent,
waiver or approval in accordance with Section 6.01(b) of the Indenture, provided
that the Pass-Through Trustee shall be entitled to receive an Opinion of Counsel
(as defined in the Pass-Through Trust Agreement) necessary, in its sole
discretion, to establish that the Indenture Trustee's consent would not be
required under such circumstances.
Section 15.03. Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
Section 15.04. Successors and Assigns. The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the Lessee and its
successors and permitted assigns, the Subordination Agent and its successors and
permitted assigns, including without limitation each Holder of a Certificate,
the Owner Participant and its successors and permitted assigns, the Owner
Trustee and its successors as Owner
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<PAGE>
Trustee (and any additional owner trustee appointed) under the Trust Agreement,
the Indenture Trustee and its successors as Indenture Trustee (and any
additional indenture trustee appointed) under the Indenture and the Pass-Through
Trustee and its successors as Pass-Through Trustee (and any additional
Pass-Through trustee appointed).
Section 15.05. Concerning the Owner Trustee, Indenture Trustee and
the Pass-Through Trustee. Each of Trust Company and FNBM is entering into this
Agreement solely in its capacities (except to the extent otherwise expressly
indicated), in the case of Trust Company, not in its individual capacity but
solely as Owner Trustee under the Trust Agreement, in the case of FNBM, not in
its individual capacity but solely as Indenture Trustee under the Indenture and
as Pass-Through Trustee under the Pass-Through Trust Agreement and as
Subordination Agent under the Subordination Agreement, and except as otherwise
expressly provided in this Agreement or in the Lease, the Indenture, the
Pass-Through Trust Agreement or the Trust Agreement, neither Trust Company nor
FNBM shall be personally liable for or on account of its statements,
representations, warranties, covenants or obligations under this Agreement;
provided, however, that each of Trust Company and FNBM accepts the benefits
running to it under this Agreement, and each agrees that (except as otherwise
expressly provided in this Agreement or any other Operative Agreement to which
it is a party) it shall be liable in its individual capacity for (a) its own
gross negligence or willful misconduct (whether in its capacity as trustee or in
its individual capacity), (b) any breach of representations and warranties or
any breach of covenants made in its individual capacity pursuant to or in
connection with this Agreement or the other Operative Agreements to which it is
a party, (c) any breach, in the case of the Owner Trustee, of its covenants
contained in Sections 3.05 and 3.08 of the Indenture, (d) the failure to use
ordinary care in receiving, handling and disbursing funds, (e) in the case of
the Owner Trustee, Lessor's Liens attributable to it in its individual capacity,
(f) in the case of the Indenture Trustee, Indenture Trustee's Liens, and (g)
taxes, fees or other charges on, or based on, or measured by, any fees,
commissions or compensation received by it in connection with the transactions
contemplated by the Operative Agreements.
Section 15.06. Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 15.07. Certain Limitations on Reorganization. The Indenture
Trustee and the Pass-Through Trustee agree that, if (i) the Owner Trustee
becomes or all or any part of the Lessor's Estate or the trust created by the
Trust Agreement becomes the property of, a debtor subject to the reorganization
provisions of the Bankruptcy Code or any other applicable bankruptcy or
insolvency statutes, (ii) pursuant to any such reorganization provisions, the
Owner Participant is held to have recourse liability to the debtor, the Owner
Trustee or the trustee of the debtor directly
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<PAGE>
or indirectly on account of any amount payable as Make-Whole Premium, principal
or interest on the Equipment Notes, or any other amount payable on any Equipment
Note that is provided in the Operative Agreements to be nonrecourse to the Owner
Participant and (iii) the Indenture Trustee actually receives any Recourse
Amount which reflects any payment by the Owner Participant on account of (ii)
above, then the Indenture Trustee shall promptly refund to the Owner Participant
such Recourse Amount. For purposes of this Section 15.07, "Recourse Amount"
means the amount by which the portion of such payment by the Owner Participant
on account of clause (ii) above received by the Indenture Trustee exceeds the
amount which would have been received by the Indenture Trustee if the Owner
Participant had not become subject to the recourse liability referred to in (ii)
above. Nothing contained in this Section shall prevent the Indenture Trustee
from enforcing any individual obligation (and retaining the proceeds thereof) of
the Owner Participant under this Agreement or, any other Operative Agreement to
the extent herein or therein provided, for which the Owner Participant has
expressly agreed by the terms of this Agreement to accept individual
responsibility.
Section 15.08. GOVERNING LAW. THIS AGREEMENT IS BEING DELIVERED IN
THE SATE OF NEW YORK, AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAWS.
Section 15.09. Section 1110 Compliance. The parties hereto agree
that the transactions contemplated by the Operative Agreements are expressly
intended to be, shall be, and should be construed so as to be entitled to the
benefits and protection of Section 1110 of the Bankruptcy Code.
Section 15.10. Reliance of Liquidity Providers. Each of the parties
hereto agrees and acknowledges that each Liquidity Provider shall be a third
party beneficiary of each of the representations and warranties made herein by
such party (and of each covenant herein made by such party to each Liquidity
Provider), and that each Liquidity Provider may rely on such representations,
warranties and covenants to the same extent as if such representations,
warranties and covenants were made to such Liquidity Provider directly. The
terms of this Agreement shall inure to the benefit of each Liquidity Provider,
their respective successors and permitted assigns.
* * *
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<PAGE>
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers as of the
day and year first written above.
MIDWAY AIRLINES CORPORATION
By: _______________________
Name:
Title:
[OWNER PARTICIPANT]
By: _______________________
Name:
Title:
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in its
individual capacity, except as
otherwise expressly provided herein
but solely as Owner Trustee
By: _______________________
Name:
Title:
THE FIRST NATIONAL BANK OF
MARYLAND, as Indenture Trustee,
Pass-Through Trustee and
Subordination Agent
By: _______________________
Name:
Title:
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Schedule I
Commitments
Participants Amount of Commitment
- - ------------ --------------------
[Owner Participant] ____% of Lessor's Cost
1998-A1 Pass-Through Trust ____% of Lessor's Cost
1998-B1 Pass-Through Trust ____% of Lessor's Cost
1998-C1 Pass-Through Trust ____% of Lessor's Cost
1998-D1 Pass-Through Trust ____% of Lessor's Cost
<PAGE>
[Leased Aircraft
Definitions]
APPENDIX A
DEFINITIONS [N______]
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (as defined below), unless otherwise
defined in an Operative Agreement or the context thereof shall otherwise
require. In the case of any conflict between the provisions of this Appendix and
the provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean such agreements as amended and supplemented from time to
time, and (ii) references to parties to agreements shall be deemed to include
the successors and permitted assigns of such parties.
"Additional Insureds" means the Owner Trustee (in its individual and trust
capacities), the Owner Participant, the Indenture Trustee (in its individual and
trust capacities) and each Liquidity Provider.
"Aeronautics Authority" means as of any time of determination, the FAA or
other governmental airworthiness authority having jurisdiction over the Aircraft
or the Airframe and Engines or engines attached thereto under the laws of the
country in which the Airframe is then registered.
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling 50% or more of any class of voting securities of such
Person or otherwise controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract or
otherwise.
"After Tax Basis" means a basis such that any payment to be received by a
Person shall be supplemented by a further payment to such Person so that the sum
of the two payments, after deduction of all Taxes (taking into account any
related credits or deductions) resulting from the receipt or accrual of such
payments, shall be equal to the payment to be received.
<PAGE>
"Aircraft" means the Airframe together with the Engines, whether or not
any of the Engines may at the time of determination be installed on the Airframe
or installed on any other airframe or on any other aircraft.
"Airframe" means (i) the Canadair Regional Jet Series 200ER aircraft
(excluding the Engines and any other engines which may from time to time be
installed thereon, but including any and all Parts which may from time to time
be incorporated in, installed on or attached to such aircraft, and including any
and all such Parts removed therefrom so long as title to such removed Parts
remains vested in the Lessor under the terms of Section 7 of the Lease)
originally delivered and leased under the Lease, identified by national
registration number and manufacturer's serial number in the Lease Supplement
executed and delivered on the Delivery Date, so long as a Replacement Airframe
shall not have been substituted therefor pursuant to Section 8 of the Lease, and
(ii) a Replacement Airframe, so long as another Replacement Airframe shall not
have been substituted therefor pursuant to Section 8 of the Lease.
"Applicable Law" means all applicable laws, treaties, judgments, decrees,
injunctions, writs and orders of any court, governmental agency or authority and
rules, regulations, orders, directives, licenses and permits of any governmental
body, instrumentality, agency or authority.
"Average Life Date" means, for any Equipment Note, the date which follows
the prepayment date by a period equal to the Remaining Weighted Average Life of
such Equipment Note.
"Bankruptcy Code" means Title 11 of the United States Code, as amended,
and any successor thereto.
"Basic Rent" means the rent payable on Basic Rent Payment Dates throughout
the Basic Term for the Aircraft pursuant to Section 3(b) of the Lease and rent
payable during any Renewal Term pursuant to Section 13(a) of the Lease.
"Basic Rent Payment Date" means each date listed under the heading "Basic
Rent Payment Date" in Exhibit C to the Lease.
"Basic Term" means the period commencing at the beginning of the day on
the Delivery Date and ending at end of the day on the Expiration Date, or such
earlier date on which the Lease shall be terminated as provided therein.
"Beneficial Interest" means the interest of the Owner Participant under
the Trust Agreement.
"Business Day" means any day other than a Saturday or Sunday on which
commercial banks are not authorized or required to close in New York City,
Charlotte, North Carolina and the city in the United States in which the office
or agency is
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maintained by the Pass-Through Trustee for the payment of the Pass-Through
Certificates, and after the Lien of the Indenture is discharged, Wilmington,
Delaware.
"Change in Tax Law" means any change or proposed change in the Code or the
Regulations or any change in the interpretation of the Code or Regulations or
any change in the interpretation of the Code or Regulations in a decision by the
United States Supreme Court, the United States Tax Court, the United States
Court of Claims or any one of the United States Courts of Appeals, or any
issuance of a revenue ruling, revenue procedure or any pronouncement by the
Internal Revenue Service or the Department of the Treasury.
"Citizen of the United States" means a citizen of the United States as
defined in ss. 40102(a)(15) of the Transportation Code, or any analogous part of
any successor or substituted legislation or regulation at the time in effect.
"Class A Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Class B Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Class C Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any similar legislation of the United States enacted to supersede,
amend, or supplement such Code (and any reference to a provision of the Code
shall refer to any successor provision(s), however designated).
"Commitment" of a Loan Participant shall have the meaning given such term
in Section 2(d) of the Participation Agreement; "Commitment" of the Owner
Participant shall have the meaning given such term in Section 2(c) of the
Participation Agreement.
"CRAF Program" has the meaning specified in Section 5(b)(vii) of the
Lease.
"DOT" means the U.S. Department of Transportation or any successor
thereto.
"Debt Rate" means the weighted average (based on Outstanding principal
amount) rate of interest on the Equipment Notes.
"Default" means any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
"Delivery Date" means the date on which the Aircraft is delivered and sold
to the Lessor and leased by the Lessor to the Lessee under the Lease, which date
shall be the date of the initial Lease Supplement.
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"Deposit Agreement" means each of the four Deposit Agreements between the
Depositary and the Escrow Agent, dated as of the Issuance Date, each of which
relates to one of the Pass-Through Trusts.
"Depositary" means First Union National Bank, as Depositary under each
Deposit Agreement.
"Dollars" means dollars in lawful currency of the United States.
"Downgrade Drawing" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"EBO Date" has the meaning given to such term in Exhibit B to the Lease.
"EBO Price" has the meaning given to such term in Exhibit B to the Lease.
"Engine" means (A) one of the two CF34-3B1 Series 200 engines originally
delivered and leased under the Lease, identified by manufacturer's serial number
in the Lease Supplement executed and delivered on the Delivery Date, so long as
a Replacement Engine shall not have been substituted therefor pursuant to
Section 7(e) of the Lease, and (B) a Replacement Engine, so long as another
Replacement Engine shall not have been substituted therefor pursuant to Section
7(e) of the Lease, whether or not such engine or Replacement Engine, as the case
may be, is from time to time installed on the Airframe or installed on any other
aircraft, and including in each case all Parts incorporated or installed in or
attached thereto and any and all Parts removed therefrom so long as title to
such Parts remains vested in the Lessor under the terms of Section 7 of the
Lease. The term "Engines" means, as of any date of determination, the two
engines each of which is an Engine on that date.
"Engine Manufacturer's Consent" means any consent to the Engine Warranty
Assignment delivered by the manufacturer of the Engines on the Delivery Date and
pertaining to the Aircraft.
"Engine Warranty Assignment" means any engine warranty assignment
agreement, in form and substance reasonably acceptable to the Owner Participant
entered into by the Lessor and the Lessee on the Delivery Date.
"Equipment Notes" means the Equipment Notes issued by the Owner Trustee
pursuant to the Indenture and any equipment note issued in exchange therefor or
replacement thereof pursuant to the Indenture.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means First Union Trust Company, National Association, as
Escrow Agent under each of the Escrow Agreements.
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<PAGE>
"Escrow Agreement" means each of the four Escrow and Paying Agent
Agreements, among the Escrow Agent, the Paying Agent, certain initial purchasers
of the Pass-Through Certificates named therein and one of the Pass-Through
Trustees, dated as of the Issuance Date, each of which relates to one of the
Pass Through Trusts.
"Event of Default" has the meaning given to such term in Section 17 of the
Lease.
"Event of Loss" means any of the following events with respect to the
Aircraft, the Airframe or any Engine:
(i) theft or disappearance for a period in excess of 90 consecutive
days;
(ii) destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use for any reason whatsoever;
(iii) any event which results in an insurance settlement with
respect to such property on the basis of an actual, constructive or
compromised total loss;
(iv) condemnation, confiscation or seizure of, or requisition of
title to or use of such property by any foreign government (or in the case
of any such requisition of title, by the Government) or any agency or
instrumentality thereof, for a period in excess of 180 consecutive days
(or 30 consecutive days for the appropriation of title), or, in any of the
cases in this clause (iv), such shorter period ending on the expiration of
the Term;
(v) condemnation, confiscation or seizure of, or requisition of use
of such property by the Government for a period extending beyond the Term,
provided that no Event of Loss shall be deemed to have occurred, and the
term of the Lease shall be extended automatically for a period of six
months in the event that the Aircraft is requisitioned by the Government
pursuant to an activation under the CRAF Program; and
(vi) as a result of any law, rule, regulation, order or other action
by the Aeronautics Authority, the use of the Aircraft or Airframe in the
normal course of air transportation shall have been prohibited by virtue
of a condition affecting all Canadair Regional Jet Series 200ER aircraft
equipped with engines of the same make and model as the Engines for a
period of 180 consecutive days (or beyond the end of the Term), unless the
Lessee, prior to the expiration of such 180-day period, shall be
diligently carrying forward all necessary and desirable steps to permit
normal use of the Aircraft and shall within 12 months have conformed at
least one Canadair Regional Jet Series 200ER aircraft (but not necessarily
the Aircraft) to the requirements of any such law, rule, regulation, order
or action, and shall be diligently pursuing conformance of the Aircraft in
a non-discriminatory manner.
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<PAGE>
The date of such Event of Loss shall be (aa) the 91st day following loss of such
property or its use due to theft or disappearance (or the end of the Term if
earlier); (bb) the date of any destruction, damage beyond economic repair or
rendition of such property permanently unfit for normal use; (cc) the date of
any insurance settlement on the basis of an actual, constructive or compromised
total loss; (dd) the 181st day following condemnation, confiscation, seizure or
requisition of title to or use of such property by a foreign government referred
to in clause (iv) above (or the 31st day in the case of appropriation of title,
or the end of the Term if earlier than such 181st or 31st day); (ee) the last
day of the Term (as automatically extended by six months in the case of an
activation under the CRAF Program) in the case of requisition of title to or use
of such property by the Government; and (if) the last day of the applicable
period referred to in clause (vi) above (or if earlier, the end of the Term
without the Lessee's having conformed at least one Canadair Regional Jet Series
200ER aircraft to the applicable requirements). An Event of Loss with respect to
the Aircraft shall be deemed to have occurred if any Event of Loss occurs with
respect to the Airframe.
"Excepted Payments" means collectively, (i) indemnity, expense,
reimbursement or other payments paid or payable by the Lessee in respect of the
Owner Participant, the Owner Trustee in its individual capacity or any of their
respective successors, permitted assigns, directors, officers, employees,
servants and agents or Affiliates, pursuant to the Participation Agreement or
any other Operative Agreement or any indemnity hereafter granted to the Owner
Participant or the Owner Trustee in its individual capacity pursuant to the
Lease or the Participation Agreement, (ii) proceeds of public liability
insurance (or government indemnities in lieu thereof) in respect of the Aircraft
payable as a result of insurance claims paid for the benefit of, or losses
suffered by, the Owner Trustee or the Indenture Trustee in their respective
individual capacities or by the Owner Participant, or their respective
successors, permitted assigns or Affiliates, (iii) proceeds of insurance
maintained with respect to the Aircraft by the Owner Participant or any
Affiliate thereof (whether directly or through the Owner Trustee) in accordance
with Section 9(f) of the Lease, (iv) payments by the Lessee in respect of any
amounts payable under the Tax Indemnity Agreement, (v) any purchase price paid
to the Owner Participant for its interest in the Trust Estate, (vi) subject to
Section 3(f) of the Lease, payments constituting increases in Basic Rent
attributable to payments arising pursuant to the Tax Indemnity Agreement, (vii)
any payments in respect of interest to the extent attributable to payments
referred to in clauses (i) through (vi) above, (viii) any right to demand,
collect or otherwise receive and enforce the payment of any amount described in
clauses (i) through (v) and (vii) above (except with respect to interest
attributable to payments referred to in clause (vi) above).
"Expenses" has the meaning given to such term in Section 7.01(a) of the
Participation Agreement.
"Expiration Date" means the date specified as such in the Lease Supplement
executed and delivered on the Delivery Date.
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<PAGE>
"FAA Bill of Sale" means the bill of sale for the Airframe on AC Form
8050-2, or such other form as may be approved by the Aeronautics Authority,
executed in favor of the Owner Trustee and to be dated the Delivery Date.
"Fair Market Rental Value" or "Fair Market Sales Value" of the Airframe or
any Engine shall mean the value that would be obtained in an arms'-length
transaction between an informed and willing lessee-user or buyer-user (other
than a lessee currently in possession or a used equipment dealer) under no
compulsion to lease or buy, as the case may be, and an informed and willing
lessor or seller, as the case may be, under no compulsion to lease or sell, as
the same shall be specified by agreement between the Lessor and the Lessee or,
if not agreed to by the Lessor and the Lessee within a period of 15 days after
either party requests a determination, then as specified in an appraisal
prepared and delivered in New York City mutually agreed to by two recognized
independent aircraft appraisers, one of which shall be appointed by the Lessor
and the other of which shall be appointed by the Lessee, or, if such appraisers
cannot agree on such appraisal, an appraisal arrived at by a third independent
recognized appraiser chosen by the mutual consent of the two aircraft
appraisers. If either party should fail to appoint an appraiser within 15 days
of receiving notice of the appointment of an appraiser by the other party, then
such appraisal shall be made by the appraiser appointed by the first party. If
the two appraisers cannot agree on such appraisal and fail to appoint a third
independent recognized aircraft appraiser within 15 days after the appointment
of the second appraiser, then either party may apply to the American Arbitration
Association to make such appointment. The appraisal shall be completed within 30
days of the appointment of the last appraiser appointed. In determining Fair
Market Rental Value or Fair Market Sales Value by appraisal or otherwise, it
will be assumed that the Aircraft, Airframe or Engine is in the condition,
location and overhaul status in which it is required to be returned to the
Lessor pursuant to Section 12 of the Lease (except that a determination of Fair
Market Sales Value pursuant to Section 17 of the Lease shall be based on "as is,
where is" condition), that the Lessee has removed all Parts which it is entitled
to remove pursuant to Section 7 of the Lease and that the Aircraft is encumbered
by the Lease. For purposes of the preceding sentence and with respect to a
purchase of the Aircraft pursuant to Section 13(b) of the Lease, "encumbered by
the Lease" shall mean, with respect to Fair Market Sales Value, the Fair Market
Sales Value increased or decreased to reflect the benefits and burdens of the
Lease and other Operative Documents. Except as otherwise expressly provided in
the Lease, all appraisal costs will be shared equally by the Lessor and the
Lessee.
"Federal Aviation Administration" or "FAA" means the United States Federal
Aviation Administration and any successor agency or agencies thereto.
"Final Drawing" has the meaning given to such term in Section 1.01 of the
Intercreditor Agreement.
"Fixed Renewal Term" has the meaning given to such term in Section 13(a)
of the Lease.
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<PAGE>
"FNBM" means The First National Bank of Maryland, a national banking
association.
"Government means the United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and credit
of the United States of America.
"Holder" means, as of any particular time, the Person in whose name a
Equipment Note shall be registered.
"Indemnitee" means each of Trust Company, in its individual capacity and
as Owner Trustee, the Subordination Agent, in its individual capacity and in its
capacity as Subordination Agent, each Liquidity Provider, the Owner Participant,
the Indenture Trustee, in its individual capacity and as trustee, the Escrow
Agent, the Paying Agent, the Pass Through Trustees and each Affiliate, officer,
director, employee, agent and servant of any of the foregoing Persons. No holder
of a Pass-Through Certificate shall be deemed to be an Indemnitee.
"Indenture" means the Trust Indenture and Security Agreement [N_______],
dated as of ______________ __, 199_, between the Owner Trustee and the Indenture
Trustee.
"Indenture Default" means any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
"Indenture Documents" has the meaning specified in the Granting Clause of
the Indenture.
"Indenture Event of Default" means each of the events specified in Section
7.01 of the Indenture.
"Indenture Indemnitee" means (i) the Indenture Trustee and each separate
or additional trustee appointed pursuant to the Indenture, (ii) the Escrow
Agent, (iii) the Subordination Agent, (iv) each Liquidity Provider, (v) the
Paying Agent, (vi) each Pass-Through Trustee and (vii) each of the respective
directors, officers, employees, agents and servants of each of the persons
described in clauses (i) through (vi).
"Indenture Supplement" means (a) the Trust Indenture and Security
Agreement Supplement No. 1, substantially in the form of Exhibit A to the
Indenture, which shall describe with particularity the Aircraft included in the
property of the Owner Trustee covered by the Indenture by reference to the Lease
Supplement, and which creates a first priority security interest in the Aircraft
and (b) any other supplement to the Indenture from time to time executed and
delivered.
"Indenture Trustee" means The First National Bank of Maryland, a national
banking association, as indenture trustee under the Operative Documents.
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"Indenture Trustee's Liens" means any Lien against, on or with respect to
the Aircraft, any Engine, the Lessor's Estate or the Trust Indenture Estate or
any part thereof resulting from (i) claims against the Indenture Trustee not
related to the administration of the Trust Indenture Estate or any transactions
pursuant to the Indenture or any document included in the Trust Indenture
Estate, (ii) any act or omission of the Indenture Trustee which is not related
to the transactions contemplated by the Operative Agreements or is in violation
of any of the terms of the Operative Agreements, or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity in respect of which the Lessee
has not indemnified (and is not obligated to indemnify) the Indenture Trustee in
such capacity.
"Independent Investment Banker" means an independent investment banking
institution of national standing appointed by the Lessee that is independent in
fact, does not have any direct financial interests, or any material indirect
financial interest, in the Lessee or any Affiliate of the Lessee, and is not
connected with the Lessee or any Affiliate of the Lessee, as an officer,
employee, promoter, underwriter, trustee, partner, director or Person performing
similar functions; provided, that if the Indenture Trustee shall not have
received written notice of such an appointment at least 10 days prior to the
Prepayment Date, "Independent Investment Banker" shall mean such an institution
appointed by the Indenture Trustee.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of
August 13, 1998, among the Pass Through Trustees, the Class A Liquidity
Provider, the Class B Liquidity Provider, the Class C Liquidity Provider and the
Subordination Agent.
"Interest Drawing" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Issuance Date" means August 13, 1998.
"Lease" means the Lease Agreement [N______], dated as of ______ _____,
199_ between the Owner Trustee and the Lessee.
"Lease Supplement" means any Lease Supplement, substantially in the form
of Exhibit A to the Lease, entered into between the Lessor and the Lessee for
the purpose of leasing the Aircraft under and pursuant to the terms of the
Lease, including any amendment thereto entered into subsequent to the Delivery
Date.
"Lessee" means Midway Airlines Corporation, a Delaware corporation.
"Lessee Documents" means (x) the Operative Agreements to which the Lessee
is a party and (y) the Pass-Through Trust Agreements.
"Lessor" means First Union Trust Company, National Association, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement.
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"Lessor's Cost" has the meaning given to such term in Exhibit B of the
Lease.
"Lessor's Estate" means all estate, right, title and interest of the Owner
Trustee in and to the Aircraft, and Engines and the Operative Agreements (other
than the Tax Indemnity Agreement) including, without limitation, all amounts of
Rent, insurance proceeds and requisition, indemnity or other payments of any
kind, but specifically excluding any Excepted Payments.
"Lessor's Liens" means Liens against, on or with respect to the Aircraft,
any Engine, the Lessor's Estate or the Trust Indenture Estate or any part
thereof, title thereto or any interest therein arising as a result of (i) claims
against or affecting the Lessor, in its individual capacity or as Owner Trustee,
or the Owner Participant, in each case not related to the Operative Agreements
or the transactions contemplated thereby, (ii) acts or omissions of the Lessor
in its individual capacity or as Owner Trustee, or of the Owner Participant not
contemplated or permitted under the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to Articles 6 or 7 of the Participation Agreement and which are not
required to be indemnified against by the Lessee pursuant to the Tax Indemnity
Agreement, or (iv) claims against the Lessor, in its individual capacity or as
Owner Trustee, or the Owner Participant arising from the transfer by the Lessor
or the Owner Participant of its interests in the Aircraft or any Engine other
than a transfer of the Aircraft pursuant to Section 5(b), 7(e), 13(b), 14(a) or
17 of the Lease and other than a transfer pursuant to the exercise of the
remedies set forth in Section 17 of the Lease.
"Lien" means any mortgage, pledge, lien, charge, encumbrance, lease,
security interest, claim, or other similar interest of any nature whatsoever.
"Liquidity Facility" means each of the three Irrevocable Revolving Credit
Agreements (consisting of a separate Revolving Credit Agreement with the
Liquidity Provider with respect to each Pass-Through Trust) between the
Subordination Agent, as borrower, and the Liquidity Provider, each dated as of
the Issuance Date.
"Liquidity Provider" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Loan Participant" means and includes each registered holder from time to
time of an Equipment Note issued under the Indenture including, so long as it
holds any Equipment Notes issued under the Indenture, the Pass-Through Trustee
under each Pass-Through Trust Agreement.
"Majority in Interest of Holders" means, as of a particular date of
determination, the Holders of more than 50% of the aggregate unpaid principal
amount of all Equipment Notes Outstanding as of such date.
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"Make-Whole Premium" means with respect to any Equipment Note, an amount
determined as of the day before the applicable Prepayment Date (or date of
purchase, as the case may be) which an Independent Investment Banker determines
to be equal to the excess, if any, of (i) the present value of the remaining
scheduled payments of such principal amount or portion thereof and interest
thereon to the maturity date of such Equipment Note assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield (in the case of the Series A Equipment Notes and Series B Equipment Notes)
and the Treasury Yield plus .50% (in the case of the Series C Equipment Notes
and the Series D Equipment Notes) over (ii) the outstanding principal amount of
such Equipment Note plus accrued interest (other than any overdue portion
thereof).
"Manufacturer" means Bombardier, Inc., a Canadian corporation.
"Minimum Liability Amount" has the meaning given to such term in Exhibit B
to the Lease.
"Moody's" means Moody's Investors Service, Inc.
"Non-U.S. Person" means any Person other than a U.S. Person.
"Note Purchase Agreement" means the Note Purchase Agreement, dated as of
the Issuance Date, among the Lessee, the Subordination Agent, the Escrow Agent,
the Paying Agent and the Pass-Through Trustee under each Pass-Through Trust
Agreement providing for, among other things, the issuance and sale of certain
equipment notes.
"Offering Memo" means the Lessee's August 6, 1998 Offering Memorandum
concerning the Pass-Through Certificates.
"Officer's Certificate" means, when delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner Trustee,
as the case may be, and delivered to the Indenture Trustee. Each such
certificate shall include the statements provided for in Section 15.07 of the
Indenture.
"Operative Agreements" means the Participation Agreement, the Trust
Agreement, the FAA Bill of Sale, the Warranty Bill of Sale, the Purchase
Agreement, the Purchase Agreement Assignment, the Engine Warranty Assignment,
the PAA Consent, the Lease, each Lease Supplement, any Owner Participant
Guaranty, the Equipment Notes outstanding at the time of reference, the
Indenture, each Indenture Supplement and the Tax Indemnity Agreement.
"Opinion of Counsel" means when delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the Lessee
may be (i) an attorney employed by the Lessee who is generally empowered to
deliver such written opinions, (ii) Fulbright & Jaworski L.L.P., or (iii) other
counsel designated by the
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Lessee and reasonably satisfactory to the Indenture Trustee, and (b) for the
Owner Trustee or the Indenture Trustee, an attorney selected by such Person and
reasonably satisfactory to the Lessee and, in the case of the Owner Trustee,
reasonably satisfactory to the Indenture Trustee.
"Outstanding" means, when used with respect to Equipment Notes, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Equipment Notes theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Equipment Notes theretofore canceled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Equipment Notes for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture Trustee in
trust for the Holders of such Equipment Notes pursuant to Section
14.01 of the Indenture; provided that if such Equipment Notes are to
be prepaid, notice of such prepayment has been duly given pursuant
to the Indenture or provision therefor satisfactory to the Indenture
Trustee has been made; and
(iii) Equipment Notes in exchange for or in lieu of which other
Equipment Notes have been executed and delivered pursuant to Article
II of the Indenture.
"Owner Participant" means _________________, a _________________.
"Owner Participant Guarantor" means the provider of an Owner Participant
Guaranty.
"Owner Participant Guaranty" means any guaranty delivered to support the
obligations of the Owner Participation under the Operative Agreements in
connection with the transfer by the Owner Participant of the Beneficial
Interest.
"Owner Trustee" means Trust Company, not in its individual capacity except
as otherwise expressly stated, but solely as trustee under the Trust Agreement.
"PAA Consent" means any consent to the Purchase Agreement Assignment
delivered by the Manufacturer on the Delivery Date and pertaining to the
Aircraft.
"Participants" means, collectively, the Owner Participant and the
Pass-Through Trustee with respect to each of the Pass-Through Trust Agreements;
"Participant" means, individually, one of the Participants.
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"Participation Agreement" the Participation Agreement [N________], dated
as of __________ __, 199_, among the Lessee, the Owner Trustee not in its
individual capacity except as otherwise expressly provided therein, but solely
as owner trustee, the Owner Participant, the Indenture Trustee, the Pass-Through
Trustees and the Subordination Agent.
"Parts" means any and all appliances, parts, instruments, appurtenances,
accessories, furnishings, seats, and other equipment of whatever nature (other
than Engines or engines and temporary replacement parts as provided in Section 8
of the Lease and cargo containers) which may from time to time be incorporated
or installed in or attached to any Airframe or any Engine, exclusive of any
items leased by the Lessee from third parties and not required in the navigation
of the Aircraft.
"Pass-Through Certificates" means any of the Pass-Through Certificates,
1998-1A, the Pass-Through Certificates, 1998-1B, the Pass-Through Certificates,
1998-1C or the Pass Through Certificates, 1998-1D, in each case as issued by the
related Pass-Through Trust; and "Pass-Through Certificates" means all of such
Pass-Through Certificates.
"Pass-Through Documents" means the Pass-Through Trust Agreements, the
Escrow Agreements, the Intercreditor Agreement, the Note Purchase Agreement and
the Liquidity Facilities.
"Pass-Through Trust" means the Midway Airlines 1998-1 Pass-Through Trust
Class A, Midway Airlines 1998-1 Pass-Through Trust Class B, Midway Airlines
1998-1 Pass-Through Trust Class C and Midway Airlines 1998-1 Pass-Through
Trust-Class D, in each case formed pursuant to the related Series Supplement in
accordance with the Pass-Through Trust Agreement; and "Pass-Through Trusts"
means all of such Pass-Through Trusts.
"Pass-Through Trust Agreement" means each of the four Pass-Through Trust
Agreements dated as of August 13, 1998 among the Lessee and the Pass-Through
Trustee (which shall include each Successor Pass-Through Trust Agreement entered
into pursuant to Section 11.01 of each thereof).
"Pass-Through Trustee" The First National Bank of Maryland, a national
banking association, in its capacity as Pass-Through Trustee under each
Pass-Through Trust Agreement.
"Past Due Rate" means in respect of any principal of or interest on or any
other amounts payable in respect of any Equipment Note that is not paid when due
to any Holder, a rate per annum during the period from and including the due
date to but excluding the date on which such amount is paid in full equal to 1%
plus the interest rate applicable to such Equipment Note.
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"Payment Date" means each January 2 and July 2, commencing on _________ 2,
199_.
"Permitted Air Carrier" means (a) any Section 1110 Person and (b) any
foreign air carrier that is principally based in any foreign country listed on
Exhibit E to the Lease, except those that do not maintain normal diplomatic
relations with the United States.
"Permitted Investments" means (a) direct obligations of the United States
of America or any agency or instrumentality thereof, (b) obligations fully
guaranteed by the United States of America or any agency or instrumentality
thereof, (c) any mutual fund the portfolio of which is limited to obligations of
the type described in clauses (a) and (b), including any proprietary mutual fund
of The First National Bank of Maryland for which such bank or an affiliate is
investment advisor or to which such bank provides other services and receives
reasonable compensation for such services, (d) certificates of deposit issued
by, or bankers' acceptances of, or time deposits or a deposit account with, any
bank, trust company, or national banking association incorporated or doing
business under the laws of the United States of America or one of the states
thereof, having a combined capital and surplus of at least $100,000,000 and
having a rating of "A" or better from the Keefe Bank Watch Service, (e)
commercial paper issued by companies in the United States which directly issue
their own commercial paper and which are doing business under the laws of the
United States of America or one of the states thereof and in each case having a
rating assigned to such commercial paper by a nationally recognized rating
organization in the United States of America equal to the highest rating
assigned by such organization, or (f) obligations of the type described in
clauses (a), (b), (d), or (e) above, purchased from any bank, trust company, or
banking association referred to in clause (d) above pursuant to repurchase
agreements obligating such bank, trust company, or banking association to
repurchase any such obligation not later than 30 days after the purchase of any
such obligation. Unless otherwise specified in writing by the Owner Trustee, all
such Permitted Investments shall mature not later than 30 days from the date of
purchase.
"Permitted Lien" has the meaning given to such term in Section 10 of the
Lease.
"Permitted Sublessee" means (a) any Permitted Air Carrier or (b) any
airframe or engine manufacturer, or Affiliate of such a manufacturer, who is
domiciled in the United States of America or a country listed on Exhibit E to
the Lease.
"Person" means any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
"Placement Agents" means Morgan Stanley & Co. Incorporated and Credit
Suisse First Boston.
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"Placement Agreement" means the Purchase Agreement dated August 6, 1998
among the Lessee and the Placement Agents.
"Prepayment Date" has the meaning given to such term in Section 6.02(b) of
the Indenture.
"Prepayment Price" has the meaning given to such term in Section 6.02(b)
of the Indenture.
"Purchase Agreement" means Bombardier Regional Aircraft Division Purchase
Agreement No. PA-0393 dated September 17, 1997, as amended, between the Company
and the Manufacturer (including all exhibits thereto, together with all letter
agreements entered into that by their terms constitute part of any such Purchase
Agreement).
"Purchase Agreement Assignment" means the Purchase Agreement and Engine
Warranties Assignment [N ____], dated as of even date with the Participation
Agreement, between Lessee and Owner Trustee.
"Purchase Price" means an amount equal to Lessor's Cost.
"Rating Agency" means Moody's or S&P, as the context requires.
"Record Date" means, with respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 15 for January 2
Payment Dates and June 15 for July 2 Payment Dates, whether or not such date is
a Business Day.
"Recourse Amount" has the meaning given to such term in Section 15.07 of
the Participation Agreement.
"Refinancing" means a non-recourse loan to the Lessor arranged pursuant to
Section 13.01 of the Participation Agreement.
"Register" has the meaning given to such term in Section 3.02 of the
Indenture.
"Registrar" has the meaning given to such term in Section 3.02 of the
Indenture.
"Registration Rights Agreement" means the Exchange and Registration Rights
Agreement, dated as of August 13, 1998, among the Placement Agents, FNBM, as
Pass-Through Trustee, and the Lessee.
"Registration Rights Event" has the meaning given to such term in the
Registration Rights Agreement.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and supplemented
and in effect from time to time.
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"Remaining Weighted Average Life" means on a given date with respect to
any Equipment Note the number of days equal to the quotient obtained by dividing
(i) the sum of each of the products obtained by multiplying (a) the amount of
each then remaining scheduled payment of principal of such Equipment Note by (b)
the number of days from and including such prepayment date to but excluding the
dates on which each such payment of principal is scheduled to be made; by (ii)
the then outstanding principal amount of such Equipment Note.
"Renewal Term" has the meaning given to such term in Section 13(a) of the
Lease.
"Rent" means Basic Rent and Supplemental Rent, collectively.
"Rent Payment Date" means each Payment Date during the Term.
"Replacement Aircraft" means any Aircraft of which a Replacement Airframe
is part.
"Replacement Airframe" means a Canadair Regional Jet Series 200ER series
aircraft or a comparable or improved model of such aircraft of the Manufacturer
(except Engines or engines from time to time installed thereon) which shall have
become subject to the Lease pursuant to Section 8 thereof.
"Replacement Closing Date" has the meaning given such term in Section 8(d)
of the Lease.
"Replacement Engine" means a CF34-3B1 Series 200 engine (or engine of the
same or another manufacturer of a comparable or an improved model and suitable
for installation and use on the Airframe), and which shall have become subject
to the Lease pursuant to Section 7(e) thereof.
"Responsible Officer" means, with respect to the Owner Trustee or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate officer
of a party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant, agreement
or obligation of such party pursuant to any Operative Agreement, would have
responsibility for and knowledge of such matter and the requirements of any
Operative Agreement with respect thereto.
"S&P" means Standard & Poor's Ratings Group.
"SEC" means the Securities and Exchange Commission of the United States
and any successor agencies or authorities.
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"Section 1110 Person" means a Citizen of the United States who is an
air carrier holding a valid air carrier operating certificate issued pursuant
to 49 U.S.C. ch. 447 for aircraft capable of carrying 10 or more individuals.
"Secured Obligations" has the meaning specified in the Granting Clause of
the Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Series "A" or "Series A Equipment Notes" means the Equipment Notes issued
and designated as "Series A" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series A".
"Series "B" or "Series B Equipment Notes" means the Equipment Notes issued
and designated as "Series B" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series B".
"Series "C" or "Series C Equipment Notes" means the Equipment Notes issued
and designated as "Series C" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series C".
"Series "D" or "Series D Equipment Notes" means the Equipment Notes issued
and designated as "Series D" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series D".
"Specified Default" means (a) an event or condition described in Section
16(a), (f), (g) or (h) of the Lease that, after the giving of notice or lapse of
time, or both, would mature into an Event of Default, or (b) any Event of
Default.
"Specified Investments" means (a) direct obligations of the United States
of America or obligations fully guaranteed by the United States of America; (b)
any mutual fund the portfolio of which is limited to obligations of the type
described in clause (a), including any proprietary mutual fund of The First
National Bank of Maryland for which such bank or an affiliate is investment
advisor or to which such bank provides other services and receives reasonable
compensation for such services; (c) commercial paper rated A-1/P-1 by S&P and
Moody's, respectively or, if such ratings are unavailable, rated by any
nationally recognized rating organization in the United States equal to the
highest rating assigned by such rating organization; (d) 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
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Bankwatch, having maturities no later than 90 days following the date of such
investment; (e) overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers; or (f) overnight repurchase
agreements with respect to the securities described in clause (a) above entered
into with an office of a bank or trust company which is located in the United
States of America or any bank or trust company which is organized under the laws
of the United States or any state thereof and has capital, surplus and undivided
profits aggregating at least $500 million.
"Sublease" means any sublease agreement between the Lessee and a Permitted
Sublessee as permitted by Section 5(b) of the Lease.
"Subordination Agent" means The First National Bank of Maryland, a
national banking association, in its capacity as Subordination Agent.
"Subsequent Renewal Term" has the meaning given to such term in Section
13(a) of the Lease.
"Supplemental Rent" means (a) all amounts, liabilities and obligations
which the Lessee assumes or agrees to perform or pay under the Lease or under
the Participation Agreement or Tax Indemnity Agreement or any other Operative
Agreement to the Lessor, the Owner Participant, the Indenture Trustee, the
Subordination Agent, any Liquidity Provider or others, including payments of
Termination Value, EBO Price, and amounts calculated by reference to Termination
Value, any amounts of Make-Whole Premium payable under the Indenture to the
extent provided in Section 3(c) of the Lease, and all amounts required to be
paid by Lessee under the agreements, covenants, and indemnities contained in the
Lease or in the Participation Agreement or the Tax Indemnity Agreement or any
other Operative Agreement, but excluding Basic Rent, and (b) all amounts that
the Owner Trustee is obligated to pay in accordance with clause (b) of the last
paragraph of Section 2.04 of the Indenture.
"Tax" or "Taxes" has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
"Tax Indemnitee" means each of Trust Company, individually and as Owner
Trustee, the Owner Participant and the Indenture Trustee.
"Tax Indemnity Agreement" the Tax Indemnity Agreement to be entered into
by the Lessee and the Owner Participant on the Delivery Date.
"Term" has the meaning given to such term in Section 3(a) of the Lease.
"Termination Date" means each date listed in the column entitled
"Termination Date" in Exhibit D to the Lease.
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"Termination Value" means (a) as of any Termination Date during the Basic
Term, the amount determined as set forth in Exhibit C to the Lease for that
Termination Date, and (b) during any Renewal Term, the amount for the date
involved, determined in accordance with Section 13(a) of the Lease, in either
case adjusted as required by Section 3(d) of the Lease.
"Transaction Costs" means those costs and expenses set forth in Section
8.01(a) of the Participation Agreement to be borne by the Owner Participant.
"Transportation Code" means Title 49 of the United States Code, subtitle
VII, as amended and in effect on the date of the Lease or as subsequently
amended, or any successor or substituted legislation at the time in effect and
applicable, and the regulations promulgated pursuant thereto.
"Treasury 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 on 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 public securities markets, (i) one maturing as close as possible to, but
earlier than, the Average Life Date of such Certificate and (ii) 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 Premium will be the
third Business Day prior to the applicable prepayment 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 prepayment date.
"Trust Agreement" means the Trust Agreement [N____] dated as of _________
__, between the Owner Participant and Trust Company.
"Trust Company" means First Union Trust Company, National Association.
"Trust Estate" means the Lessor's Estate.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
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"Trust Indenture Estate" means all estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interest, and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of the
Owner Trustee or the Owner Participant expressly reserved to the Owner Trustee
or the Owner Participant pursuant to the Indenture.
"United States", "U.S." or "US" means the United States of America.
"U.S. Person" means a Person described in ss. 7701(a)(30) of the Code.
"Warranty Bill of Sale" means the full warranty bill of sale covering the
Aircraft (and specifically referring to each Engine) executed by the owner of
the Aircraft in favor of the Owner Trustee and to be dated the Delivery Date.
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Exhibit A-1(a) to
Leased Aircraft
Participation Agreement
[Midway Leased Aircraft Opinion]
[SUBJECT TO REVIEW BY MIDWAY GENERAL COUNSEL]
[Delivery Date]
To Each of the Parties Named
on the Attached Schedule
Re: Leveraged Lease Financing of One Canadair Regional
Jet Series 200ER Aircraft Bearing U.S. Registration No. N
Ladies and Gentlemen:
I am General Counsel for Midway Airlines Corporation, a Delaware
corporation (the "Lessee"), and have acted as counsel for the Lessee in
connection with the transactions contemplated by the Participation Agreement
dated as of _________ ____, 199__, between the Lessee; Bell Atlantic Credit
Corporation, as Owner Participant; First Union Trust Company, National
Association, as Owner Trustee; and The First National Bank of Maryland, as
Indenture Trustee, Pass Through Trustee and Subordination Agent.
This opinion is being delivered pursuant to Section 3.01(b)(xviii)(A)(I)
of the Participation Agreement. Capitalized terms not defined herein are used as
defined in the Participation Agreement.
In connection with the opinions expressed below, I, or counsel under my
supervision in the office of the General Counsel of the Lessee, have examined
the Participation Agreement, the Purchase Agreement Assignment, the Lease, the
Lease Supplement covering the Aircraft and the Tax Indemnity Agreement (the
"Lessee's Agreements"). In addition we have reviewed the Indenture and the other
Operative Documents. In arriving at the opinions expressed below, I have assumed
(except as to the Lessee) the genuineness of all signatures and the due
authorization, execution and delivery by the parties thereto of the Lessee's
Agreements and that each such party has full power and authority to perform its
obligations thereunder. I have examined and relied without independent
verification on the representations and warranties by parties other than the
Lessee as to factual matters contained in or made pursuant to
<PAGE>
the Lessee's Agreements. In addition, I have examined originals or copies
certified to my satisfaction, of such other agreements, documents, certificates
and statements of government officials and other papers as I have deemed
necessary or advisable as a basis for such opinions.
Based upon the foregoing, I am of the opinion that:
1. The Lessee is a corporation duly organized and validly existing in good
standing under the laws of the State of Delaware and has the corporate power and
authority to own or hold under lease its properties and conduct its business as
presently conducted and to enter into and perform its obligations under the
Lessee's Agreements. The Lessee is an "air carrier" within the meaning of the
Transportation Code and a holder of a certificate under Section 41102(a) of the
Transportation Code and a "citizen of the United States" within the meaning of
Section 40102(a)(15) of the Transportation Code holding an "air carrier
operating certificate" issued under Chapter 447 of the Transportation Code for
aircraft capable of carrying ten or more individuals or 6,000 pounds or more of
cargo, and each such certificate is in full force and effect. The Lessee is duly
qualified to do business as a foreign corporation and in good standing in each
jurisdiction where the activities of the Lessee require such qualification
except where the failure to so qualify would not have a material adverse effect
on the Lessee or the ability of the Lessee to perform its obligations under the
Lessee's Agreements. The Lessee's chief executive office (as such term is
defined in the Uniform Commercial Code as in effect in the State of North
Carolina) is at 300 West Morgan Street, Suite 1200, Durham, North Carolina
27701.
2. The execution, delivery and performance by the Lessee of the Lessee's
Agreements do not require the approval or consent of, or the giving of notice
to, any trustee, stockholders or holders of any indebtedness or obligations of
the Lessee (except for such consents or approvals as have been obtained on or
prior to the Delivery Date), and neither the execution and delivery by the
Lessee thereof nor the performance by the Lessee of the transactions
contemplated thereby nor compliance by the Lessee with any of the terms and
provisions thereof will contravene any applicable law of the State of Delaware
or the United States of America applicable to or binding upon the Lessee (other
than the securities or Blue Sky laws of the various states, as to which I
express no opinion), or any of its properties, or contravene or result in any
breach of, or constitute any default under or result in the creation of any Lien
(other than as permitted under the Operative Documents) upon any property of the
Lessee under any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract bank loan or credit agreement, corporate charter,
by-law or other agreement, or instrument to which the Lessee is a party or by
which the Lessee or any of its property may be bound or affected (except for
such conflicts, breaches or defaults or liens, charges or encumbrances, that,
singly or in the aggregate, would not have material adverse effect on the
Lessee's ability to perform its obligations under the Lessee's Agreements).
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3. The execution, delivery and performance of the Lessee's Agreements have
been duly authorized by all necessary corporate action on the part of the
Lessee, and the Lessee's Agreements have been duly executed and delivered by the
Lessee.
4. Except for the filings of the Uniform Commercial Code financing
statements on the Delivery Date, the execution and delivery by the Lessee of the
Lessee's Agreements and the consummation by the Lessee of the transactions
contemplated thereby do not require the consent or approval of, or the giving of
notice to, or the registration, recording or filing of any document with, or the
taking of any other action with respect to any authority or agency of the State
of North Carolina.(*)
5. The Uniform Commercial Code financing statements referred to in Section
___ of the Participation Agreement have been filed with the Office of the
Secretary of State of North Carolina.(*)
6. There are no pending or, to our knowledge, threatened actions, suits,
or proceedings before any court or administrative agency or arbitration against
the Lessee or involving the Lessee that question the validity of any of the
Lessee's Agreements or that is required to have been disclosed in the Lessee's
Annual Report on Form 10-K filed for the year ended ________________,or any
subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K, except
such as are therein disclosed.
No opinion is expressed herein as to state securities laws or other laws
other than the General Corporation Law of the State of Delaware [, the laws of
the State of North Carolina](*)e and the federal laws of the United States.
This opinion is furnished by me as counsel to the Lessee to you as parties
to the Participation Agreement and is solely for your benefit.
Very truly yours,
- - ----------
(*) The opinions in paragraphs 4 and 5 will be delivered by a North Carolina
law firm in a legal opinion subject to customary qualifications.
<PAGE>
Schedule of Addresses
[Owner Participant]
First Union Trust Company, National Association,
individually and as Owner Trustee
The First National Bank of Maryland,
as Indenture Trustee, Pass Through
Trustee and Subordination Agent
ABN AMRO Bank N.V.
Standard & Poor's Rating Services
<PAGE>
Exhibit A-1(b) to
Leased Aircraft
Participation Agreement
[LETTERHEAD OF KENNEDY COVINGTON LOBDELL & HICKMAN, L.L.P.]
[Date]
To Each of the Parties Named
on the Attached Schedule
Re: Midway Airlines Corporation Participation Agreement N[__]
Ladies and Gentlemen:
We have acted as special North Carolina counsel to Midway Airlines
Corporation, a Delaware corporation (the "Company"), in connection with the
transactions contemplated by the Participation Agreement, dated as of
[___________ __, ___] (the "Participation Agreement"), among the Company and The
First National Bank of Maryland, as Indenture Trustee, Pass Through Trustee and
Subordination Agent, and the other parties named therein. This opinion is being
delivered pursuant to Section 3.01(b)(xviii)(A)(II) of the Participation
Agreement. Capitalized terms not defined herein are used as defined in the
Participation Agreement.
In connection with the opinion expressed below, we have examined
originals, or copies certified to our satisfaction, of the Participation
Agreement, the Trust Agreements and the Pass Through Trust Agreements (the
"Agreements"). In addition, we have reviewed originals, or copied certified to
our satisfaction, of the Indenture and the other Operative Documents executed
and delivered on the date hereof. In arriving at the opinion expressed below, we
have assumed the genuineness of all signatures and the due authorization,
execution and delivery by the parties thereto of the Agreements and that each
such party has the full power and authority to perform its obligations
thereunder. We have examined and relied without independent verification on the
representations and warranties by the parties as to factual matters contained in
or made pursuant to the Agreements. In addition, we have examined originals, or
copies certified to our satisfaction, of such other agreements, documents,
certificates and statements of government officials and other papers as we have
deemed necessary or advisable as a basis for such opinion.
With your permission, we have made the following factual assumptions for
purposes of this opinion:
<PAGE>
To Each of the Parties Named on the Attached Schedule
[date]
Page 2
1. The Company is in compliance with all federal and state laws and
regulations (other than the laws and regulations of the State of
North Carolina) relating to the execution and delivery by the
Company of the Documents and the consumption by the Company of the
transactions contemplated thereby.
2. Prior to the date hereof, the Company has been in compliance with
all North Carolina laws and regulations governing its operations.
Based upon the foregoing and subject to the qualifications set forth
below, we are of the opinion that (a) the Uniform Commercial Code financing
statements required to be filed in North Carolina on the Delivery Date pursuant
to Section 3.01(m) of the Participation Agreements have been duly filed and (b)
the execution and delivery by the Company of the Documents and the consummation
by the Company of the transactions contemplated thereby do not require the
consent or approval of, or the giving of notice to, or the registration,
recording or filing of any document with, or the taking of any other action with
respect to any authority or agency of the State of North Carolina.
The opinion expressed herein is limited to matters governed by the laws of
the State of North Carolina. You have not requested any opinion from us nor do
we express any opinion, concerning: (i) North Carolina state securities laws,
(ii) the North Carolina state tax implications of the issuance or the holding of
any Certificates or the underlying notes, (iii) the priority of any liens on any
portion of the Trust Estate or proceeds thereof, or (iv) the consequences of any
insolvency proceedings with respect for the Company.
This opinion letter is rendered only as of the date hereof. We undertake
no obligation to update this opinion letter after the date hereof or to give
notice as to any future changes of facts or law that might affect the opinions
set forth herein. This opinion letter is limited to the matters expressly stated
herein, and no other opinion shall be implied or inferred herefrom.
We have provided this opinion letter to the addressees in our capacity as
special counsel to the Company in connection with the transactions contemplated
by the Participation Agreements. This opinion letter is solely for your use and
may not be relied upon for any other purpose or by any other person without our
prior written consent.
Very truly yours,
<PAGE>
[Exhibit A-2 to
Note Purchase
Agreement - Form
of Lease]
- - --------------------------------------------------------------------------------
LEASE AGREEMENT
dated as of ___________, 199_
between
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
Owner Trustee,
Lessor,
and
MIDWAY AIRLINES CORPORATION
Lessee.
Covering One Canadair Regional
Jet Series 200ER Aircraft
Registration Number
N_______
- - --------------------------------------------------------------------------------
This Lease Agreement is subject to a security interest in favor of The First
National Bank of Maryland, as Indenture Trustee, under the Trust Indenture and
Security Agreement dated as of _________ __, 199_, for the benefit of the
holders of the Equipment Notes referred to in such Trust Indenture and Security
Agreement. This Lease Agreement has been executed in counterparts. To the
extent, if any, that this Lease Agreement constitutes chattel paper (as such
term is defined in the Uniform Commercial Code as in effect in any
jurisdiction), no security interest in this Lease Agreement may be created
through the transfer or possession of any counterpart other than the counterpart
containing the receipt therefor executed by The First National Bank of Maryland,
as Indenture Trustee, on the signature page thereof.
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Interpretation................................................. 1
(a) Definitions.................................................... 1
(b) References..................................................... 1
(c) Headings....................................................... 1
(d) Appendices, Schedules and Exhibits............................. 2
Section 2. Delivery and Leasing of the Aircraft........................... 2
(a) Leasing of the Aircraft........................................ 2
(b) Delivery and Acceptance of the Aircraft Under the Lease........ 2
Section 3. Term and Rent.................................................. 2
(a) Term........................................................... 2
(b) Basic Rent..................................................... 2
(c) Supplemental Rent.............................................. 3
(d) Adjustments to Basic Rent and Termination Values............... 3
(e) Manner of Payment.............................................. 5
(f) Minimum Rent................................................... 5
(g) Rent Obligations Unconditional................................. 6
Section 4. The Lessor's Representations and Warranties.................... 7
Section 5. Possession, Operation and Use,
Maintenance Registration and Insignia.......................... 7
(a) General........................................................ 7
(b) Possession..................................................... 7
(c) Operation and Use.............................................. 10
(d) Maintenance.................................................... 11
(e) Registration................................................... 11
Section 6. Inspection; Financial Information.............................. 12
Section 7. Replacement and Pooling of Parts; Alterations, Modifications
and Additions; Substitution of Engines......................... 13
(a) Replacement of Parts........................................... 13
(b) Title to Parts................................................. 13
(c) Pooling or Parts Leasing....................................... 13
(d) Alterations, Modifications and Additions....................... 14
(e) Substitution of Engines........................................ 15
Section 8. Loss, Destruction or Requisition............................... 17
(a) Event of Loss with Respect to the Airframe..................... 17
(b) Effect of Replacement.......................................... 18
<PAGE>
(c) Effect of Termination Value Payment............................ 18
(d) Conditions to Airframe Replacement............................. 19
(e) Non-Insurance Payments Received on Account of an Event of
Loss........................................................... 21
(f) Requisition for Use............................................ 22
(g) Certain Payments to be Held As Security........................ 23
Section 9. Insurance...................................................... 23
(a) Public Liability and Property Damage Insurance................. 23
(b) Insurance Against Loss or Damage to the Aircraft and Engines... 24
(c) Additional Insureds; Loss Payment.............................. 24
(d) Deductibles and Self-Insurance................................. 25
(e) Application of Hull Insurance Proceeds......................... 25
(f) Insurance for Own Account...................................... 26
(g) Reports, etc................................................... 26
Section 10. Liens.......................................................... 27
Section 11. Recordation and Further Assurances............................. 28
(a) Recordation of Lease........................................... 28
(b) Further Assurances............................................. 28
Section 12. Return of Aircraft and Records................................. 28
(a) Return of Aircraft............................................. 28
(b) Return of Other Engines........................................ 28
(c) Fuel; Records.................................................. 29
(d) Condition of Aircraft.......................................... 29
(e) Delayed Return................................................. 29
Section 13. Renewal Option and Purchase Options............................ 29
(a) Renewal Terms.................................................. 29
(b) Lessee Purchase Options........................................ 30
(i) Rights to Purchase....................................... 30
(ii) Option to Assume Equipment Notes......................... 31
(iii) Notice of Exercise of Option............................. 31
Section 14. Voluntary Termination for Obsolescence......................... 31
(a) Termination by Sale of Aircraft................................ 31
(b) Payments Due Upon Sale of Aircraft............................. 32
(c) Preemptive Election by Lessor.................................. 33
(d) Termination of Lease........................................... 33
(e) Effect of No Sale or Preemptive Delivery to Lessor............. 33
Section 15. Investment of Security Funds................................... 34
Section 16. Events of Default.............................................. 34
<PAGE>
Section 17. Remedies....................................................... 36
Section 18. Lessor's Right to Perform for the Lessee....................... 38
Section 19. Bankruptcy..................................................... 39
Section 20. Assignment: Benefit and Binding Effect......................... 39
(a) Assignment by the Lessee....................................... 39
(b) Assignment by the Lessor....................................... 39
(c) Benefit and Binding Effect..................................... 39
(d) Sublessee's Performance and Rights............................. 40
Section 21. Owner Trustee's Limitation on Liability........................ 40
Section 22. Certain Agreements of Lessee................................... 40
Section 23. Miscellaneous.................................................. 41
(a) Notices........................................................ 41
(b) Counterparts................................................... 41
(c) Amendments..................................................... 41
(d) Agreement to Lease............................................. 42
(e) Governing Law.................................................. 42
Appendix A Definitions
Exhibit A Form of Lease Supplement
Exhibit B Certain Economic Information
Exhibit C Basic Rent
Exhibit D Termination Values
Exhibit E List of Countries
Exhibit F Return Conditions
<PAGE>
THIS LEASE AGREEMENT, dated as of ____________, 199_, between FIRST
UNION TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, not
in its individual capacity but solely as Owner Trustee, the Lessor, and MIDWAY
AIRLINES CORPORATION, a Delaware corporation, the Lessee.
W I T N E S S E T H:
WHEREAS, the Lessor intends to purchase the Aircraft pursuant to the
terms of the Participation Agreement;
WHEREAS, the Lessee desires to lease from the Lessor and the Lessor
is willing to lease to the Lessee the Aircraft upon and subject to the terms and
conditions of this Lease; and
WHEREAS, the parties intend this Lease to constitute a true lease
and not a security agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration the receipt and adequacy of
which is hereby acknowledged, and intending to be legally bound, the parties do
hereby agree as follows:
Section 1. Interpretation.
(a) Definitions.
Capitalized terms used herein and defined in Appendix A shall,
except as such definitions may be specifically modified in the body of this
Lease for the purposes of a particular section, paragraph or clause, have the
meanings given such terms in Appendix A and, unless otherwise specified, such
meanings shall be equally applicable to both the singular and the plural forms
of such terms.
(b) References.
References in this Lease to sections, paragraphs, clauses,
appendices, schedules and exhibits are to sections, paragraphs, clauses,
appendices, schedules and exhibits in and to this Lease unless otherwise
specified. Paragraphs identified with a letter and clauses identified with a
number or letter within a section may be referred to either by section reference
(for example, this is Section l(b)) or by paragraph and clause reference (for
example, this is also paragraph (b) of Section 1) with the same meaning.
<PAGE>
(c) Headings.
The headings of the various sections, paragraphs and clauses of this
Lease and the table of contents are for convenience of reference only and shall
not modify, define, expand or limit any of the terms or provisions hereof.
(d) Appendices, Schedules and Exhibits.
The appendices, schedules and exhibits are part of this Lease.
Section 2. Delivery and Leasing of the Aircraft.
(a) Leasing of the Aircraft.
Subject to the satisfaction or waiver of the conditions precedent
stated in the Participation Agreement, the Lessor agrees to lease to the Lessee,
and the Lessee agrees to lease from the Lessor, the Aircraft on the terms and
conditions set forth herein, such leasing to be evidenced by the execution and
delivery by the Lessor and the Lessee on the Delivery Date of a Lease
Supplement.
(b) Delivery and Acceptance of the Aircraft Under the Lease.
The Lessor hereby authorizes one or more persons designated by the
Lessee as the authorized representative or representatives of the Lessor to
accept delivery of the Aircraft from the [Lessor][Manufacturer]. By executing
and delivering Lease Supplement No. 1, the Lessee confirms to the Lessor that
the Lessee has duly and irrevocably accepted delivery of the Aircraft for all
purposes of this Lease.
Section 3. Term and Rent.
(a) Term.
The Aircraft is leased for a Term which shall comprise the Basic
Term and, at the option of the Lessee exercised in accordance with Section
13(a), one or more Renewal Terms. The Basic Term shall commence on the Delivery
Date and continue through the Expiration Date; and each Renewal Term shall be
for the applicable period provided in Section 13(a), except that the Term
(including the Basic Term or any Renewal Term, as the case may be) shall end
upon any earlier termination of this Lease according to its terms.
(b) Basic Rent.
The Lessee shall pay Basic Rent in consecutive semi-annual
installments on each Basic Rent Payment Date during the Basic Term, each such
installment to be in an amount determined by multiplying Lessor's Cost by the
percentage set forth in Exhibit C for the applicable Basic Rent Payment Date.
The Lessee shall pay Basic Rent
-2-
<PAGE>
during a Renewal Term in the amounts and at the times provided in Section 13(a)
for such Renewal Term.
(c) Supplemental Rent.
The Lessee shall pay to the Lessor, or to whoever shall be entitled
thereto, any and all Supplemental Rent when the same shall become due and owing.
The Lessee shall pay as Supplemental Rent:
(i) to the Lessor, on demand, interest at the Past Due
Rate on any part of any installment of Basic Rent not paid
when due for the period for which the same shall be overdue;
(ii) to whoever shall have been entitled to receive the
relevant payment of Supplemental Rent, on demand, interest at
the Past Due Rate on any payment of Supplemental Rent (other
than interest payable under this clause (ii)) not paid when
due for the period for which the same shall be overdue; and
(iii) to the Lessor, an amount equal to any Make-Whole
Premium as and when such amount is due and payable by the
Lessor under the terms of the Indenture (except in the case of
any prepayment pursuant to Section 6.02(a)(iii) of the
Indenture), except as otherwise provided in Section 14(b).
(d) Adjustments to Basic Rent and Termination Values.
All installments of Basic Rent remaining to be paid during the Basic
Term shall be recalculated and adjusted, upwards or downwards as the case may be
(and corresponding adjustments shall be made to the Termination Values
applicable during the remaining Basic Term) to maintain the net economic return
of the Owner Participant and, to the greatest extent consistent with such
maintenance of such net economic return, to minimize the net present value
(calculated at a discount rate equal to the Applicable Rate or such other rate
as may be specified by the Lessee to the Owner Participant) of the remaining
Basic Rent payments (or, if the Lessee shall have so specified to the Owner
Participant, the remaining Basic Rent Payments to any date when a purchase
option is exercisable at a fixed price under Section 13(b) together with the
price payable in connection with the exercise of such purchase option), if:
(i) the Delivery Date shall not be __________, 199_;
(ii) there shall be a refinancing or refunding of the debt evidenced
by the Certificates pursuant to Section 13 of the Participation Agreement;
-3-
<PAGE>
(iii) the Transaction Costs payable by the Owner Participant
pursuant to Section 8.01(a) of the Participation Agreement shall be
greater or less than __ percent of Lessor's Cost;
(iv) there shall be an adjustment of Termination Values as provided
in Section ___ of the Tax Indemnity Agreement; or
(v) there shall be any increase in the amount of interest due on the
Equipment Notes pursuant to the Registration Rights Agreement.
Adjustments to the installments of Basic Rent (expressed as percentages of
Lessor's Cost) set forth in Exhibit C and conforming adjustments to the amounts
of Termination Values (expressed as percentages of Lessor's Cost) set forth in
Exhibit D shall be calculated by the Owner Participant in accordance with the
terms of this paragraph, and the Owner Participant shall deliver to the Lessee,
the Lessor and the Indenture Trustee schedules setting forth the revised
percentages that the Owner Participant proposes to include in Exhibits C and D,
subject to review by the Lessee and verification as provided herein. In the
event of a dispute regarding any such adjustment which is not resolved by
agreement of the Lessee and the Owner Participant, the adjustments, at the
request of the Lessee delivered to the Owner Participant within 30 days after
receipt of the Owner Participant's proposed adjustments, shall be subjected to
verification by a nationally recognized firm of accountants to be selected by
the Lessee and reasonably acceptable to the Owner Participant. The Owner
Participant shall provide to such accounting firm on a confidential basis such
information as such accounting firm may reasonably require, including, without
limitation, a true copy of this Agreement and a full description of the
methodology and assumptions employed by the Owner Participant in calculating the
Basic Rent and Termination Values set forth in Exhibits C and D as in effect on
the Delivery Date and a true copy of the calculations of the same performed by
the Owner Participant at the time, to enable such accounting firm to determine
whether the adjustments proposed by the Owner Participant are mathematically
accurate, apply the same methodology and assumptions as were employed in the
calculations of the Basic Rent and Termination Values in effect on the Delivery
Date, and are otherwise in conformity with the provisions of this Lease. The
Lessee and its financial advisors shall be entitled to submit such data and
views as the Lessee may elect to such accounting firm concerning the proposed
adjustments. The accounting firm shall be requested to deliver to each of the
Owner Participant, the Lessee, the Lessor and the Indenture Trustee within 30
days after its appointment its determination as to the change; if any, that are
appropriate with respect to the adjustments proposed by the Owner Participant.
The adjustments proposed by the Owner Participant, if not disputed by the Lessee
as provided above, or the determination of the accounting firm as provided
above, as the case may be, shall be conclusive, final and binding upon the
Lessor, the Lessee and the Owner Participant, and Exhibits C and D shall be
amended to reflect them. All reasonable fees and expenses payable to an
accounting firm pursuant to this paragraph shall be paid by the Lessee except
that such fees and expenses shall be paid entirely by the Owner Participant if,
as a rest of changes
-4-
<PAGE>
determined by the accounting firm, the net present value, discounted at the
Applicable Rate or such other rate as the Lessee may have specified as provided
above in this paragraph, of Basic Rent remaining to be paid is five basis points
(0.05%) or more lower than it would have been under the adjustments proposed by
the Owner Participant.
(e) Manner of Payment.
All Rent payable by the Lessee to the Lessor hereunder shall be paid
to the Lessor at its principal office at One Rodney Square, 920 King Street,
Suite 102, Wilmington, Delaware, 19801, Attention: Corporate Trust
Administration, or to such other address as the Lessor shall specify in a notice
to the Lessee, in United States dollars in immediately available funds, so that
the Lessor receives the full amount of each payment not later than 12:00 noon
Eastern Time on the due date thereof, except that so long as the Indenture shall
not have terminated pursuant to its terms, all Rent payable to the Lessor (other
than Excepted Payments) shall be paid to the Indenture Trustee, in the manner
provided above, at its principal office as specified in the Indenture, or as the
Indenture Trustee may otherwise direct by a notice delivered to the Lessee prior
to the date of payment. If any Rent is due on a day that is not a Business Day,
such Rent shall be paid on the next succeeding Business Day with the same force
and effect as if paid on the scheduled date of payment and no interest shall
accrue on the amount of such payment from and after such scheduled date to the
time of payment on such next succeeding Business Day. Whether or not the
Indenture remains in effect, Rent constituting Excepted Payments shall be paid
directly to the Person entitled thereto.
(f) Minimum Rent.
Anything herein to the contrary notwithstanding,
(i) each installment of Basic Rent, whether or not such
installment has been adjusted pursuant to Section 3(d), shall
be in an amount which is at least equal to the amount of any
principal of and interest on the Equipment Notes that falls
due and is payable by the Lessor pursuant to the terms of the
Indenture (other than by reason of acceleration of the
Equipment Notes) on the date when such installment of Basic
Rent is due, and
(ii) Termination Value, whether or not Termination Value
has been adjusted pursuant to Section 3(d), shall be in an
amount which is at least equal to, as of the applicable date
of payment, the aggregate unpaid principal of and accrued
interest on the Equipment Notes (other than overdue amounts
attributable to an Indenture Event of Default not caused
solely by an Event of Default).
-5-
<PAGE>
The preceding sentence is intended solely to provide for, and to allocate as
between the Lessor and the Lessee the risk of, the possibility of miscalculation
by the Lessor and the Lessee of amounts of Rent which it is contemplated will be
available to the Indenture Trustee, as the Lessor's security assignee under the
Indenture, for application to the payment of amounts payable by the Lessor on
the Equipment Notes. The Lessee does not guarantee, and nothing in this
paragraph (f) shall be construed to be a guarantee by the Lessee, that the
Lessor will repay any principal of or pay any premium or interest on any
Equipment Notes or that the Indenture Trustee will, or will be able to, apply
for such purposes any amount of Rent paid by the Lessee.
(g) Rent Obligations Unconditional.
The Lessee's obligations to pay all Rent due and owing under the
terms hereof shall be absolute and unconditional and shall not be affected by
any circumstance whatsoever including, without limitation, (i) any setoff,
counterclaim, recoupment or other right which the Lessee may have against the
Lessor, the Owner Participant, the Indenture Trustee, the holders of the
Equipment Notes or anyone else for any reason whatsoever, (ii) any defect in the
title, airworthiness, condition, design, operation or fitness for use of, or any
damage to or loss or destruction of, the Aircraft, or any interference,
interruption or cessation in or prohibition of the use or possession thereof by
the Lessee for any reason whatsoever, including, without limitation, any such
interference, interruption, cessation or prohibition resulting from the act of
any governmental authority or any violation by the Lessor of Section 4 hereof,
(iii) any Liens, encumbrances or rights of others with respect to the Aircraft,
(iv) the invalidity or unenforceability or lack of due authorization or other
infirmity of this Lease or any lack of right, power or authority of the Lessor
or the Lessee to enter into this Lease, (v) any insolvency, bankruptcy,
reorganization or similar proceedings by or against the Lessee, or any other
Person, or (vi) any other cause whether similar or dissimilar to the foregoing,
any present or future law notwithstanding, it being the intention of the parties
that all Rent payable by the Lessee hereunder shall continue to be payable in
all events in the manner and at the times provided herein. Such Rent shall not
be subject to any abatement and the payments thereof shall not be subject to any
setoff or any reduction for any reason other than manifest error in the
calculation thereof or the documentation of this Lease. To the extent permitted
by Applicable Law, the Lessee waives any rights which it may now have or which
may be conferred upon it by statute or otherwise to terminate, cancel, quit or
surrender this Lease except in accordance with the terms hereof. Nothing herein
shall be construed as a waiver by the Lessee of any claim it may have against
any Person arising under any of the Operative Agreements or otherwise,
including, without limitation, any claim that Rent payments demanded from or
paid by the Lessee are or were not due, are or were erroneous or were paid under
mistake or protest, or be construed as a limitation on any rights of the Lessee
to assert any claim in any proceeding at law, in equity or otherwise against the
Lessor or any other Person and to pursue and obtain relief on such claim in such
manner as the Lessee shall deem appropriate other than by setoff against Rent
payments due under the terms hereof.
-6-
<PAGE>
Section 4. The Lessor's Representations and Warranties.
(a) THE LESSOR LEASES THE AIRCRAFT HEREUNDER "AS-IS" AND NEITHER THE
LESSOR, TRUST COMPANY INDIVIDUALLY NOR THE OWNER PARTICIPANT SHALL BE DEEMED TO
HAVE MADE ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
AIRWORTHINESS, CONDITION, VALUE, DESIGN, OPERATION, MERCHANTABILITY, COMPLIANCE
WITH SPECIFICATIONS, CONSTRUCTION, PERFORMANCE OR FITNESS FOR USE OF THE
AIRCRAFT OR ANY PART THEREOF, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS,
WHETHER OR NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY
PATENT, TRADEMARK OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT
LIABILITY IN TORT, OR AS TO THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE
AIRCRAFT OR ANY PART THEREOF OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER,
EXPRESS OR IMPLIED, WITH RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except
that the Lessor warrants that on the Delivery Date the Lessor shall have
received whatever title was conveyed to it by the Lessee and the Lessor warrants
that the Aircraft shall be free of Lessor's Liens during the Term.
(b) The Lessor covenants that during the Term, as long as no Event
of Default has occurred and is continuing, the Lessee's possession, use and
quiet enjoyment of the Aircraft leased hereunder shall not be interrupted by the
Lessor (or any Person claiming through the Lessor).
Section 5. Possession, Operation and Use,
Maintenance Registration and Insignia.
(a) General.
Except as otherwise expressly provided herein, the Lessee shall be
entitled during the Term to operate, use, locate, employ or otherwise utilize or
not utilize the Airframe, Engines and Parts leased hereunder in any lawful
manner or place in accordance with the Lessee's business judgment.
(b) Possession.
The Lessee shall not sublease, or otherwise in any manner deliver,
relinquish or transfer possession of the Airframe or any Engine leased hereunder
to any Person or install any Engine, or permit any Engine to be installed, on
any airframe other than the Airframe, during the Term, without the prior consent
of the Lessor, which consent shall not be unreasonably withheld, except that the
Lessee may without the prior consent of the Lessor:
(i) enter into a charter or wet lease or other similar
arrangement under which the Lessee has operational control of
the
-7-
<PAGE>
Airframe and any Engines installed thereon in the course of
the Lessee's business (which shall not be considered a
transfer of possession hereunder), provided that the Lessee's
obligations under this Lease shall continue in full force and
effect notwithstanding any such charter or wet lease or other
similar arrangement;
(ii) deliver possession of the Airframe or any Engine or
any Part to the manufacturer thereof or to any organization
for testing, service, repair, maintenance, overhaul work or
other similar purposes or for alterations or modifications or
additions required or permitted by the terms of this Lease;
(iii) subject the Airframe and any Engines installed
thereon to interchange agreements or any Engine to interchange
or pooling agreements or arrangements which are applicable to
other similar property owned by or leased to the Lessee and
are entered into by the Lessee in the course of its airline
business with any air carrier, provided, that (A) no such
agreement or arrangement shall under any circumstances result
in, contemplate or require the transfer of title to the
Aircraft or Airframe and (B) if the Lessor's title to any
Engine shall be divested under any such agreement or
arrangement, such divestiture shall be deemed to be an Event
of Loss with respect to such Engine and the Lessee shall
comply with Section 7(e) hereof in respect thereof;
(iv) install an Engine on an airframe owned by the
Lessee free and clear of all Liens except (A) Permitted Liens,
(B) those which apply only to the engines (other than the
Engines), appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment (other than
Parts) installed on such airframe, and (C) those created by
the rights of other air carriers under interchange or pooling
agreements or other arrangements customary in the airline
industry which do not contemplate, permit or require the
transfer of title to such airframe or engines installed
thereon;
(v) install an Engine on an airframe, leased to the
Lessee or purchased by the Lessee subject to a conditional
sale or other security agreement, provided that such Engine
shall not thereby become subject to the lien of such lease,
conditional sale or other security agreement;
(vi) install an Engine on an airframe, owned by the
Lessee, leased by the Lessee or purchased by the Lessee
subject to a conditional sale or other security agreement
under circumstances where neither clause (iv) nor clause (v)
above is applicable,
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provided that any divestiture or non-curable impairment of
title to such Engine resulting from such installation shall be
deemed an Event of Loss with respect to such Engine and the
Lessee shall comply with Section 7(e) hereof;
(vii) transfer possession of the Airframe or Engine to
the United States of America or any instrumentality thereof
pursuant to the Civil Reserve Air Fleet Program (as
established and administered pursuant to Executive Order
11490, as amended, as superseded by United States Executive
Order No. 12656) or any similar or substitute program;
(viii) transfer possession of the Airframe or any Engine
to the United States of America, or to a foreign government,
when required by Applicable Law (it being understood that
nothing in this clause (viii) shall relieve the Lessee from
its obligations under Section 8(a) if such transfer becomes an
Event of Loss); and
(ix) transfer possession of the Airframe or any Engine
to the United States of America or any instrumentality or
agency thereof pursuant to a sublease, contract or other
instrument;
(x) so long as no Specified Default shall have occurred
and be continuing, and subject to the provisions of this
Section 5(b), enter into a sublease with respect to any Engine
or the Airframe and Engines or engines then installed on the
Airframe to a Permitted Sublessee which is not the subject of
a petition filed under any bankruptcy laws or other insolvency
laws in effect at the time such sublease is entered into, or
any other foreign air carrier; provided that in the case only
of a sublease to a foreign air carrier that is not a Permitted
Sublessee, the Lessor receives at the time of such sublease an
opinion of counsel to the Lessee (which counsel shall be
reasonably satisfactory to the Lessor) to the effect that
there exist no possessory rights in favor of the sublessee
under the laws of such sublessee's country which would, upon
bankruptcy or insolvency of or other default by the Lessee and
assuming that at such time such sublessee is not insolvent or
bankrupt, prevent the return of such Engine or the Airframe
and such Engine or engine to the Lessor in accordance with and
when permitted by the terms of Section 17(a) upon the exercise
by the Lessor of its remedies under Section 17(a);
provided that (1) the rights of any transferee who receives possession by reason
of a transfer permitted by this Section 5(b) (other than by a transfer of an
Engine which is deemed an Event of Loss) shall be subject and subordinate to all
the terms of this Lease, (2) the Lessee shall remain primarily liable hereunder
for the performance of all
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the terms of this Lease and all the terms and conditions of this Lease and the
other applicable Operative Agreements shall remain in effect and (3) no sublease
or transfer of possession otherwise in compliance with this Section 5(b) shall
(x) result in any registration or reregistration of the Aircraft except to the
extent permitted by Section S(e) or the maintenance, operation or use thereof
except in compliance with Sections 5(c) and 5(d), (y) permit any action not
permitted to the Lessee hereunder or (z) extend beyond the end of the Term
(except to the extent that the Lessee shall have irrevocably committed to
exercise a purchase option in accordance with the terms hereof).
In the case of any sublease permitted under this Section 5(b), the
Lessee will include in such sublease appropriate provisions which (a) make such
sublease expressly subject and subordinate to all of the terms of this Lease and
the Indenture, including the rights of the Lessor and the Indenture Trustee to
avoid such sublease in the exercise of their rights to repossession of the
Airframe and Engines hereunder and thereunder; (b) expressly prohibit any
further subleasing of the Airframe and Engines; (c) require that the Airframe
and Engines be maintained in accordance with a maintenance program approved by
the Aeronautical Authority applicable thereto; (d) require the sublessee to
comply with the terms of Section 9 hereof; (e) limit the term of such sublease
(including renewal rights) to a period not beyond the end of the Term unless the
Lessee shall then have irrevocably committed to exercise a purchase option in
accordance with the terms hereof; and (f) require that the Airframe and Engines
be used in accordance with the limitations applicable to the Lessee's possession
and use provided in this Lease.
The Lessor hereby agrees for the benefit of the lessor or secured
party of any airframe (other than the Airframe) leased to the Lessee or
purchased by the Lessee subject to a conditional sale or other security
agreement, which lease or conditional sale or other security agreement 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, that the 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 owned by such lessor or is subject to such conditional sale or other
security agreement or security interest in favor of such secured party.
(c) Operation and Use.
The Lessee shall not operate, use or locate the Airframe or any
Engine, or suffer such Airframe or any Engine to be operated, used or located
(i) in any area excluded from coverage by any insurance required by the terms of
Section 9 hereof, except in the case of a requisition by the United States of
America where the Lessee obtains indemnity from the Government against
substantially the same risks and for at least the amounts of the insurance
required by Section 9 hereof covering such area, or (ii) outside the United
States or Canada in any recognized or, in the Lessee's reasonable judgment,
threatened area of hostilities unless covered by war risk insurance, or in
either case unless the Airframe or such Engine is operated or used
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under contract with the Government under which contract the Government assumes
liability for substantially the same risks in at least the same amounts as would
be covered by such insurance. The Lessee shall not permit the Airframe or any
Engine to be used or operated during the Term in violation of any Applicable Law
or in violation of any airworthiness certificate, license or registration
relating to the Aircraft or such Engines issued by any competent governmental
authority, unless (i) the validity thereof is being contested in good faith and
by appropriate proceedings which do not involve a material danger of the sale,
forfeiture or loss of the Airframe or such Engine, or (ii) it is not possible
for the Lessee to comply with the laws of a jurisdiction other than the United
States (or other than any jurisdiction in which the Aircraft is then registered)
because of a conflict with the applicable laws of the United States (or such
jurisdiction in which the Aircraft is then registered).
(d) Maintenance.
The Lessee, at its own cost and expense, shall during the Term
service, repair, maintain, overhaul and test the Airframe and each Engine or
cause the same to be done in accordance with a maintenance program approved by
the Aeronautical Authority, and shall keep or cause to be kept the Airframe and
each Engine in such operating condition as may be necessary to enable the
airworthiness certification of the Aircraft to be maintained in good standing at
all times under the applicable rules and regulations of the Aeronautical
Authority, except when aircraft of the same type, model or series as the
Airframe (powered by engines of the same type as those with which the Airframe
shall be equipped at the time of grounding) registered in the same country have
been grounded by the Aeronautical Authority, provided, however, that if the
airworthiness certificate of the Aircraft shall be withdrawn, then, subject to
Section 8 hereof, so long as the Lessee is taking or causing to be taken all
necessary action to promptly correct the condition which caused such withdrawal,
no Event of Default shall arise from such withdrawal. Nothing herein shall be
deemed to prevent the Lessee from taking the Aircraft out of service for
maintenance or modifications permitted hereunder or storage in accordance with
applicable Aeronautical Authority requirements and sound practice for such
storage. The Lessee shall maintain or cause to be maintained all records, logs
and other documents required by the Aeronautical Authority to be maintained in
respect of the Aircraft.
(e) Registration
Except as otherwise permitted by Section 4.02(b) of the
Participation Agreement, or as otherwise required by the Federal Aviation Act or
rules, regulations, or orders promulgated thereunder, or to the extent that such
registration cannot be effected or continued due to the Lessor's or the Owner
Participant's failure to comply with the citizenship or other eligibility
requirements for registration of commercial aircraft under the Transportation
Code or any rule, regulation or order promulgated thereunder, the Aircraft shall
be duly registered in the name of the Lessor under the Transportation Code at
all times during the Term; provided that the Lessor shall execute and deliver
all such documents as the Lessee may reasonably request for the
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purpose of effecting, continuing or (as provided in this Section 5(e) hereof and
Section 4.02(b) of the Participation Agreement) changing such registration.
Section 6. Inspection; Financial Information.
At all reasonable times during the Term, but upon at least 15 days'
prior notice to the Lessee and at a time and place reasonably acceptable to the
Lessee, the Lessor and the Indenture Trustee or their authorized representatives
may at their own expense and risk conduct a visual walk-around inspection of the
Aircraft and any Engine (including a visual walk-around inspection of the
Aircraft during any "C" check or other heavy maintenance) and may inspect the
books and records of the Lessee relating to the operation and maintenance
thereof; provided that (a) such representatives shall be fully insured to the
reasonable satisfaction of the Lessee by the Lessor or the Indenture Trustee
with respect to any risks incurred in connection with any such inspection, (b)
any such inspection shall be subject to the safety, security and workplace rules
applicable at the location where such inspection is conducted and any applicable
governmental rules or regulations, (c) in the case of an inspection during a
maintenance visit, such inspection shall not in any respect interfere with the
normal conduct of such maintenance visit or extend the time required for such
maintenance visit or, in any event, at any time interfere with the use or
operation of the Airframe or any Engine or with the normal conduct of the
Lessee's or a permitted sublessee's business, and (d) the Lessee shall not be
required to undertake or incur any additional liabilities in connection with any
such inspection. All information obtained in connection with any such inspection
shall be held confidential by the Lessor, the Indenture Trustee and the Owner
Participant and shall not be furnished or disclosed by them to anyone other than
each other, their bank examiners, auditors, accountants, agents and legal
counsel and any Person with whom the Owner Participant is in good faith
conducting negotiations relating to the possible transfer and sale of the Owner
Participant's interest in the Trust Estate or the Aircraft, if such Person shall
have entered into an agreement similar to that contained in this Section 6
whereby such Person agrees to hold such information confidential, and except as
may be required by an order of any court or administrative agency or by any
statute, rule, regulation or order of any governmental authority or as may be
necessary to enforce the terms of this Lease, provided, however, that the Lessor
or the Owner Participant may during any time it is offering the Aircraft for
sale make customary disclosures to prospective purchasers of the Aircraft as to
the then current flight and maintenance status of the Aircraft. The Lessor and
the 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.
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Section 7. Replacement and Pooling of Parts; Alterations, Modifications and
Additions; Substitution of Engines.
(a) Replacement of Parts.
Except as otherwise provided in the proviso to the third sentence of
Section 7(d) or if the Airframe or an Engine to which a Part relates has
suffered an Event of Loss, the Lessee, at its own cost and expense, will during
the Term promptly replace all Parts that 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, the
Lessee, at its own cost and expense, may remove any Parts, whether or not worn
out, lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use, provided that the Lessee, at its own cost
and expense, shall, except as otherwise provided in the proviso to the third
sentence of Section 7(d), replace such Parts as promptly as practicable with
replacement Parts or temporary replacement parts as provided in Section 7(c)
hereof. All replacement Parts shall be free and clear of all Liens except for
pooling arrangements to the extent permitted by Section 7(c) and Permitted Liens
and shall be in as good operating condition as, and shall have a value and
utility at least equal to, the Parts replaced assuming such replaced Parts were
in the condition and repair required to be maintained by the terms hereof.
(b) Title to Parts.
Except as otherwise provided in the proviso to the third sentence of
Section 7(d), all Parts at any time removed from the Airframe or any Engine
shall remain the property of the Lessor and subject to this Lease, no matter
where located, until such time as such Parts shall be replaced by Parts that
have been incorporated or installed in or attached to such Airframe or Engine
and that meet the requirements for replacement Parts specified in Section 7(a).
Immediately upon any replacement Part becoming incorporated or installed in or
attached to an Airframe or Engine as provided in Section 7(a), without further
act, (i) title to the replaced Part shall thereupon vest in the Lessee, in
"as-is, where-is" condition, free and clear of all rights of the Lessor and the
Indenture Trustee and any Lessor's Liens and shall no longer be deemed a Part
hereunder; (ii) title to such replacement Part shall thereupon vest in the
Lessor (subject only to Permitted Liens); and (iii) such replacement Part shall
become subject to this Lease and be deemed part of such Airframe or Engine, as
the case may be, for all purposes hereof to the same extent as the Parts
originally incorporated or installed in or attached to such Airframe or Engine.
(c) Pooling or Parts Leasing.
Any Part removed from the Airframe or from any Engine as provided in
Section 7(a) may be subjected by the Lessee to a pooling or parts leasing
agreement or arrangement of a type customary in the airline industry entered
into in the ordinary
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course of the Lessee's business, provided the part replacing such removed Part
shall be incorporated or installed in or attached to such Airframe or Engine in
accordance with Sections 7(a) and 7(b) as promptly as practicable 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 7(a) may be owned by another airline or vendor as
customary in the airline industry, subject to a pooling or parts leasing
arrangement, provided that the Lessee, at its expense within a commercially
reasonable time, either (i) causes title to such temporary replacement part to
vest in the Lessor in accordance with Section 7(b) by the Lessee acquiring title
thereto for the benefit of the Lessor free and clear of all Liens except
Permitted Liens, at which time such temporary replacement part shall become a
Part and become subject to this Lease or (ii) replaces such temporary
replacement part by incorporating or installing in or attaching to such Airframe
or Engine a further replacement Part owned by the Lessee free and clear of all
Liens except Permitted Liens and by causing title to such further replacement
Part to vest in the Lessor in accordance with Section 7(b).
(d) Alterations, Modifications and Additions.
The Lessee, at its own expense, shall make alterations and
modifications in and additions to the Airframe and any Engine as may be required
to be made from time to time during the Term by Applicable Law regardless of
upon whom such requirements are, by their terms, nominally imposed; provided,
that the Lessee may, in good faith, contest the validity or application of any
such standard in any reasonable manner which does not materially adversely
affect the Lessor or the lien of the Indenture. In addition, the Lessee, at its
own expense, may from time to time make or cause to be made such alterations and
modifications in and additions to the Airframe and any Engine as the Lessee may
deem desirable in the proper conduct of its business (including, without
limitation, removal of Parts), provided further that no such alteration,
modification or addition diminishes, in the Lessee's reasonable judgment, the
value, utility, condition or airworthiness of such Airframe or Engine below the
value, utility, condition or airworthiness thereof immediately prior to such
alteration, modification or addition, assuming such Airframe or Engine was then
in the condition required to be maintained by the terms of this Lease, except
that the value (but not the utility, condition or airworthiness) of the Aircraft
may be reduced by the value of Parts which the Lessee deems obsolete or no
longer suitable or appropriate for use in the Airframe or any Engine which shall
have been removed and not replaced, if the aggregate value of all such obsolete
or unsuitable Parts removed from the Aircraft and not replaced shall not exceed
$300,000. Title to all Parts incorporated or installed in or attached or added
to the Airframe or any Engine as the result of any alteration, modification or
addition effected by the Lessee shall, without further act, vest in the Lessor
free and clear of any Liens except Permitted Liens and become subject to this
Lease; provided that the Lessee may, at any time during the Term, remove any
such Part from the Airframe or an Engine if (i) such Part is in addition to, and
not in replacement of or in substitution for, any Part originally incorporated
or installed in or attached to such Airframe or Engine at the time of delivery
thereof hereunder or any Part in replacement of, or in substitution for, any
such original Part, (ii) such Part is
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not required to be incorporated or installed in or attached or added to such
Airframe or Engine pursuant to the terms of Section 5(d) or the first sentence
of this Section 7(d) and (iii) such Part can be removed from such Airframe or
Engine without diminishing or impairing the value, condition, utility or
airworthiness which such Airframe or Engine would have had at the time of
removal had such alteration, modification or addition not been effected by the
Lessee assuming the Aircraft was otherwise maintained in the condition required
by this Lease. Upon the removal by the Lessee of any such Part as above
provided, title thereto shall, without further act, vest in the Lessee, in
"as-is, where-is" condition, free and clear of all rights of the Lessor and the
Indenture Trustee and any Lessor's Liens and such Part shall no longer be deemed
a Part hereunder. Any Part not removed by the Lessee as above provided prior to
the return of the Airframe or respective Engine to the Lessor hereunder shall
remain the property of the Lessor.
(e) Substitution of Engines.
The Lessee shall have the right at its option at any time, on at
least 30 days' prior notice to the Lessor and the Indenture Trustee, to
substitute, and if an Event of Loss shall have occurred with respect to an
Engine, shall within 90 days of the occurrence of such Event of Loss and on at
least five days' prior notice to the Lessor substitute, a Replacement Engine for
any Engine not then installed or held for use on the Airframe. In such event,
immediately upon the effectiveness of such substitution on the date set forth in
such notice and without further act, (i) title to the Replacement Engine shall
thereupon vest in the Lessor free and clear of all Liens (other than Permitted
Liens), (ii) title to the replaced Engine shall thereupon vest in the Lessee, in
"as-is, where-is" condition, free and clear of all rights of the Lessor and the
Indenture Trustee and any Lessor's Liens and shall no longer be deemed an Engine
hereunder, and (iii) such Replacement Engine shall become subject to this Lease
and be deemed part of the Aircraft for all purposes hereof to the same extent as
the Engine originally installed on or attached to the Airframe. Upon the
substitution of a Replacement Engine, the following conditions shall be
satisfied at the Lessee's sole cost and expense and the parties agree to
cooperate with the Lessee to the extent necessary to enable it to timely satisfy
such conditions:
(i) the following documents shall be duly authorized,
executed and delivered by the respective party or parties
thereto, and an executed counterpart of each shall be
delivered to the Lessor, the Owner Participant and, if the
Indenture is in effect, the Indenture Trustee:
(A) a Lease Supplement covering the Replacement
Engine, which shall have been duly filed for recordation
with the FAA;
(B) so long as the Indenture shall not have been
satisfied and discharged, an Indenture Supplement
covering
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the Replacement Engine, which shall have been duly filed
for recordation with the FAA;
(C) a full warranty bill of sale (as to title), in
form and substance satisfactory to the Lessor, covering
the Replacement Engine, executed by the owner thereof in
favor of the Lessor;
(D) as long as the Indenture is in effect, such
documents as may be required under Section 9.08 of the
Indenture relating to the Replacement Engine;
(E) (i) so long as the Indenture shall not have
been satisfied and discharged, such Uniform Commercial
Code financing statements covering the security
interests created by the Indenture (or any similar
statements or other documents required to be filed or
delivered pursuant to the laws of the jurisdiction in
which the Replacement Engine may be registered in
accordance with Section 5(e)), and (ii) "precautionary"
Uniform Commercial Code financing statements as are
deemed necessary or desirable by counsel for the Owner
Participant or the Indenture Trustee to protect the
ownership interests of the Owner Trustee and the
security interests of the Indenture Trustee in the
Replacement Engine; and
(F) an Officer's Certificate of the Lessee
certifying that the Replacement Engine is of at least
equal value and utility, and in as good operating
condition, as the Engine it replaces assuming such
Engine had been maintained in the condition required
hereunder; and
(ii) upon request by the Lessor or the Indenture
Trustee, the Lessee shall furnish the Lessor and the Indenture
Trustee with an opinion, reasonably satisfactory in form and
substance to the Lessor and the Indenture Trustee, of the
Lessee's counsel, which may be the Lessee's General Counsel or
Associate General Counsel, to the effect that such bills of
sale or other documents reasonably requested by the Lessor or
the Indenture Trustee are sufficient to convey title to such
Replacement Engine to the Lessor and with respect to the
effectiveness of the interests in the Indenture Estate which
the Indenture purports to create.
Upon satisfaction of all conditions to such substitution, (x) the
Lessor shall execute and deliver, and cause the Indenture Trustee to execute and
deliver to the Lessee such bills of sale and other documents and instruments as
the Lessee shall
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reasonably request to evidence the transfer to the Lessee and vesting of all
right, title and interest in and to the replaced Engine in the Lessee, in
"as-is, where-is" condition, free and clear of all right, title and interest of
the Lessor and the Indenture Trustee, and any Lessor's Liens; (y) the Lessor
shall assign to the Lessee all claims it may have against any other Person
relating to an Event of Loss giving rise to such substitution and shall exercise
such rights as it has to cause such assignment to be free and clear of the Lien
of the Indenture and (z) the Lessee shall receive all insurance proceeds (other
than those reserved to others under Section 9(f) hereof) and proceeds in respect
of any Event of Loss giving rise to such replacement to the extent not
previously applied to the purchase price of the Replacement Engine as provided
in Sections 9(e)(i) and 8(e)(B).
Section 8. Loss, Destruction or Requisition.
(a) Event of Loss with Respect to the Airframe.
Upon the occurrence of an Event of Loss with respect to the
Airframe, the Lessee shall forthwith (and in any event within 30 days after such
occurrence) give the Lessor and the Indenture Trustee notice of such Event of
Loss. The Lessee shall, within 60 days after such occurrence, give the Lessor
and the Indenture Trustee notice of its election to perform one of the following
options (it being agreed that if the Lessee shall not have given the Lessor such
notice of such election, the Lessee shall be deemed to have elected to perform
the option identified in the following clause (ii)):
(i) subject to the satisfaction of the closing
conditions contained in Section 8(d), on a date not more than
180 days after the occurrence of the Event of Loss, convey or
cause to be conveyed to the Lessor, and to be leased by the
Lessee hereunder in replacement of the Airframe and Engines
with respect to which the Event of Loss occurred, a
Replacement Airframe (together with the same number of
Replacement Engines as the number of Engines, if any, which
were subject to such Event of Loss), such Replacement Airframe
and Replacement Engines to be free and clear of all Liens
except Permitted Liens and to have a value and utility at
least equal to the Airframe and Engines, if any, so replaced
(assuming such Airframe and Engines were in the condition and
repair required by the terms hereof); provided that, if the
Lessee shall not perform its obligation to effect such
replacement under this clause (i) during the 180-day period of
time provided herein, it shall give the Lessor and the
Indenture Trustee notice to such effect upon or before the
expiration of such period of time and shall promptly pay on
the first Loss Payment Date next following the thirtieth
(30th) day after the date of such notice to the Lessor, in
immediately available funds, the amount specified in clause
(ii) below; or
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(ii) pay or cause to be paid to the Lessor in
immediately available funds on a date specified at least 30
days in advance by the Lessee, which date shall be a
Termination Date not more than 180 days after the occurrence
of the Event of Loss, an amount equal to (A) the arrears
portion, if any, of Basic Rent payable on such Termination
Date, or if such Termination Date is not a date on which Basic
Rent is payable, a pro-rata portion (pro-rated daily) of the
arrears portion, if any, of Basic Rent payable on the next
succeeding date on which Basic Rent is payable, together with
all unpaid Termination or Basic Rent, if any, payable before
such payment date plus (B) all unpaid Supplemental Rent (other
than Value) due on or before such payment date, plus (C) the
Termination Value for the Aircraft determined as of the date
of payment or, if such date of payment is beyond the end of
the Term, the Termination Value as of the last Termination
Date of the Term.
(b) Effect of Replacement.
Should the Lessee have provided a Replacement Aircraft as provided
for in Section 8(a)(i), (i) this Lease shall continue with respect to such
Replacement Aircraft as though no Event of Loss had occurred; (ii) the Lessor
shall convey "as-is, where-is", without recourse or warranty except for a
warranty against Lessor's Liens, to the Lessee all right, title and interest of
the Lessor, in and to the Airframe and the Engine or Engines, if any, installed
on the Airframe upon the occurrence of the Event of Loss by executing and
delivering to the Lessee such bills of sale and other documents and instruments
as the Lessee may reasonably request to evidence such conveyance and shall
exercise such rights as it has to cause such Airframe and Engines and the
Purchase Agreement and Assignment with respect to such Airframe and Engines to
be released from the Lien of the Indenture; (iii) the Lessor shall assign to the
Lessee all claims it may have against any other Person arising from the Event of
Loss and (iv) the Lessee shall be entitled to receive all insurance proceeds
(other than those reserved to others under Section 9(f)) and proceeds from any
award in respect of condemnation, confiscation, seizure or requisition,
including any investment interest thereon, to the extent not previously applied
to the purchase price of the Replacement Aircraft as provided in Sections
9(e)(iii) and 8(e)(i).
(c) Effect of Termination Value Payment.
In the event of a payment in full of the Termination Value for the
Aircraft and other Rent payable as provided in Section 8(a)(ii), (i) this Lease
and the obligations of the Lessee to pay Rent (except for Supplemental Rent
obligations which survive pursuant to Section 3(c) and Articles 6 and 7 of the
Participation Agreement or the Tax Indemnity Agreement or which have accrued but
have not otherwise been paid as of the date of such payment) shall terminate and
the Term shall end, (ii) any remaining insurance proceeds (other than those
reserved to others under Section 9(f)), including
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any investment interest thereon, shall be promptly paid over to the Lessee; and
(iii) the Lessor shall convey, "as-is, where-is" without recourse or warranty,
except for a warranty against Lessor's Liens, to the Lessee all right, title and
interest of the Lessor in and to the Airframe and Engines and shall execute and
deliver to the Lessee such bills of sale and other documents and instruments as
the Lessee may reasonably request to evidence such conveyance and shall exercise
such rights as it has to cause to be released from the Lien of the Indenture,
the Airframe and the Engines and the Purchase Agreement and Assignment with
respect to such Airframe and Engines, all claims for damage to such Airframe and
Engines, if any, against third persons arising from the Event of Loss and any
interest of the Lessor in engines (which are not Engines) installed on the
Airframe.
(d) Conditions to Airframe Replacement.
The Lessee's right to substitute a Replacement Aircraft as provided
in Section 8(a)(i) shall be subject to the fulfillment, at the Lessee's sole
cost and expense, in addition to the conditions contained in such Section
8(a)(i), of the following conditions precedent:
(i) On the date when the Replacement Aircraft is
delivered to the Lessor (such date being referred to in this
Section 8(d) as the "Replacement Closing Date"), no Event of
Default shall have occurred and be continuing and the Lessor
and the Indenture Trustee shall have received an Officer's
Certificate so certifying;
(ii) On the Replacement Closing Date the following
documents shall have been duly authorized, executed and
delivered by the respective party or parties thereto and shall
be in full force and effect, and an executed counterpart of
each thereof (or, in the case of the FAA Bills of Sale (or a
comparable document, if any, of another Aeronautical
Authority, if applicable) referred to below, a photocopy
thereof) shall have been delivered to the Lessor and the
Indenture Trustee:
(A) a Lease Supplement covering the Replacement Aircraft,
which shall have been duly filed for recordation with the FAA;
(B) so long as the Indenture shall not have been discharged
and satisfied, an Indenture Supplement covering the Replacement
Aircraft, which shall have been duly filed for recordation with the
FAA;
(C) an FAA Bill of Sale (or a comparable document, if any, of
another Aeronautical Authority, if applicable) covering the
Replacement Aircraft, executed by the owner thereof in favor of the
Lessor, and dated the Replacement Closing Date;
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(D) a full warranty (as to title) bill of sale, in form and
substance satisfactory to the Indenture Trustee and the Lessor,
covering the Replacement Aircraft, executed by the owner thereof in
favor of the Lessor, dated the Replacement Closing Date;
(E) as long as the Indenture is in effect, such documents as
may be required under Section 9.08 of the Indenture;
(F) (1) so long as the Indenture shall not have been
discharged, such Uniform Commercial Code financing statements (or
any similar statements or other documents required to be filed or
delivered pursuant to the laws of the jurisdiction in which the
Replacement Aircraft may be registered in accordance with Section
5(e)) covering the security interests created by the Indenture, and
(2) such "precautionary" Uniform Commercial Code financing
statements as are deemed necessary or desirable by counsel for the
Owner Participant or the Indenture Trustee to protect the ownership
interests of the Owner Trustee and the security interests of the
Indenture Trustee in the Replacement Aircraft; and
(G) an Officer's Certificate of the Lessee certifying that the
Replacement Aircraft is a Canadair Regional Jet Series 200ER
aircraft of a more advanced model in as good operating condition as,
the Aircraft it replaces assuming such Aircraft had been maintained
in the condition required hereunder;
(iii) On or before the Replacement Closing Date, the
Lessor and the Indenture Trustee (acting directly or by
authorization to their respective special counsel) shall have
received such documents and evidence with respect to the
Lessee, the Lessor, the owner of such Replacement Aircraft or
the Indenture Trustee, as the Lessor or the Indenture Trustee
or their respective special counsel may reasonably request in
order to establish the consummation of the transactions
contemplated by Section 8(a)(i) and this Section 8(d), the
taking of all necessary corporate action in connection
therewith and compliance with the conditions set forth in this
Section 8(d), in each case in form and substance reasonably
satisfactory to the Lessor and the Indenture Trustee;
(iv) The Lessor and the Indenture Trustee (acting
directly or by authorization to their respective special
counsel) shall each have received satisfactory evidence as to
the compliance with Section 9 hereof with respect to the
Replacement Aircraft;
(v) On the Replacement Closing Date, (A) the Lessor
shall receive good title to the Replacement Aircraft free and
clear of
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Liens (other than Permitted Liens), (B) the Replacement
Aircraft shall have been duly certified by the Aeronautical
Authority as to type and airworthiness in accordance with the
terms of this Lease, and (C) application for registration of
the Replacement Aircraft in accordance with Section 5(e) shall
have been duly made with the Aeronautical Authority;
(vi) the Owner Participant shall have received an
appraisal reasonably satisfactory to it with respect to the
Replacement Aircraft;
(vii) The Lessor and the Indenture Trustee shall have
received (acting directly or by authorization to its special
counsel) (A) an opinion, satisfactory in form and substance to
the Lessor and the Indenture Trustee, of counsel to the Lessee
(which may be the Lessee's General Counsel) to the effect that
the bill of sale referred to in clause (ii)(D) above
constitutes an effective instrument for the conveyance of
title to the Replacement Airframe and Replacement Engines, if
any, to the Lessor, and (B) an opinion of qualified FAA
counsel (or counsel in such jurisdiction outside of the United
States where the Aircraft may be registered in accordance with
Section 5(e)), as to, in the case of FAA counsel, the due
recordation of the Lease Supplement, the Indenture Supplement
and all other documents or instruments the recordation of
which is necessary to perfect and protect the rights of the
Lessor and the Indenture Trustee in the Replacement Aircraft
or, in the case of counsel in another jurisdiction, the taking
of all action necessary in such jurisdiction for such
purposes; and
(viii) Either (1) the Owner Participant shall have
received an opinion of independent tax counsel (selected by
the Owner Participant and reasonably acceptable to the
Lessee), reasonably satisfactory to the Owner Participant, to
the effect that there shall be no adverse tax consequences
resulting from such replacement (and the Owner Participant
shall use its best efforts to cause a timely opinion to be
delivered) or (2) the Lessee shall have agreed to indemnify
the Owner Participant for such adverse tax consequences as may
be identified in such an opinion.
(e) Non-Insurance Payments Received on Account of an Event of Loss.
As between the Lessor and the Lessee, any payments on account of an
Event of Loss (other than insurance proceeds or other payments the application
of which is provided for in this Section 8 or elsewhere in this Lease, as the
case may be, or payments in respect of damage to the business or property of the
Lessee) with
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respect to the Aircraft, an Engine or any Part received at any time by the
Lessor or by the Lessee from any governmental authority or other Person will be
applied as follows:
(i) if such payments are received with respect to an
Event of Loss as to the Aircraft, and the Airframe or the
Airframe and the Engines or engines installed thereon are
being replaced by the Lessee pursuant to Section 8(a)(i), such
payments shall be paid over to, or retained by, the Lessee,
provided that if the Lessee has not completed such
replacement, such payments shall be paid over to, or retained
by, the Lessor as security, and upon completion of, or in
connection with a closing for, such replacement, be paid over
to or retained by the Lessee;
(ii) if such payments are received with respect to an
Event of Loss to an Engine or Part that has been or is being
replaced by the Lessee pursuant to the terms hereof, such
payments shall be paid over to, or retained by, the Lessee;
and
(iii) if such payments are received with respect to an
Event of Loss as to the Aircraft, and if the Airframe or the
Airframe and the Engines or engines installed thereon has not
been and will not be replaced as contemplated by Section 8(a),
(x) so much of such payments as shall not exceed the
Termination Value and other amounts required to be paid by the
Lessee pursuant to Section 8(a) hereof shall be applied in
reduction of the Lessee's obligation to pay such Termination
Value and other amounts, to the extent not already paid by the
Lessee, and, after the Termination Value and all amounts
required to be paid to the Lessor pursuant to Section 8(a)(ii)
above shall be paid in full, shall be applied to reimburse the
Lessee for such Termination Value and other amounts up to the
full amount thereof, and (y) the balance, if any, of such
payment remaining thereafter shall be applied to reimburse the
Lessee for its reasonable costs (including attorney's fees),
if any, of procuring such payments, and (z) the balance
remaining, if any, shall then be distributed between the
Lessor and the Lessee as their interests may appear.
(f) Requisition for Use.
In the event of a requisition for use by any government during the
Term of the Airframe and the Engines, if any, or engines installed on the
Airframe, the Lessee shall promptly notify the Lessor of such requisition and
all of the Lessee's obligations under this Lease shall continue to the same
extent as if such requisition had not occurred except to the extent that the
performance or observance of any obligation by the Lessee shall have been
prevented or delayed by such requisition, provided that the Lessee's obligations
for the payment of money and under Section 9 (except while
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an assumption of liability by the government of the United States of the scope
referred to in Section 5(c) is in effect) shall not be reduced or delayed by
such requisition. Any payments received by the Lessor or the Lessee from such
government with respect to such requisition of use shall be paid over to, or
retained by, the Lessee. In the event of an Event of Loss of an Engine resulting
from the requisition for use by a government of such Engine (but not the
Airframe), the Lessee will replace such Engine hereunder by complying with the
terms of Section 7(e) and any payments received by the Lessor or the Lessee from
such government with respect to such requisition shall be paid over to, or
retained by, the Lessee.
(g) Certain Payments to be Held As Security.
Any amount referred to in this Section 8 or Section 9 hereof which
is payable to the Lessee shall not be paid to the Lessee, or, if it has been
previously paid directly to the Lessee, shall not be retained by the Lessee, if
at the time of such payment a Specified Default shall have occurred and be
continuing, but shall be paid to and held by the Lessor as security for the
obligations of the Lessee under this Lease, and at such time as there shall not
be continuing any such Specified Default, such amount and any gain realized as a
result of Permitted Investments required to be made pursuant to Section 15 or
Section 5.08 of the Indenture shall be paid over to the Lessee.
Section 9. Insurance.
(a) Public Liability and Property Damage Insurance.
Subject to the rights of the Lessee under Section 9(d), the Lessee
shall, without expense to the Lessor, maintain or cause to be maintained in
effect at all times during the Term with insurers of recognized responsibility
public liability insurance (including, without limitation, passenger legal
liability, property damage and product liability coverage but excluding
manufacturer's product liability coverage) with respect to the Aircraft in an
amount not less than the Lessee may carry from time to time on other similar
aircraft in its fleet but not less than the Minimum Liability Amount; provided
that an agreement of the Government to insure against or indemnify for
substantially the same risks to at least the same amount shall satisfy the
requirements of this Section 9(a). Such insurance shall be of the type usually
carried by the Lessee with respect to similar aircraft and engines, and covering
risks of the kind customarily insured against by the Lessee.
During any period that the Aircraft is grounded and not in operation
for any reason, the Lessee may modify the insurance required by this Section
9(a)(i) to reduce the amounts of public liability and property damage insurance
and (ii) to modify the scope of the risks covered and the type of insurance, in
both circumstances to conform to such insurance customary in the United States
airlines industry for regional air carriers similarly situated with the Lessee
in respect of similar aircraft which are grounded, not in operation, and stored
or hangared, except that the amounts of coverage and scope of risk covered and
the type of insurance shall be the same as from
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time to time applicable to aircraft owned or leased by Lessee on the ground, not
in operation, and stored or hangared.
(b) Insurance Against Loss or Damage to the Aircraft and Engines.
Subject to the rights of the Lessee under Section 9(d), the Lessee
shall, without expense to the Lessor, maintain or cause to be maintained in
effect at all times during the Term with insurers of recognized responsibility
all risk, agreed value, ground and flight hull insurance, which may exclude war
risks and allied perils, covering the Aircraft for an amount not less than the
Termination Value from time to time; provided that, neither the Lessee nor any
Permitted Sublessee shall be required to maintain all-risk flight aircraft hull
insurance with respect to any period in which the Aircraft is grounded for any
reason and properly stored or hangared. Such hull insurance or other personal
property insurance of the Lessee shall cover Engines or engines and Parts
temporarily removed from the Airframe, pending replacement by installation of
the same or similar Engines, engines or Parts on the Airframe but such insurance
need not cover an Engine while attached to an airframe not owned, leased or
operated by the Lessee or a permitted sublessee. Such insurance shall be of the
type usually carried by the Lessee with respect to similar aircraft and engines,
and covering risks of the kind customarily insured against by the Lessee. If and
to the extent that the Lessee or a sublessee operates the Aircraft (A) on routes
where it maintains war risk insurance in effect with respect to other similar
owned or leased aircraft in its fleet, or (B) on routes (other than routes
within the United States, Canada, Mexico, Bermuda and islands other than Cuba in
the Caribbean Basin) where the custom in the industry is to carry war risk
insurance, the Lessee or such sublessee shall maintain or cause to be maintained
such insurance in effect with respect to the Aircraft in the lesser of an amount
at least equal to Termination Value or the amount of such insurance customarily
carried by corporations engaged in the same or similar business similarly
situated with the Lessee and owning or operating similar aircraft and engines on
such routes or similar routes, provided that if the requirement to maintain war
risk insurance arises under clause (A) of this sentence, such insurance shall be
maintained in an amount not less than that maintained by the Lessee or such
sublessee on similar aircraft in its fleet. An agreement by the United States
Government to insure against or indemnify for substantially the same risks to at
least the same amount will satisfy any of the requirements of this Section 9(b).
(c) Additional Insureds; Loss Payment.
The Lessee shall cause all policies of insurance carried in
accordance with this Section 9 to name the Additional Insureds as their
respective interests may appear as additional insureds. Such policies shall
provide with respect to such Additional Insureds that (i) none of their
respective interests in such policies shall be invalidated by any act or
omission or breach of warranty or condition contained in such policies by the
Lessee or, in the case of any particular Additional Insured, any other
Additional Insured; (ii) no cancellation or lapse of coverage for nonpayment of
premium or otherwise, and no substantial change of coverage which adversely
affects the interests
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of any such Additional Insured, shall be effective as to such Additional Insured
until 30 days (or such lesser period as may be applicable in the case of any war
risk coverage) after receipt by such Additional Insured of written notice from
the insurers of such cancellation, lapse or change; (iii) they shall have no
liability for premiums, commissions, calls, assessments or advances with respect
to such policies; (iv) such policies will be primary without any right of
contribution from any other insurance carried by such Additional Insureds; and
(v) the insurers waive any rights of set-off, counterclaim, deduction or
subrogation against such Additional Insureds. Each liability policy shall
provide that all the provisions thereof, except the limits of liability, shall
operate in the same manner as if there were a separate policy covering each
insured and provide that the exercise by the insurer of rights of subrogation
derived from rights retained by the Lessee will not delay payment of any claim
that would otherwise be payable but for such rights of subrogation. Each hull
policy shall name the Indenture Trustee as loss payee as long as the Indenture
shall remain in effect and thereafter shall name the Lessor as loss payee;
provided that, so long as the insurers shall not have received written notice
that an Event of Default has occurred and is continuing, if insurance proceeds
in the aggregate equal $2,000,000 or less, then such proceeds shall be payable
to the Lessee and, notwithstanding the foregoing, any amounts up to Termination
Value (i) of any proceeds which in the aggregate exceed $2,000,000, (ii) of any
proceeds in respect of a total loss or an Event of Loss or (iii) if the insurers
shall have received written notice that an Event of Default has occurred and is
continuing, any proceeds with respect to any single loss, shall be payable to
such loss payee.
(d) Deductibles and Self-Insurance.
The Lessee may from time to time self-insure, by way of deductible
or premium adjustment provisions in insurance policies or otherwise, the risks
required to be insured against pursuant to this Section 9 in such amounts as are
then self-insured with respect to similar owned or leased aircraft in the
Lessee's fleet but in no case shall such self-insurance in the aggregate exceed
$15,000,000 on a per occurrence or on fleetwide basis. A deductible per
occurrence that is not in excess of the prevailing standard market deductible
for similar aircraft shall be permitted, for each aircraft in the Lessee's
fleet, in addition to such self-insurance.
(e) Application of Hull Insurance Proceeds.
Subject to Section 8(g), as between the Lessor and the Lessee, any
payments received under policies of hull or other property insurance required to
be maintained by the Lessee pursuant to Section 9(b), shall be applied as
follows:
(i) if such payments are received with respect to loss
or damage (including an Event of Loss with respect to an
Engine) not constituting an Event of Loss with respect to the
Airframe, payments in the aggregate of $2,000,000 or less
shall be paid over to or retained by the Lessee and, subject
to Section 9(c), any payments which in the aggregate are
greater than $2,000,000 shall
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be paid over to or retained by the Lessor for payment to the
Lessee only upon performance of its repair or replacement
obligation;
(ii) if such payments are received with respect to an
Event of Loss with respect to the Airframe and the Airframe is
not being replaced by the Lessee pursuant to Section 8(a)(i),
so much of such payments as shall not exceed the Termination
Value and other amounts required to be paid by the Lessee
pursuant to Section 8(a)(ii) shall be applied in reduction of
the Lessee's obligation to pay such amounts if not already
paid by the Lessee, and to reimburse the Lessee if such
amounts shall have been paid, and the balance, if any, of such
payments shall be promptly paid over to or retained by the
Lessee; and
(iii) if such payments are received with respect to the
Airframe or the Airframe and Engines or engines installed
thereon and the Airframe is being replaced by the Lessee
pursuant to Section 8(a)(i), such payments shall be paid over
to, or retained by the Lessee, provided that if the Lessee has
not completed such replacement, such payments shall be paid
over to, or retained by, the Lessor as security, and upon
completion of, or in connection with a closing for, such
replacement, be paid over to or retained by the Lessee.
(f) Insurance for Own Account.
Nothing in this Section 9 shall prohibit the Lessor, the Owner
Participant or the Lessee obtaining insurance with respect to the Aircraft for
its own account (including, without limitation, in the case of the Lessee, hull
insurance under the same policies maintained pursuant to this Section 9 in
amounts in excess of those required to be maintained pursuant to this Section 9)
and any proceeds payable thereunder shall be payable as provided in the
insurance policy relating thereto, provided that no such insurance may be
obtained which would limit or otherwise adversely affect the availability
coverage or payment of any insurance required to be obtained or maintained
pursuant to this Section 9, it being understood that all salvage rights to the
Airframe or the Engines shall remain with the Lessee's insurers at all times.
(g) Reports, etc.
The Lessee will during the Term furnish to the Lessor and the
Indenture Trustee evidence of renewal of the insurance policies required
pursuant to this Section 9 prior to the cancellation, lapse or expiration of
such insurance policies and, on or before the renewal dates of the insurance
policies carried by the Lessee pursuant to this Section 9, a report signed by a
firm of aircraft insurance brokers, not affiliated with the Lessee, appointed by
the Lessee and reasonably satisfactory to the Lessor, stating the opinion of
such firm that the insurance then carried and maintained on the Aircraft
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complies with the terms hereof and that such renewal insurance will on and after
the effective date thereof so comply with the terms hereof, provided that all
information contained in such report shall be held confidential by the Lessor
and the Indenture Trustee, and shall not be furnished or disclosed by them to
anyone except the Owner Participant and bona fide prospective transferees of the
Owner Participant and their respective agents (provided that they shall agree
for the benefit of the Lessee to hold all such information similarly
confidential) or as may be required by Applicable Law. The Lessee will instruct
such firm to give prompt written advice to the Lessor and the Indenture Trustee
of any default in the payment of any premium and of any other act or omission on
the part of the Lessee of which it has knowledge and which would in such firm's
opinion invalidate or render unenforceable, in whole or in any material part,
any insurance on the Aircraft. The Lessee will also instruct such firm to advise
the Lessor and the Indenture Trustee in writing at least 30 days prior to the
termination or cancellation of, or material adverse change in, such insurance
carried and maintained on the Aircraft pursuant to this Section 9.
Section 10. Liens.
The Lessee shall not during the Term directly or indirectly create,
incur, assume or suffer to exist any Lien on or with respect to the Airframe or
any Engine or title thereto or any interest therein or in this Lease except (a)
the respective rights of the Lessor and the Lessee as provided herein, the Lien
of the Indenture and the rights of the parties to the other Operative
Agreements; (b) the rights of others under agreements or arrangements to the
extent expressly permitted in Sections 5(b) and 7(c); (c) Liens for Taxes either
not yet due or being contested in good faith by appropriate proceedings so long
as such proceedings do not involve a material danger of the sale, forfeiture or
loss of the Airframe or an Engine; (d) Liens of suppliers, mechanics, workers,
repairers, employees, airport operators, air traffic control authorities or
other like Liens arising in the ordinary course of business and for amounts the
payment of which is either not yet delinquent or is being contested in good
faith (and for the payment of which adequate reserves have been provided) by
appropriate proceedings, so long as such proceedings do not involve a material
danger of the sale, forfeiture or loss of the Airframe or an Engine; (e) Liens
arising out of judgments or awards against the Lessee with respect to which at
the time there shall have been secured a stay of execution; (f) Lessor's Liens,
Trust Company Liens and Indenture Trustee Liens; (g) salvage and similar rights
of insurers under policies of insurance maintained with respect to the Aircraft
and (h) Liens with respect to which the Lessee (or any sublessee) has provided a
bond or other security adequate in the reasonable opinion of the Lessor. Liens
described in clauses (a) through (h) above are referred to herein as "Permitted
Liens." The Lessee shall promptly, at its own expense, take such action as may
be necessary to duly discharge (by bonding or otherwise) any Lien other than a
Permitted Lien arising at any time during the Term;
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Section 11. Recordation and Further Assurances.
(a) Recordation of Lease.
The Lessee shall cause this Lease, any Lease Supplements, and any
and all additional instruments which shall be executed pursuant to the terms
hereof to be kept, filed and recorded and to be re-executed, refiled and
re-recorded at all times during the Term with the FAA or other Aeronautical
Authority to the extent required to perfect and preserve the Lessor's interest
in the Aircraft.
(b) Further Assurances.
The Lessee and the Lessor will each promptly and duly execute and
deliver to the other such further documents and assurances and take such further
action as the other may from time to time reasonably request in order to more
effectively carry out the intent and purpose of this Lease and to establish and
protect the rights and remedies created or intended to be created in favor of
the Lessor and the Lessee hereunder, including, without limitation, if requested
by the Lessor or the Lessee, the execution and delivery of supplements or
amendments hereto, in recordable form, subjecting any replacement or substituted
aircraft or engine to this Lease and the recording or filing of counterparts
hereof, or of financing statements with respect hereto.
Section 12. Return of Aircraft and Records.
(a) Return of Aircraft.
Upon the termination of this Lease at the expiration of the Term or
upon the earlier termination of this Lease pursuant to the terms hereof, unless
the Lessee shall purchase the Aircraft or there shall have been an Event of Loss
with respect to the Aircraft, the Lessee, at its own expense, shall, except as
otherwise expressly provided herein, return the Airframe by delivering the same
to the Lessor in the continental United States of America at a location on the
Lessee's domestic route system chosen by the Lessee, fully equipped with two
Engines or other General Electric CF34-3B1 Series 200 engines (or engines of a
comparable or another manufacturer of a comparable or an improved model and
suitable for installation and use on the Airframe and owned by the Lessee) duly
installed thereon.
(b) Return of Other Engines.
In the event any engine not owned by the Lessor shall be returned
with the Airframe, such engine shall satisfy the requirements for a Replacement
Engine, and the Lessee shall, at its own expense and concurrently with such
return, furnish the Lessor with a full warranty bill of sale, in form and
substance reasonably satisfactory to the Lessor, with respect to each such
engine and shall take such other action as the Lessor may reasonably request in
order that such engine shall be duly and properly
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titled in the Lessor free and clear of all Liens other than Lessor's Liens. Upon
passage of title such engine shall be deemed to be an Engine for all purposes
hereof and thereupon the Lessor will transfer to the Lessee, without recourse or
warranty except a warranty against Lessor's Liens, all right, title and interest
of the Lessor or any affiliate in and to an Engine not installed on the Airframe
at the time of the return thereof and, if the Indenture has not been discharged,
shall exercise such rights as it has to cause such Engine to be released from
the Lien of the Indenture.
(c) Fuel; Records.
Upon the return of the Aircraft, (i) the Lessee shall have no
obligation with respect to the amount of fuel or oil contained in the Airframe
and the Lessor shall reimburse the Lessee for all fuel contained in the
Aircraft's fuel tanks at the Lessee's then current cost of fuel at the place of
redelivery and (ii) the Lessee shall deliver to the Lessor all logs, manuals,
certificates and inspection, modification and overhaul records which are
required to be maintained with respect thereto under applicable rules and
regulations of the FAA and Department of Transportation.
(d) Condition of Aircraft.
The Aircraft when returned to the Lessor shall be in the operating
condition required by Exhibit F hereto.
(e) Delayed Return. (i) In the event that the use of the Aircraft,
Airframe or any Engine in the normal course of the business of air
transportation is prohibited on the last day of the Term or the date the
Aircraft is required to be redelivered pursuant to Section 14 due to
circumstances beyond the Lessee's or any sublessee's control, the Lessee shall
not be required to return such Aircraft to the Lessor but may retain custody and
control of the Aircraft for a period not in excess of 180 days beyond the last
day of the Term or such date in order to attempt in a diligent manner to remedy
any condition prohibiting such use or (ii) in connection with any sublease of
the Aircraft by the Lessee permitted under the terms of this Lease, the Lessee
may at its option, upon written notice to the Lessor given not less than 30 days
prior to the last day of the Term or such date, extend this Lease for a period
not in excess of 30 days beyond the last day of the Term in order to enable the
Lessee to bring the Aircraft to the condition required under this Section 12 on
its return to the Lessor; provided that in either case, the Lessee shall pay to
the Lessor at monthly intervals the daily equivalent of the average annual Basic
Rent payable during the Term (excluding the Interim Term) pursuant to the terms
hereof for each day of such period.
Section 13. Renewal Option and Purchase Options.
(a) Renewal Terms.
The Lessee shall have the right to extend this Lease for a period of
___ years beyond the expiration of the Basic Term (the "Fixed Renewal Term"). At
the end
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of the Fixed Renewal Term, the Lessee shall have the right to further extend
this Lease for any number of successive periods of not less than one year (each
a "Subsequent Renewal Term"; the Fixed Renewal Term and each Subsequent Renewal
Term, being hereinafter sometimes called a ("Renewal Term"). The Fixed Renewal
Term will commence at the end of the Basic Term and a Subsequent Renewal Term
will commence at the end of the Fixed Renewal Term or the preceding Subsequent
Renewal Term, as the case may be. Such right to extend this Lease shall be
exercised upon notice to the Lessor not less than 120 days before the expiration
of the Basic Term or the preceding Renewal Term, as the case may be. Such notice
shall be irrevocable except that in the event the Lessee gives such notice to
the Lessor 180 or more days before the end of the Basic Term or the Renewal Term
then in effect, as the case may be, the Lessee may revoke its election to extend
this Lease within 15 days following the determination of the Fair Market Rental
Value of the Aircraft but in no event later than 90 days prior to the end of the
Basic Term or the preceding Renewal Term, as the case may be. If the Lessee
requests a determination of Fair Market Rental Value at least 180 days before
the expiration of the Basic Term or a Renewal Term, as the case may be, the
Lessor and the Lessee shall comply in a timely manner with their respective
obligations under the definition of "Fair Market Rental Value" to allow any
appraisal of Fair Market Rental Value to be completed in sufficient time to
permit the Lessee to exercise the revocation right provided above. If no
Specified Default shall have occurred and be continuing on the date of such
notice or on the date of the commencement of any Renewal Term, then this Lease
shall be extended for the additional period of such Renewal Term as specified in
such notice on the same conditions as provided for herein. The Basic Rent
payable per annum during the Fixed Renewal Term shall be the lesser of (i) the
then Fair Market Rental Value for the Aircraft and (ii) [__%] of the average
annual Basic Rent over the Basic Term. The rental payable per annum during any
Subsequent Renewal Term shall be the then Fair Market Rental Value for the
Aircraft. Such rental during each Renewal Term shall be payable semi-annually in
arrears. The Termination Value of the Aircraft during each Renewal Term shall be
the lesser of the Fair Market Sales Value thereof at the commencement of such
Renewal Term or ___% of Lessor's Cost.
(b) Lessee Purchase Options.
(i) Rights to Purchase.
The Lessee shall have the right upon notice as provided herein to
purchase the Aircraft (A) on (the "EBO Date") for a price equal to % of Lessor's
Cost (the "EBO Price"); (B) upon the termination of the Basic Term a price equal
to the lesser of the then Fair Market Sales Value of the Aircraft and a price
equal to % of Lessor's Cost; or (C) at the end of any Renewal Term for a price
equal to the then Fair Market Sales Value. Upon the payment by the Lessee of the
purchase price for the Aircraft and the arrears portion of Basic Rent, if any,
payable on the date of purchase, together with all unpaid Basic Rent, if any,
payable before such date and all Supplemental Rent then due and payable
hereunder, the Term shall end and the obligations of the Lessee to pay Rent
hereunder (except for Supplemental Rent
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obligations surviving pursuant to Section 3(c), Articles 8 and 9 of the
Participation Agreement or the Tax Indemnity Agreement or which have otherwise
accrued but not been paid as of the date of such payment) shall cease, and the
Lessor shall convey to the Lessee all right, title and interest of the Lessor in
and to the Aircraft on an "as-is, where is" basis, without recourse or warranty
except a warranty against Lessor's Liens.
(ii) Option to Assume Equipment Notes.
In the event the Lessee elects to purchase the Aircraft pursuant to
clause (A) of Section 13(b)(i), the Lessee may, at its election, assume the
payment obligations of the Lessor with respect to such Equipment Notes as
contemplated by Section 5.10 of the Participation Agreement, in which case the
purchase price to be paid by the Lessee shall be reduced by an amount equal to
the principal of and accrued interest on the Equipment Notes so assumed by the
Lessee.
(iii) Notice of Exercise of Option.
The Lessee's right to purchase provided for in clause (B) or (C) of
Section 13(b)(i) shall be exercised upon notice to the Lessor not less than 180
days before the applicable date of purchase provided in such clause (B) or (C)
as the case may be. Such notice shall be irrevocable, except that where the
purchase price is or may be measured by the Fair Market Sales Value of the
Aircraft the Lessee may revoke its exercise of an option to purchase the
Aircraft within 15 days following the determination of such Fair Market Sales
Value, but in no event later than 90 days prior to the applicable date of
purchase provided in such clause (B) or (C), as the case may be. The Lessee's
right to purchase provided for in clause (A) of Section 13(b)(i) shall be
exercised upon written notice to the Lessor not less than 30 days before the EBO
Date and shall be irrevocable when given.
Section 14. Voluntary Termination for Obsolescence.
(a) Termination by Sale of Aircraft.
So long as no Event of Default shall have occurred and be
continuing, the Lessee shall have the right at its option five years or more
after commencement of the Basic Term on at least 180 days' prior notice (which
notice shall be irrevocable, except as provided below) to the Lessor and the
Indenture Trustee, specifying a proposed date of termination which shall be a
Termination Date, to terminate this Lease if the chief financial officer of the
Lessee shall have certified in writing to the Lessor that the Aircraft shall
have become obsolete or shall be surplus to the Lessee's equipment requirements.
Subject to the Lessor's preemptive election under Section 14(c), during the
period following the giving of such notice of termination until the Termination
Date, the Lessee, as exclusive agent for the Lessor, shall endeavor to sell the
Aircraft "as is", without any warranty by the Lessor or the Lessee except as to
the Lessor's title, on behalf of the Lessor. The Lessee, in acting as agent for
the Lessor, taking account of the Lessor's right to make a preemptive election
under Section 14(c), shall have no
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liability to the Lessor for failure to obtain the best price, shall act in its
sole discretion, and shall be under no duty to solicit bids publicly or in any
particular market, and the Lessor acknowledges that the Lessee's sole interest
in acting as such agent is to sell the Aircraft at a price that reduces or
eliminates the Lessee's obligation hereunder to pay the difference between the
sales price and the Termination Value as of such Termination Date. So long as
the Lessor has not exercised its preemptive election under Section 14(c), the
Lessee may, by notice to the Lessor and the Indenture Trustee, withdraw its
notice of termination, and thereupon this Lease shall continue in full force and
effect. Withdrawal of notice of termination shall not exhaust the Lessee's right
to give a further notice of termination as provided herein. Unless the Lessee
shall withdraw its notice of termination as stated above or the Lessor shall
have made a preemptive election to take possession of the Aircraft in accordance
with Section 14(c), on the Termination Date, or such other date of sale as shall
be consented to in writing by the Lessor and the Lessee, which date shall
thereafter be deemed the Termination Date, the Lessee shall, upon payment in
full of the amounts described in Section 14(b), deliver the Airframe and Engines
or engines installed thereon to the party which shall have prior to such date
agreed to purchase the same, in the same manner as if delivery were being made
to the Lessor pursuant to Section 12, and shall duly transfer to such party
title to any engines which are not Engines delivered with the Airframe in
accordance with the terms of Section 12. The Lessor shall, without recourse or
warranty (except a warranty as to the absence of Lessor's Liens), simultaneously
therewith sell and convey title to the Airframe and the Engines or engines
conveyed to the Lessor as provided in Section 12 for cash to such party and
exercise such rights as it has to cause the Aircraft to be released from the
Lien of the Indenture. Upon the sale of the Airframe and the Engines or engines
conveyed to the Lessor as provided in Section 12 pursuant to this Section 14 and
receipt by the Lessor of all amounts referred to in Section 14(b), the Lessor
will transfer to the Lessee, without recourse or warranty (except a warranty as
to the absence of Lessor's Liens), all right, title and interest of the Lessor
in and to any Engines constituting part of the Aircraft but which were not
delivered to the purchaser with the Airframe.
(b) Payments Due Upon Sale of Aircraft.
The total selling price realized at any sale of the Airframe and
Engines or engines installed thereon in accordance with this Section 15 shall be
retained by the Lessor and, in addition, on the Termination Date, the Lessee
shall pay to the Lessor or, in the case of Supplemental Rent, to the Persons
entitled thereto, in immediately available funds, an amount equal to the sum of
(A) the excess, if any, of (x) the Termination Value as of the Termination Date,
over (y) the net proceeds of the sale of the Aircraft, plus (B) all unpaid
Supplemental Rent due on or before the Termination Date, plus (C) the arrears
portion, if any, of Basic Rent payable on such Termination Date, or if such
Termination Date is not a Basic Rent Payment Date, a pro-rata portion (pro-rated
daily) of the arrears portion, if any, of Basic Rent payable on the next
succeeding Basic Rent Payment Date, together with all unpaid Basic Rent, if any,
payable before the Termination Date.
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(c) Preemptive Election by Lessor.
Notwithstanding the foregoing provisions of this Section 14, the
Lessor may, within 15 days after receipt of the Lessee's notice of termination,
notify the Lessee of its preemptive election to take possession of the Aircraft,
which notice shall be accompanied by an irrevocable undertaking by the Lessor to
pay to the Indenture Trustee the amount required to pay in full (after giving
effect to any installment of Basic Rent due and payable on such date) the
aggregate unpaid principal amount of the outstanding Equipment Notes, together
with all accrued interest thereon and Make Whole Premium, if any (without
releasing Lessee from its obligations under clause (C) of Section 14(b) in
respect of the payment of such amount). Upon payment by the Lessor of such
amount to the Indenture Trustee, and payment of any Basic Rent due on such date,
the Lessee shall have no obligation to pay Termination Value. On the Termination
Date, if the Lessor shall have paid such amount to the Indenture Trustee, the
Lessee shall deliver the Airframe and Engines or engines installed thereon to
the Lessor in accordance with Section 12 and shall pay all unpaid Basic Rent, if
any, payable before the Termination Date, together with all accrued Basic Rent
(on a per diem basis), if any, which would otherwise have been paid in arrears
on the next following Basic Rent Payment Date, all unpaid Supplemental Rent due
on or before or after the Termination Date, and the Lessor shall transfer to the
Lessee title to any Engines constituting part of the Airframes but which were
not then installed on the Aircraft as provided in Section 12(b). If the Lessor,
having given notice or a preemptive election, shall fail to perform any of its
obligations pursuant to this Section 14(c) and as a result thereof this Lease
shall not be terminated on a proposed Termination Date, the Lessor shall
thereafter no longer be entitled to exercise its preemptive election to retain
the Aircraft upon any subsequent termination pursuant to this Section 14 and the
Lessee may at its option at any time thereafter submit a new termination notice.
(d) Termination of Lease.
Upon delivery by the Lessee of the Airframe and Engines or engines
installed thereon and payment by the Lessee of all amounts payable by the Lessee
under either Section 14(b) or 14(c), as the case may be, the obligations of the
Lessee to pay Rent (except for Supplemental Rent obligations surviving pursuant
to the second sentence of Section 3(c) and Articles 6 and 7 of the Participation
Agreement or the Tax Indemnity Agreement or which have otherwise accrued but not
paid as of the Termination Date) shall cease and the Term shall end.
(e) Effect of No Sale or Preemptive Delivery to Lessor.
If on the Termination Date no sale of the Aircraft shall have
occurred and the Lessee has not delivered the Aircraft to the Lessor pursuant to
Section 14(c), the Lessee's notice given pursuant to Section 14(a) shall be
deemed to be withdrawn as of such date and this Lease shall continue in full
force and effect, without prejudice, however, to any claims the Lessee may have
against any Person under the Participation Agreement or otherwise if a failure
to deliver the Aircraft to the Lessor pursuant to
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Section 14(c) shall have been due to a failure of the Lessor to make the payment
by the Lessor provided for in such Section.
Section 15. Investment of Security Funds.
Any monies paid to or retained by the Lessor which are required to
be paid to the Lessee or applied for the benefit of the Lessee (including,
without limitation, amounts payable to the Lessee under Sections 8 and 9), but
which the Lessor is entitled to hold under the terms hereof pending the
occurrence of some event or the performance of some act (including, without
limitation, the remedying of an Event of Default), shall, until paid to the
Lessee or applied as provided herein, be invested by the Lessor (or, if the
Indenture shall not have been discharged, the Indenture Trustee) from time to
time at the direction, risk and expense of the Lessee in Permitted Investments,
subject, in the case of investments by the Indenture Trustee to the terms of
Section 5.08 of the Indenture. There shall be promptly remitted to the Lessee
any gain (including interest received) realized as the result of any such
investment (net of any fees, commissions and other expenses, if any, incurred in
connection with such investment) unless a Specified Default shall have occurred
and be continuing, in which case such gains shall be held subject to the
preceding sentence. The Lessee will promptly pay to the Indenture Trustee or the
Lessor, as the case may be, on demand, the amount of any loss realized as the
result of any such investment (together with any fees, commissions and other
expenses, if any, incurred in connection with such investment).
Section 16. Events of Default.
The following events shall constitute Events of Default and each
such Event of Default shall be deemed to exist and continue so long as, but only
so long as, it shall not have been remedied:
(a) The Lessee shall fail to make any payment of (i) Basic Rent,
Termination Value or a payment required by clause (iii) of the second
sentence of Section 3(c) when due and such failure shall continue for a
period of 10 days or (ii) Supplemental Rent (other than Termination Value
or the payment required by clause (iii) of the second sentence of Section
3(c)) within 30 days after receipt by the Lessee of a written demand
therefor from the Lessor or the Indenture Trustee, provided, that in the
case of Supplemental Rent which constitutes an Excepted Payment, such
demand shall only be effective for purposes of this paragraph (a) if sent
by the Owner Participant or the Lessor and such failure shall not become
an Event of Default until the Owner Participant shall have notified the
Indenture Trustee that it has elected to treat such failure as an Event of
Default;
(b) The Lessee shall fail to procure and maintain property or
liability insurance pursuant to Section 9 or such insurance shall be
cancelled or lapse; provided that such lapse or cancellation shall not
constitute an Event of Default
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until the earlier of 30 days after receipt by the Lessor or the Indenture
Trustee of notice of such lapse or cancellation or the date that the lapse
or cancellation is effective as to the Lessor, the Owner Participant or
the Indenture Trustee;
(c) The Lessee shall operate the Aircraft after having received
notice that the public liability insurance required by Section 9(a) has
lapsed or has been cancelled;
(d) The Lessee shall fail to perform or observe any other covenant
or condition to be performed or observed by it hereunder or under any
other Operative Agreement (other than the Tax Indemnity Agreement), and
such failure shall continue unremedied for a period of 30 days after
delivery of notice of such failure from the Lessor or the Indenture
Trustee to the Lessee, unless such failure is curable and the Lessee
shall, after the delivery of such notice, be diligently proceeding to
correct such failure and shall in fact correct such failure 180 days after
delivery of such notice;
(e) Any material representation or warranty made by the Lessee
herein or in any Operative Agreement (other than the Tax Indemnity
Agreement) shall prove to have been incorrect in any material respect when
made and shall remain material at the time in question and shall not be
remedied within 30 days after notice thereof has been given to the Lessee
by the Lessor or the Indenture Trustee, unless such incorrectness is
curable and Lessee shall, after delivery of such notice, be diligently
proceeding to correct such failure and shall in fact correct such failure
180 days after the delivery of such notice;
(f) The Lessee shall consent to the appointment of or taking
possession by a receiver, assignee, custodian, sequestrator, trustee or
liquidator (or other similar official) of itself or of a substantial part
of its property, or the Lessee shall admit in writing its inability to pay
its debts generally as they come due (as provided in 11 U.S.C. ss.
303(h)(1)), or shall make a general assignment for the benefit of its
creditors, or the Lessee shall file a voluntary petition in bankruptcy or
a voluntary petition or answer seeking liquidation, reorganization or
other relief with respect to itself or its debts under the Federal
bankruptcy laws, as now or hereafter constituted or any other applicable
Federal or State bankruptcy, insolvency or other similar law or shall
consent to the entry of an order for relief in an involuntary case under
any such law or the Lessee shall file an answer admitting the material
allegations of a petition filed against the Lessee in any such proceeding,
or otherwise seek relief under the provisions of any now existing or
future Federal or State bankruptcy, insolvency or other similar law
providing for the reorganization or winding-up of corporations, or
providing for an agreement, composition, extension or adjustment with its
creditors;
(g) An order, judgment or decree shall be entered in any proceedings
by any court of competent jurisdiction appointing, without the consent of
the
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Lessee, a receiver, trustee or liquidator of the Lessee or of any
substantial part of its property, or any substantial part of the property
of the Lessee shall be sequestered, and any such order, judgment of decree
of appointment or sequestration shall remain in force undismissed,
unstayed or unvacated for a period of 90 days after the date of entry
thereof; or
(h) A petition against the Lessee in a proceeding under the Federal
bankruptcy laws or other insolvency laws as now or hereafter in effect
shall be filed and shall not be withdrawn or dismissed within 90 days
thereafter, or, under the provisions of any law providing for
reorganization or winding-up of corporations which may apply to the
Lessee, any court of competent jurisdiction shall assume jurisdiction,
custody or control of the Lessee or of any substantial part of its
property and such jurisdiction, custody or control shall remain in force
unrelinquished, unstayed or unterminated for a period of 90 days;
provided that, notwithstanding anything to the contrary contained in this Lease,
any failure of the Lessee to perform or observe any covenant, condition, or
agreement herein shall not constitute an Event of Default under clause (d) above
if such failure is caused solely by reason of an event referred to in the
definition of "Event of Loss" so long as the Lessee is continuing to comply with
the applicable terms of Section 8.
Section 17. Remedies.
Upon the occurrence of any Event of Default and at any time
thereafter so long as the same shall be continuing, the Lessor may, at its
option, declare this Lease to be in default by a notice to the Lessee (provided
that this Lease shall be deemed to have been declared in default without the
necessity of such notice upon the occurrence of any Event of Default described
in paragraph (f), (g) or (h) of Section 16 hereof); and at any time thereafter
so long as the Lessee shall not have remedied all outstanding Events of Default,
the Lessor may do, and the Lessee shall comply with, one or more of the
following with respect to the Airframe and all or any part of the Engines, as
the 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; provided that during any period the Aircraft is subject to the Civil
Reserve Air Fleet Program in accordance with the provisions of Section 5(b) and
in the possession of the United States government or an instrumentality or
agency thereof, the Lessor shall not, on account of any Event of Default, be
entitled to do any of the following in such manner as to limit the Lessee's
control under this Lease (or any sublessee's control under any sublease
permitted by the terms of this Lease) of any Airframe or any Engines, unless at
least 60 days' (or such lesser period, if any, as may then be applicable under
the Military Airlift Command Program of the United States Government) prior
notice of default hereunder shall have been given by the Lessor by registered or
certified mail to the Lessee (or any sublessee) with a copy addressed to the
Contracting Office Representative for the Military Airlift Command of the United
States Air Force under any contract with Lessee (or any sublessee) relating to
the Aircraft:
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(a) Cause the Lessee, upon the written demand of the Lessor and at
the Lessee's expense to, and the Lessee shall, promptly return the
Airframe and all or such part of the Engines as the Lessor may demand to
the Lessor in the manner and condition required by, and otherwise in
accordance with all of the provisions of, Section 12 as if the Airframe
and such Engines were being returned at the end of the Term; or the
Lessor, at its option, may cause public officials acting pursuant to
judicial order obtained in summary proceedings or otherwise to enter upon
the premises where the Airframe or any or all Engines are located or
reasonably believed to be located and take immediate possession of and
remove such Airframe or Engines, and the Lessee shall comply therewith,
all without liability to the Lessor for or by reason of such entry or
taking possession, whether for the restoration of damage to property
caused by such taking or otherwise; and the Lessee shall promptly execute
and deliver to the Lessor such instruments of title or other documents as
the Lessor may deem necessary or advisable to enable the Lessor or its
agent to obtain possession of the Airframe or the Engines, provided that
if the Lessee shall for any reason fail to execute and deliver such
instruments and documents after such request, the Lessor shall be
entitled, in a proceeding to which the Lessee shall be a necessary party,
to a judgment for specific performance, conferring the right to immediate
possession upon the Lessor and requiring the Lessee to execute and deliver
such instruments and documents to the Lessor;
(b) Sell or otherwise dispose of the Aircraft, at public or private
sale, as the Lessor may determine, or hold, use, operate, lease to others
or keep idle all or any part of the Airframe or any Engine as the Lessor,
in its sole discretion, may determine, in any such case free and clear of
any rights of the Lessee except as hereinafter set forth in this Section
17 and without any duty to account to the Lessee with respect to such
action or inaction or for any proceeds with respect thereto except to the
extent required by paragraph (d) below in the event the Lessor elects to
exercise its rights under said paragraph in lieu of its rights under
paragraph (c) below;
(c) Whether or not the Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph (a) or
paragraph (b) above with respect to the Aircraft, the Lessor, by written
notice to the Lessee specifying a payment date not earlier than 10 days
from the date of such notice, may cause the Lessee to pay to the Lessor,
and the Lessee shall pay to the Lessor, on the payment date specified in
such notice, as liquidated damages for loss of a bargain and not as a
penalty, any installment of Basic Rent due on or before such payment date
plus an amount equal to the excess, if any, of (i) Termination Value for
the Aircraft, determined as of such payment date over (ii) the Fair Market
Sales Value for the Aircraft, computed as of the payment date specified
pursuant to this paragraph (c), together with interest, to the extent
permitted by Applicable Law, at the Past Due Rate on the amount of such
excess, if any, from such payment date specified pursuant to this
paragraph (c), to the date of actual payment of such amount;
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(d) In the event the Lessor, pursuant to paragraph (b) above, shall
have sold the Aircraft upon reasonable notice to the Lessee, the Lessor in
lieu of exercising its rights under paragraph (c) above with respect to
the Aircraft, may, if it shall so elect, cause the Lessee to pay the
Lessor, and the Lessee shall pay to the Lessor, on the date of such sale,
as liquidated damages for loss of a bargain and not as a penalty (in lieu
of the Basic Rent due after the date on which such sale occurs but in
addition to any installment of Basic Rent due on or up to the date on
which such sale occurs), the amount of any deficiency of the net proceeds
of such sale below the Termination Value of the Aircraft, determined as of
the date of such sale, together with interest, to the extent permitted by
Applicable Law, at the Past Due Rate on the amount of such deficiency from
the date as of which such Termination Value is determined to the date of
actual payment; and
(e) Rescind this Lease or exercise any other right or remedy which
may be available under Applicable Law or proceed by appropriate court
action to enforce the terms hereof or to recover damages for the breach
hereof.
In addition, the Lessee shall be liable for any unpaid Supplemental Rent due
hereunder before or after any termination hereof, including all reasonable costs
and expenses including attorney's fees and disbursements incurred by reason of
the occurrence of any Event of Default or the exercise of the Lessor's remedies
with respect thereto including without limitation all costs and expenses
incurred in connection with the return of the Airframe or any Engine in
accordance with, and in the condition required by, the terms of Section 12 or
any appraisal of the Aircraft required for purposes of this Section 17. At any
sale of the Aircraft, the Airframe or any Engine, or portion thereof pursuant to
this Section 17, the Lessor may bid for and purchase such property. Except as
otherwise expressly provided above, no remedy referred to in this Section 17 is
intended to be exclusive (but the liquidation of damages provided in this
Section 17 shall be exclusive to the extent permitted by Applicable Law), but
each shall be cumulative and in addition to any other remedy referred to above
or otherwise available to the Lessor for the Event of Default at law or in
equity; and the exercise or beginning of exercise by the Lessor of any one or
more of such remedies shall not preclude the simultaneous or later exercise by
the Lessor of any or all such other remedies. No express or implied waiver by
the Lessor of any Event of Default hereunder shall in any way be, or be
construed to be, a waiver of any future or subsequent Event of Default.
Section 18. Lessor's Right to Perform for the Lessee.
If the Lessee fails to make any payment of Rent required to be made
by it hereunder or fails to perform or comply with any of its agreements
contained herein the Lessor may, upon prior notice to the Lessee, itself make
such payment or perform or comply with such agreement, and the amount of such
payment and the amount of the reasonable expenses of the Lessor incurred in
connection with such payment or the performance of or compliance with such
agreement, as the case may be, together with interest thereon at the Past Due
Rate, shall be deemed Supplemental Rent, payable by
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the Lessee upon demand; provided, that nothing in this Section 18 shall be
deemed to permit the Lessor to exercise any control over the operation or
maintenance of the Aircraft or any part thereof while it is being utilized in
the air transportation services of the Lessee or any permitted sublessee without
the consent of the Lessee.
Section 19. Bankruptcy.
It is the intention of the parties that the Lessor (and the
Indenture Trustee as assignee of the Lessor under the Indenture) shall be
entitled to the benefits of 11 U.S.C. ss. 1110 with respect to the right to
repossess the Airframe, Engines and Parts as provided herein, and in any
circumstances where more than one construction of the terms and conditions of
this Lease is possible, a construction which would preserve such benefits shall
control over any construction which would not preserve such benefits or would
render them doubtful. To the extent consistent with the provisions of 11 U.S.C.
ss. 1110 or any analogous section of the Federal bankruptcy laws, as amended
from time to time, it is hereby expressly agreed and provided that,
notwithstanding any other provisions of the Federal bankruptcy laws, as amended
from time to time, any right of the Lessor to take possession of the Aircraft in
compliance with the provisions of this Lease shall not be affected by the
provisions of 11 U.S.C. ss. 362 or 363, as amended from time to time, or any
analogous provisions of any superseding statute or any power of the bankruptcy
court to enjoin such taking of possession.
Section 20. Assignment: Benefit and Binding Effect.
(a) Assignment by the Lessee.
The Lessee may not, without the prior written consent of the Lessor,
assign any of its rights hereunder except as otherwise expressly provided
herein.
(b) Assignment by the Lessor.
The Lessor's interest in this Lease has been assigned as security to
the Indenture Trustee pursuant to the Indenture for the benefit of the holders
from time to time of the Certificates, and the Lessee acknowledges due notice
of, and consents to, such security assignment. The Lessor may not, without the
prior consent of the Lessee, otherwise assign any of its rights under or
interest in this Lease except to a successor Owner Trustee or additional trustee
referred to in Section 22(a) hereof or as otherwise expressly provided herein.
(c) Benefit and Binding Effect.
The terms and provisions of this Lease shall be binding upon and,
subject to the limitations on assignment of rights hereunder, inure to the
benefit of the Lessor and the Lessee and their respective successors and
permitted assigns. Nothing herein shall be construed as creating rights in any
other Person. In no event shall any of the
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representations, warranties or agreements of the Lessee herein or in the
Participation Agreement be assignable to or inure to the benefit of or be
enforceable by or on behalf of any Person which, whether as purchaser or lessee
or otherwise, conducts flight or ground operations with the Aircraft or any part
thereof at any time following the Term.
(d) Sublessee's Performance and Rights.
Any obligation imposed on the Lessee in this Lease shall require
only that the Lessee perform or cause to be performed such obligation, even if
stated herein as a direct obligation, and the performance of any such obligation
by any sublessee or transferee of the Airframe or any Engine or Part permitted
by the terms hereof under a sublease or transfer agreement then in effect shall
constitute performance by the Lessee and to the extent of such performance
discharge such obligation by the Lessee. Except as otherwise expressly provided
herein, any right granted to the Lessee in this Lease shall grant the Lessee the
right to exercise such right or permit such right to be exercised by any such
sublessee or transferee. The inclusion of specific references to obligations or
rights of any such sublessee or transferee in certain provisions of this Lease
shall not in any way prevent or diminish the application of the provisions of
the two sentences immediately preceding with respect to obligations or rights in
respect of which specific reference to any such sublessee or transferee has not
been made in this Lease.
Section 21. Owner Trustee's Limitation on Liability.
Trust Company is entering into this Lease solely as Owner Trustee
under the Trust Agreement and not in its individual capacity and neither Trust
Company nor any entity acting as successor Owner Trustee or additional Owner
Trustee under the Trust Agreement shall be personally liable for, or for any
loss in respect of, any of the statements, representations, warranties,
agreements or obligations stated to be those of the Lessor hereunder, as to
which all interested parties shall look solely to the Trust Estate, except to
the extent expressly provided otherwise in the other Operative Agreement,
provided, however, that nothing in this Section 21 shall be construed to limit
in scope or substance the liability of Trust Company or any entity acting as
successor Owner Trustee or additional Owner Trustee under the Trust Agreement in
its individual capacity for the consequences of its own willful misconduct or
gross negligence or (in receiving, handling or remitting funds) its simple
negligence, or the inaccuracy or breach of its representations, warranties or
covenants made in such capacity in any other Operative Agreement.
Section 22. Certain Agreements of Lessee.
The Lessee will take, or cause to be taken, at the Lessee's cost and
expense, such action with respect to the recording, filing, re-recording and
re-filing of this Lease, each Lease Supplement, the Trust Agreement, the
Indenture, each Indenture Supplement and any financing statements or other
instruments as are necessary or requested by the Owner Participant or the
Indenture Trustee and appropriate, to
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maintain, so long as the Indenture or this Lease is in effect, the perfection of
the security interest created by the Indenture and any security interest that
may be claimed to have been created by this Lease and the ownership interest of
the Owner Trustee in the Aircraft, and will furnish to the Owner Trustee, the
Indenture Trustee and the Owner Participant timely notice of the necessity of
such action, together with such instruments, in execution form, and such other
information as may be required to enable them to take such action.
Section 23. Miscellaneous.
(a) Notices.
Except as otherwise specifically provided herein, all notices,
requests, approvals or consents required or permitted by the terms hereof shall
be in writing (it being understood that the specification of a writing in
certain instances and not in others does not imply an intention that a writing
is not required as to the latter). Any notice shall be effective when received.
Any notice shall either be mailed, certified or registered mail, return receipt
requested with proper first class postage prepaid, or sent in the form of a
telex, telegram or telecopy, or by overnight delivery service or delivered by
hand. Any notice shall be directed to the Lessee, the Lessor, the Indenture
Trustee or any other party to the Participation Agreement to the respective
addresses set forth in Section 12.01 to the Participation Agreement or to such
other address or telex or telecopy number as any such party may designate
pursuant to Section 14.01 of the Participation Agreement.
(b) Counterparts.
This Lease may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall, subject to the
next sentence and the legends appearing on the cover and signature page hereof,
be an original, but all such counterparts shall together constitute but one and
the same instrument. TO THE EXTENT, IF ANY, THAT THIS LEASE CONSTITUTES CHATTEL
PAPER (AS THE 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 CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE INDENTURE TRUSTEE ON
THE SIGNATURE PAGE THEREOF.
(c) Amendments.
Neither this Lease nor any of the terms hereof may be terminated,
amended, supplemented, waived or modified orally, but only by an instrument in
writing signed by the Lessor and the Lessee provided, however, that unless and
until the Lessee shall have received written notice from the Indenture Trustee
that the Indenture has been discharged, except as otherwise provided in the
Indenture, no
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termination, amendment, supplement, waiver or modification of, or waiver by or
consent of the Lessor in respect of, any of the provisions of this Lease shall
be effective unless the Indenture Trustee shall have joined in such amendment,
modification, waiver or consent or shall have given its prior consent thereto.
(d) Agreement to Lease.
This Lease shall constitute an agreement of lease, and nothing
contained herein shall be construed as conveying to the Lessee any right, title
or interest in the Aircraft except as a lessee only.
(e) Governing Law.
THIS LEASE SHALL IN ALL RESPECTS BE GOVERNED BY THE LAW OF THE STATE
OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
THIS LEASE HAS BEEN DELIVERED IN THE STATE OF NEW YORK.
* * *
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IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Lease to be duly executed by their authorized officers as of the day and year
first above written.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
not in its individual
capacity, but solely
as Owner Trustee
By:____________________________
Name:
Title:
MIDWAY AIRLINES CORPORATION
By:____________________________
Name:
Title:
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<PAGE>
[Leased Aircraft
Definitions]
APPENDIX A
DEFINITIONS [N______]
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (as defined below), unless otherwise
defined in an Operative Agreement or the context thereof shall otherwise
require. In the case of any conflict between the provisions of this Appendix and
the provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean such agreements as amended and supplemented from time to
time, and (ii) references to parties to agreements shall be deemed to include
the successors and permitted assigns of such parties.
"Additional Insureds" means the Owner Trustee (in its individual and trust
capacities), the Owner Participant, the Indenture Trustee (in its individual and
trust capacities) and each Liquidity Provider.
"Aeronautics Authority" means as of any time of determination, the FAA or
other governmental airworthiness authority having jurisdiction over the Aircraft
or the Airframe and Engines or engines attached thereto under the laws of the
country in which the Airframe is then registered.
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling 50% or more of any class of voting securities of such
Person or otherwise controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract or
otherwise.
"After Tax Basis" means a basis such that any payment to be received by a
Person shall be supplemented by a further payment to such Person so that the sum
of the two payments, after deduction of all Taxes (taking into account any
related credits or deductions) resulting from the receipt or accrual of such
payments, shall be equal to the payment to be received.
<PAGE>
"Aircraft" means the Airframe together with the Engines, whether or not
any of the Engines may at the time of determination be installed on the Airframe
or installed on any other airframe or on any other aircraft.
"Airframe" means (i) the Canadair Regional Jet Series 200ER aircraft
(excluding the Engines and any other engines which may from time to time be
installed thereon, but including any and all Parts which may from time to time
be incorporated in, installed on or attached to such aircraft, and including any
and all such Parts removed therefrom so long as title to such removed Parts
remains vested in the Lessor under the terms of Section 7 of the Lease)
originally delivered and leased under the Lease, identified by national
registration number and manufacturer's serial number in the Lease Supplement
executed and delivered on the Delivery Date, so long as a Replacement Airframe
shall not have been substituted therefor pursuant to Section 8 of the Lease, and
(ii) a Replacement Airframe, so long as another Replacement Airframe shall not
have been substituted therefor pursuant to Section 8 of the Lease.
"Applicable Law" means all applicable laws, treaties, judgments, decrees,
injunctions, writs and orders of any court, governmental agency or authority and
rules, regulations, orders, directives, licenses and permits of any governmental
body, instrumentality, agency or authority.
"Average Life Date" means, for any Equipment Note, the date which follows
the prepayment date by a period equal to the Remaining Weighted Average Life of
such Equipment Note.
"Bankruptcy Code" means Title 11 of the United States Code, as amended,
and any successor thereto.
"Basic Rent" means the rent payable on Basic Rent Payment Dates throughout
the Basic Term for the Aircraft pursuant to Section 3(b) of the Lease and rent
payable during any Renewal Term pursuant to Section 13(a) of the Lease.
"Basic Rent Payment Date" means each date listed under the heading "Basic
Rent Payment Date" in Exhibit C to the Lease.
"Basic Term" means the period commencing at the beginning of the day on
the Delivery Date and ending at end of the day on the Expiration Date, or such
earlier date on which the Lease shall be terminated as provided therein.
"Beneficial Interest" means the interest of the Owner Participant under
the Trust Agreement.
"Business Day" means any day other than a Saturday or Sunday on which
commercial banks are not authorized or required to close in New York City,
Charlotte, North Carolina and the city in the United States in which the office
or agency is
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maintained by the Pass-Through Trustee for the payment of the Pass-Through
Certificates, and after the Lien of the Indenture is discharged, Wilmington,
Delaware.
"Change in Tax Law" means any change or proposed change in the Code or the
Regulations or any change in the interpretation of the Code or Regulations or
any change in the interpretation of the Code or Regulations in a decision by the
United States Supreme Court, the United States Tax Court, the United States
Court of Claims or any one of the United States Courts of Appeals, or any
issuance of a revenue ruling, revenue procedure or any pronouncement by the
Internal Revenue Service or the Department of the Treasury.
"Citizen of the United States" means a citizen of the United States as
defined in ss. 40102(a)(15) of the Transportation Code, or any analogous part of
any successor or substituted legislation or regulation at the time in effect.
"Class A Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Class B Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Class C Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any similar legislation of the United States enacted to supersede,
amend, or supplement such Code (and any reference to a provision of the Code
shall refer to any successor provision(s), however designated).
"Commitment" of a Loan Participant shall have the meaning given such term
in Section 2(d) of the Participation Agreement; "Commitment" of the Owner
Participant shall have the meaning given such term in Section 2(c) of the
Participation Agreement.
"CRAF Program" has the meaning specified in Section 5(b)(vii) of the
Lease.
"DOT" means the U.S. Department of Transportation or any successor
thereto.
"Debt Rate" means the weighted average (based on Outstanding principal
amount) rate of interest on the Equipment Notes.
"Default" means any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
"Delivery Date" means the date on which the Aircraft is delivered and sold
to the Lessor and leased by the Lessor to the Lessee under the Lease, which date
shall be the date of the initial Lease Supplement.
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"Deposit Agreement" means each of the four Deposit Agreements between the
Depositary and the Escrow Agent, dated as of the Issuance Date, each of which
relates to one of the Pass-Through Trusts.
"Depositary" means First Union National Bank, as Depositary under each
Deposit Agreement.
"Dollars" means dollars in lawful currency of the United States.
"Downgrade Drawing" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"EBO Date" has the meaning given to such term in Exhibit B to the Lease.
"EBO Price" has the meaning given to such term in Exhibit B to the Lease.
"Engine" means (A) one of the two CF34-3B1 Series 200 engines originally
delivered and leased under the Lease, identified by manufacturer's serial number
in the Lease Supplement executed and delivered on the Delivery Date, so long as
a Replacement Engine shall not have been substituted therefor pursuant to
Section 7(e) of the Lease, and (B) a Replacement Engine, so long as another
Replacement Engine shall not have been substituted therefor pursuant to Section
7(e) of the Lease, whether or not such engine or Replacement Engine, as the case
may be, is from time to time installed on the Airframe or installed on any other
aircraft, and including in each case all Parts incorporated or installed in or
attached thereto and any and all Parts removed therefrom so long as title to
such Parts remains vested in the Lessor under the terms of Section 7 of the
Lease. The term "Engines" means, as of any date of determination, the two
engines each of which is an Engine on that date.
"Engine Manufacturer's Consent" means any consent to the Engine Warranty
Assignment delivered by the manufacturer of the Engines on the Delivery Date and
pertaining to the Aircraft.
"Engine Warranty Assignment" means any engine warranty assignment
agreement, in form and substance reasonably acceptable to the Owner Participant
entered into by the Lessor and the Lessee on the Delivery Date.
"Equipment Notes" means the Equipment Notes issued by the Owner Trustee
pursuant to the Indenture and any equipment note issued in exchange therefor or
replacement thereof pursuant to the Indenture.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means First Union Trust Company, National Association, as
Escrow Agent under each of the Escrow Agreements.
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"Escrow Agreement" means each of the four Escrow and Paying Agent
Agreements, among the Escrow Agent, the Paying Agent, certain initial purchasers
of the Pass-Through Certificates named therein and one of the Pass-Through
Trustees, dated as of the Issuance Date, each of which relates to one of the
Pass Through Trusts.
"Event of Default" has the meaning given to such term in Section 17 of the
Lease.
"Event of Loss" means any of the following events with respect to the
Aircraft, the Airframe or any Engine:
(i) theft or disappearance for a period in excess of 90 consecutive
days;
(ii) destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use for any reason whatsoever;
(iii) any event which results in an insurance settlement with
respect to such property on the basis of an actual, constructive or
compromised total loss;
(iv) condemnation, confiscation or seizure of, or requisition of
title to or use of such property by any foreign government (or in the case
of any such requisition of title, by the Government) or any agency or
instrumentality thereof, for a period in excess of 180 consecutive days
(or 30 consecutive days for the appropriation of title), or, in any of the
cases in this clause (iv), such shorter period ending on the expiration of
the Term;
(v) condemnation, confiscation or seizure of, or requisition of use
of such property by the Government for a period extending beyond the Term,
provided that no Event of Loss shall be deemed to have occurred, and the
term of the Lease shall be extended automatically for a period of six
months in the event that the Aircraft is requisitioned by the Government
pursuant to an activation under the CRAF Program; and
(vi) as a result of any law, rule, regulation, order or other action
by the Aeronautics Authority, the use of the Aircraft or Airframe in the
normal course of air transportation shall have been prohibited by virtue
of a condition affecting all Canadair Regional Jet Series 200ER aircraft
equipped with engines of the same make and model as the Engines for a
period of 180 consecutive days (or beyond the end of the Term), unless the
Lessee, prior to the expiration of such 180-day period, shall be
diligently carrying forward all necessary and desirable steps to permit
normal use of the Aircraft and shall within 12 months have conformed at
least one Canadair Regional Jet Series 200ER aircraft (but not necessarily
the Aircraft) to the requirements of any such law, rule, regulation, order
or action, and shall be diligently pursuing conformance of the Aircraft in
a non-discriminatory manner.
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The date of such Event of Loss shall be (aa) the 91st day following loss of such
property or its use due to theft or disappearance (or the end of the Term if
earlier); (bb) the date of any destruction, damage beyond economic repair or
rendition of such property permanently unfit for normal use; (cc) the date of
any insurance settlement on the basis of an actual, constructive or compromised
total loss; (dd) the 181st day following condemnation, confiscation, seizure or
requisition of title to or use of such property by a foreign government referred
to in clause (iv) above (or the 31st day in the case of appropriation of title,
or the end of the Term if earlier than such 181st or 31st day); (ee) the last
day of the Term (as automatically extended by six months in the case of an
activation under the CRAF Program) in the case of requisition of title to or use
of such property by the Government; and (if) the last day of the applicable
period referred to in clause (vi) above (or if earlier, the end of the Term
without the Lessee's having conformed at least one Canadair Regional Jet Series
200ER aircraft to the applicable requirements). An Event of Loss with respect to
the Aircraft shall be deemed to have occurred if any Event of Loss occurs with
respect to the Airframe.
"Excepted Payments" means collectively, (i) indemnity, expense,
reimbursement or other payments paid or payable by the Lessee in respect of the
Owner Participant, the Owner Trustee in its individual capacity or any of their
respective successors, permitted assigns, directors, officers, employees,
servants and agents or Affiliates, pursuant to the Participation Agreement or
any other Operative Agreement or any indemnity hereafter granted to the Owner
Participant or the Owner Trustee in its individual capacity pursuant to the
Lease or the Participation Agreement, (ii) proceeds of public liability
insurance (or government indemnities in lieu thereof) in respect of the Aircraft
payable as a result of insurance claims paid for the benefit of, or losses
suffered by, the Owner Trustee or the Indenture Trustee in their respective
individual capacities or by the Owner Participant, or their respective
successors, permitted assigns or Affiliates, (iii) proceeds of insurance
maintained with respect to the Aircraft by the Owner Participant or any
Affiliate thereof (whether directly or through the Owner Trustee) in accordance
with Section 9(f) of the Lease, (iv) payments by the Lessee in respect of any
amounts payable under the Tax Indemnity Agreement, (v) any purchase price paid
to the Owner Participant for its interest in the Trust Estate, (vi) subject to
Section 3(f) of the Lease, payments constituting increases in Basic Rent
attributable to payments arising pursuant to the Tax Indemnity Agreement, (vii)
any payments in respect of interest to the extent attributable to payments
referred to in clauses (i) through (vi) above, (viii) any right to demand,
collect or otherwise receive and enforce the payment of any amount described in
clauses (i) through (v) and (vii) above (except with respect to interest
attributable to payments referred to in clause (vi) above).
"Expenses" has the meaning given to such term in Section 7.01(a) of the
Participation Agreement.
"Expiration Date" means the date specified as such in the Lease Supplement
executed and delivered on the Delivery Date.
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"FAA Bill of Sale" means the bill of sale for the Airframe on AC Form
8050-2, or such other form as may be approved by the Aeronautics Authority,
executed in favor of the Owner Trustee and to be dated the Delivery Date.
"Fair Market Rental Value" or "Fair Market Sales Value" of the Airframe or
any Engine shall mean the value that would be obtained in an arms'-length
transaction between an informed and willing lessee-user or buyer-user (other
than a lessee currently in possession or a used equipment dealer) under no
compulsion to lease or buy, as the case may be, and an informed and willing
lessor or seller, as the case may be, under no compulsion to lease or sell, as
the same shall be specified by agreement between the Lessor and the Lessee or,
if not agreed to by the Lessor and the Lessee within a period of 15 days after
either party requests a determination, then as specified in an appraisal
prepared and delivered in New York City mutually agreed to by two recognized
independent aircraft appraisers, one of which shall be appointed by the Lessor
and the other of which shall be appointed by the Lessee, or, if such appraisers
cannot agree on such appraisal, an appraisal arrived at by a third independent
recognized appraiser chosen by the mutual consent of the two aircraft
appraisers. If either party should fail to appoint an appraiser within 15 days
of receiving notice of the appointment of an appraiser by the other party, then
such appraisal shall be made by the appraiser appointed by the first party. If
the two appraisers cannot agree on such appraisal and fail to appoint a third
independent recognized aircraft appraiser within 15 days after the appointment
of the second appraiser, then either party may apply to the American Arbitration
Association to make such appointment. The appraisal shall be completed within 30
days of the appointment of the last appraiser appointed. In determining Fair
Market Rental Value or Fair Market Sales Value by appraisal or otherwise, it
will be assumed that the Aircraft, Airframe or Engine is in the condition,
location and overhaul status in which it is required to be returned to the
Lessor pursuant to Section 12 of the Lease (except that a determination of Fair
Market Sales Value pursuant to Section 17 of the Lease shall be based on "as is,
where is" condition), that the Lessee has removed all Parts which it is entitled
to remove pursuant to Section 7 of the Lease and that the Aircraft is encumbered
by the Lease. For purposes of the preceding sentence and with respect to a
purchase of the Aircraft pursuant to Section 13(b) of the Lease, "encumbered by
the Lease" shall mean, with respect to Fair Market Sales Value, the Fair Market
Sales Value increased or decreased to reflect the benefits and burdens of the
Lease and other Operative Documents. Except as otherwise expressly provided in
the Lease, all appraisal costs will be shared equally by the Lessor and the
Lessee.
"Federal Aviation Administration" or "FAA" means the United States Federal
Aviation Administration and any successor agency or agencies thereto.
"Final Drawing" has the meaning given to such term in Section 1.01 of the
Intercreditor Agreement.
"Fixed Renewal Term" has the meaning given to such term in Section 13(a)
of the Lease.
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"FNBM" means The First National Bank of Maryland, a national banking
association.
"Government means the United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and credit
of the United States of America.
"Holder" means, as of any particular time, the Person in whose name a
Equipment Note shall be registered.
"Indemnitee" means each of Trust Company, in its individual capacity and
as Owner Trustee, the Subordination Agent, in its individual capacity and in its
capacity as Subordination Agent, each Liquidity Provider, the Owner Participant,
the Indenture Trustee, in its individual capacity and as trustee, the Escrow
Agent, the Paying Agent, the Pass Through Trustees and each Affiliate, officer,
director, employee, agent and servant of any of the foregoing Persons. No holder
of a Pass-Through Certificate shall be deemed to be an Indemnitee.
"Indenture" means the Trust Indenture and Security Agreement [N_______],
dated as of ______________ __, 199_, between the Owner Trustee and the Indenture
Trustee.
"Indenture Default" means any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
"Indenture Documents" has the meaning specified in the Granting Clause of
the Indenture.
"Indenture Event of Default" means each of the events specified in Section
7.01 of the Indenture.
"Indenture Indemnitee" means (i) the Indenture Trustee and each separate
or additional trustee appointed pursuant to the Indenture, (ii) the Escrow
Agent, (iii) the Subordination Agent, (iv) each Liquidity Provider, (v) the
Paying Agent, (vi) each Pass-Through Trustee and (vii) each of the respective
directors, officers, employees, agents and servants of each of the persons
described in clauses (i) through (vi).
"Indenture Supplement" means (a) the Trust Indenture and Security
Agreement Supplement No. 1, substantially in the form of Exhibit A to the
Indenture, which shall describe with particularity the Aircraft included in the
property of the Owner Trustee covered by the Indenture by reference to the Lease
Supplement, and which creates a first priority security interest in the Aircraft
and (b) any other supplement to the Indenture from time to time executed and
delivered.
"Indenture Trustee" means The First National Bank of Maryland, a national
banking association, as indenture trustee under the Operative Documents.
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"Indenture Trustee's Liens" means any Lien against, on or with respect to
the Aircraft, any Engine, the Lessor's Estate or the Trust Indenture Estate or
any part thereof resulting from (i) claims against the Indenture Trustee not
related to the administration of the Trust Indenture Estate or any transactions
pursuant to the Indenture or any document included in the Trust Indenture
Estate, (ii) any act or omission of the Indenture Trustee which is not related
to the transactions contemplated by the Operative Agreements or is in violation
of any of the terms of the Operative Agreements, or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity in respect of which the Lessee
has not indemnified (and is not obligated to indemnify) the Indenture Trustee in
such capacity.
"Independent Investment Banker" means an independent investment banking
institution of national standing appointed by the Lessee that is independent in
fact, does not have any direct financial interests, or any material indirect
financial interest, in the Lessee or any Affiliate of the Lessee, and is not
connected with the Lessee or any Affiliate of the Lessee, as an officer,
employee, promoter, underwriter, trustee, partner, director or Person performing
similar functions; provided, that if the Indenture Trustee shall not have
received written notice of such an appointment at least 10 days prior to the
Prepayment Date, "Independent Investment Banker" shall mean such an institution
appointed by the Indenture Trustee.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of
August 13, 1998, among the Pass Through Trustees, the Class A Liquidity
Provider, the Class B Liquidity Provider, the Class C Liquidity Provider and the
Subordination Agent.
"Interest Drawing" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Issuance Date" means August 13, 1998.
"Lease" means the Lease Agreement [N______], dated as of ______ _____,
199_ between the Owner Trustee and the Lessee.
"Lease Supplement" means any Lease Supplement, substantially in the form
of Exhibit A to the Lease, entered into between the Lessor and the Lessee for
the purpose of leasing the Aircraft under and pursuant to the terms of the
Lease, including any amendment thereto entered into subsequent to the Delivery
Date.
"Lessee" means Midway Airlines Corporation, a Delaware corporation.
"Lessee Documents" means (x) the Operative Agreements to which the Lessee
is a party and (y) the Pass-Through Trust Agreements.
"Lessor" means First Union Trust Company, National Association, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement.
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"Lessor's Cost" has the meaning given to such term in Exhibit B of the
Lease.
"Lessor's Estate" means all estate, right, title and interest of the Owner
Trustee in and to the Aircraft, and Engines and the Operative Agreements (other
than the Tax Indemnity Agreement) including, without limitation, all amounts of
Rent, insurance proceeds and requisition, indemnity or other payments of any
kind, but specifically excluding any Excepted Payments.
"Lessor's Liens" means Liens against, on or with respect to the Aircraft,
any Engine, the Lessor's Estate or the Trust Indenture Estate or any part
thereof, title thereto or any interest therein arising as a result of (i) claims
against or affecting the Lessor, in its individual capacity or as Owner Trustee,
or the Owner Participant, in each case not related to the Operative Agreements
or the transactions contemplated thereby, (ii) acts or omissions of the Lessor
in its individual capacity or as Owner Trustee, or of the Owner Participant not
contemplated or permitted under the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to Articles 6 or 7 of the Participation Agreement and which are not
required to be indemnified against by the Lessee pursuant to the Tax Indemnity
Agreement, or (iv) claims against the Lessor, in its individual capacity or as
Owner Trustee, or the Owner Participant arising from the transfer by the Lessor
or the Owner Participant of its interests in the Aircraft or any Engine other
than a transfer of the Aircraft pursuant to Section 5(b), 7(e), 13(b), 14(a) or
17 of the Lease and other than a transfer pursuant to the exercise of the
remedies set forth in Section 17 of the Lease.
"Lien" means any mortgage, pledge, lien, charge, encumbrance, lease,
security interest, claim, or other similar interest of any nature whatsoever.
"Liquidity Facility" means each of the three Irrevocable Revolving Credit
Agreements (consisting of a separate Revolving Credit Agreement with the
Liquidity Provider with respect to each Pass-Through Trust) between the
Subordination Agent, as borrower, and the Liquidity Provider, each dated as of
the Issuance Date.
"Liquidity Provider" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Loan Participant" means and includes each registered holder from time to
time of an Equipment Note issued under the Indenture including, so long as it
holds any Equipment Notes issued under the Indenture, the Pass-Through Trustee
under each Pass-Through Trust Agreement.
"Majority in Interest of Holders" means, as of a particular date of
determination, the Holders of more than 50% of the aggregate unpaid principal
amount of all Equipment Notes Outstanding as of such date.
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"Make-Whole Premium" means with respect to any Equipment Note, an amount
determined as of the day before the applicable Prepayment Date (or date of
purchase, as the case may be) which an Independent Investment Banker determines
to be equal to the excess, if any, of (i) the present value of the remaining
scheduled payments of such principal amount or portion thereof and interest
thereon to the maturity date of such Equipment Note assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield (in the case of the Series A Equipment Notes and Series B Equipment Notes)
and the Treasury Yield plus .50% (in the case of the Series C Equipment Notes
and the Series D Equipment Notes) over (ii) the outstanding principal amount of
such Equipment Note plus accrued interest (other than any overdue portion
thereof).
"Manufacturer" means Bombardier, Inc., a Canadian corporation.
"Minimum Liability Amount" has the meaning given to such term in Exhibit B
to the Lease.
"Moody's" means Moody's Investors Service, Inc.
"Non-U.S. Person" means any Person other than a U.S. Person.
"Note Purchase Agreement" means the Note Purchase Agreement, dated as of
the Issuance Date, among the Lessee, the Subordination Agent, the Escrow Agent,
the Paying Agent and the Pass-Through Trustee under each Pass-Through Trust
Agreement providing for, among other things, the issuance and sale of certain
equipment notes.
"Offering Memo" means the Lessee's August 6, 1998 Offering Memorandum
concerning the Pass-Through Certificates.
"Officer's Certificate" means, when delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner Trustee,
as the case may be, and delivered to the Indenture Trustee. Each such
certificate shall include the statements provided for in Section 15.07 of the
Indenture.
"Operative Agreements" means the Participation Agreement, the Trust
Agreement, the FAA Bill of Sale, the Warranty Bill of Sale, the Purchase
Agreement, the Purchase Agreement Assignment, the Engine Warranty Assignment,
the PAA Consent, the Lease, each Lease Supplement, any Owner Participant
Guaranty, the Equipment Notes outstanding at the time of reference, the
Indenture, each Indenture Supplement and the Tax Indemnity Agreement.
"Opinion of Counsel" means when delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the Lessee
may be (i) an attorney employed by the Lessee who is generally empowered to
deliver such written opinions, (ii) Fulbright & Jaworski L.L.P., or (iii) other
counsel designated by the
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Lessee and reasonably satisfactory to the Indenture Trustee, and (b) for the
Owner Trustee or the Indenture Trustee, an attorney selected by such Person and
reasonably satisfactory to the Lessee and, in the case of the Owner Trustee,
reasonably satisfactory to the Indenture Trustee.
"Outstanding" means, when used with respect to Equipment Notes, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Equipment Notes theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Equipment Notes theretofore canceled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Equipment Notes for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture Trustee in
trust for the Holders of such Equipment Notes pursuant to Section
14.01 of the Indenture; provided that if such Equipment Notes are to
be prepaid, notice of such prepayment has been duly given pursuant
to the Indenture or provision therefor satisfactory to the Indenture
Trustee has been made; and
(iii) Equipment Notes in exchange for or in lieu of which other
Equipment Notes have been executed and delivered pursuant to Article
II of the Indenture.
"Owner Participant" means _________________, a _________________.
"Owner Participant Guarantor" means the provider of an Owner Participant
Guaranty.
"Owner Participant Guaranty" means any guaranty delivered to support the
obligations of the Owner Participation under the Operative Agreements in
connection with the transfer by the Owner Participant of the Beneficial
Interest.
"Owner Trustee" means Trust Company, not in its individual capacity except
as otherwise expressly stated, but solely as trustee under the Trust Agreement.
"PAA Consent" means any consent to the Purchase Agreement Assignment
delivered by the Manufacturer on the Delivery Date and pertaining to the
Aircraft.
"Participants" means, collectively, the Owner Participant and the
Pass-Through Trustee with respect to each of the Pass-Through Trust Agreements;
"Participant" means, individually, one of the Participants.
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<PAGE>
"Participation Agreement" the Participation Agreement [N________], dated
as of __________ __, 199_, among the Lessee, the Owner Trustee not in its
individual capacity except as otherwise expressly provided therein, but solely
as owner trustee, the Owner Participant, the Indenture Trustee, the Pass-Through
Trustees and the Subordination Agent.
"Parts" means any and all appliances, parts, instruments, appurtenances,
accessories, furnishings, seats, and other equipment of whatever nature (other
than Engines or engines and temporary replacement parts as provided in Section 8
of the Lease and cargo containers) which may from time to time be incorporated
or installed in or attached to any Airframe or any Engine, exclusive of any
items leased by the Lessee from third parties and not required in the navigation
of the Aircraft.
"Pass-Through Certificates" means any of the Pass-Through Certificates,
1998-1A, the Pass-Through Certificates, 1998-1B, the Pass-Through Certificates,
1998-1C or the Pass Through Certificates, 1998-1D, in each case as issued by the
related Pass-Through Trust; and "Pass-Through Certificates" means all of such
Pass-Through Certificates.
"Pass-Through Documents" means the Pass-Through Trust Agreements, the
Escrow Agreements, the Intercreditor Agreement, the Note Purchase Agreement and
the Liquidity Facilities.
"Pass-Through Trust" means the Midway Airlines 1998-1 Pass-Through Trust
Class A, Midway Airlines 1998-1 Pass-Through Trust Class B, Midway Airlines
1998-1 Pass-Through Trust Class C and Midway Airlines 1998-1 Pass-Through
Trust-Class D, in each case formed pursuant to the related Series Supplement in
accordance with the Pass-Through Trust Agreement; and "Pass-Through Trusts"
means all of such Pass-Through Trusts.
"Pass-Through Trust Agreement" means each of the four Pass-Through Trust
Agreements dated as of August 13, 1998 among the Lessee and the Pass-Through
Trustee (which shall include each Successor Pass-Through Trust Agreement entered
into pursuant to Section 11.01 of each thereof).
"Pass-Through Trustee" The First National Bank of Maryland, a national
banking association, in its capacity as Pass-Through Trustee under each
Pass-Through Trust Agreement.
"Past Due Rate" means in respect of any principal of or interest on or any
other amounts payable in respect of any Equipment Note that is not paid when due
to any Holder, a rate per annum during the period from and including the due
date to but excluding the date on which such amount is paid in full equal to 1%
plus the interest rate applicable to such Equipment Note.
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<PAGE>
"Payment Date" means each January 2 and July 2, commencing on _________ 2,
199_.
"Permitted Air Carrier" means (a) any Section 1110 Person and (b) any
foreign air carrier that is principally based in any foreign country listed on
Exhibit E to the Lease, except those that do not maintain normal diplomatic
relations with the United States.
"Permitted Investments" means (a) direct obligations of the United States
of America or any agency or instrumentality thereof, (b) obligations fully
guaranteed by the United States of America or any agency or instrumentality
thereof, (c) any mutual fund the portfolio of which is limited to obligations of
the type described in clauses (a) and (b), including any proprietary mutual fund
of The First National Bank of Maryland for which such bank or an affiliate is
investment advisor or to which such bank provides other services and receives
reasonable compensation for such services, (d) certificates of deposit issued
by, or bankers' acceptances of, or time deposits or a deposit account with, any
bank, trust company, or national banking association incorporated or doing
business under the laws of the United States of America or one of the states
thereof, having a combined capital and surplus of at least $100,000,000 and
having a rating of "A" or better from the Keefe Bank Watch Service, (e)
commercial paper issued by companies in the United States which directly issue
their own commercial paper and which are doing business under the laws of the
United States of America or one of the states thereof and in each case having a
rating assigned to such commercial paper by a nationally recognized rating
organization in the United States of America equal to the highest rating
assigned by such organization, or (f) obligations of the type described in
clauses (a), (b), (d), or (e) above, purchased from any bank, trust company, or
banking association referred to in clause (d) above pursuant to repurchase
agreements obligating such bank, trust company, or banking association to
repurchase any such obligation not later than 30 days after the purchase of any
such obligation. Unless otherwise specified in writing by the Owner Trustee, all
such Permitted Investments shall mature not later than 30 days from the date of
purchase.
"Permitted Lien" has the meaning given to such term in Section 10 of the
Lease.
"Permitted Sublessee" means (a) any Permitted Air Carrier or (b) any
airframe or engine manufacturer, or Affiliate of such a manufacturer, who is
domiciled in the United States of America or a country listed on Exhibit E to
the Lease.
"Person" means any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
"Placement Agents" means Morgan Stanley & Co. Incorporated and Credit
Suisse First Boston.
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<PAGE>
"Placement Agreement" means the Purchase Agreement dated August 6, 1998
among the Lessee and the Placement Agents.
"Prepayment Date" has the meaning given to such term in Section 6.02(b) of
the Indenture.
"Prepayment Price" has the meaning given to such term in Section 6.02(b)
of the Indenture.
"Purchase Agreement" means Bombardier Regional Aircraft Division Purchase
Agreement No. PA-0393 dated September 17, 1997, as amended, between the Company
and the Manufacturer (including all exhibits thereto, together with all letter
agreements entered into that by their terms constitute part of any such Purchase
Agreement).
"Purchase Agreement Assignment" means the Purchase Agreement and Engine
Warranties Assignment [N ____], dated as of even date with the Participation
Agreement, between Lessee and Owner Trustee.
"Purchase Price" means an amount equal to Lessor's Cost.
"Rating Agency" means Moody's or S&P, as the context requires.
"Record Date" means, with respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 15 for January 2
Payment Dates and June 15 for July 2 Payment Dates, whether or not such date is
a Business Day.
"Recourse Amount" has the meaning given to such term in Section 15.07 of
the Participation Agreement.
"Refinancing" means a non-recourse loan to the Lessor arranged pursuant to
Section 13.01 of the Participation Agreement.
"Register" has the meaning given to such term in Section 3.02 of the
Indenture.
"Registrar" has the meaning given to such term in Section 3.02 of the
Indenture.
"Registration Rights Agreement" means the Exchange and Registration Rights
Agreement, dated as of August 13, 1998, among the Placement Agents, FNBM, as
Pass-Through Trustee, and the Lessee.
"Registration Rights Event" has the meaning given to such term in the
Registration Rights Agreement.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and supplemented
and in effect from time to time.
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<PAGE>
"Remaining Weighted Average Life" means on a given date with respect to
any Equipment Note the number of days equal to the quotient obtained by dividing
(i) the sum of each of the products obtained by multiplying (a) the amount of
each then remaining scheduled payment of principal of such Equipment Note by (b)
the number of days from and including such prepayment date to but excluding the
dates on which each such payment of principal is scheduled to be made; by (ii)
the then outstanding principal amount of such Equipment Note.
"Renewal Term" has the meaning given to such term in Section 13(a) of the
Lease.
"Rent" means Basic Rent and Supplemental Rent, collectively.
"Rent Payment Date" means each Payment Date during the Term.
"Replacement Aircraft" means any Aircraft of which a Replacement Airframe
is part.
"Replacement Airframe" means a Canadair Regional Jet Series 200ER series
aircraft or a comparable or improved model of such aircraft of the Manufacturer
(except Engines or engines from time to time installed thereon) which shall have
become subject to the Lease pursuant to Section 8 thereof.
"Replacement Closing Date" has the meaning given such term in Section 8(d)
of the Lease.
"Replacement Engine" means a CF34-3B1 Series 200 engine (or engine of the
same or another manufacturer of a comparable or an improved model and suitable
for installation and use on the Airframe), and which shall have become subject
to the Lease pursuant to Section 7(e) thereof.
"Responsible Officer" means, with respect to the Owner Trustee or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate officer
of a party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant, agreement
or obligation of such party pursuant to any Operative Agreement, would have
responsibility for and knowledge of such matter and the requirements of any
Operative Agreement with respect thereto.
"S&P" means Standard & Poor's Ratings Group.
"SEC" means the Securities and Exchange Commission of the United States
and any successor agencies or authorities.
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<PAGE>
"Section 1110 Person" means a Citizen of the United States who is an
air carrier holding a valid air carrier operating certificate issued pursuant
to 49 U.S.C. ch. 447 for aircraft capable of carrying 10 or more individuals.
"Secured Obligations" has the meaning specified in the Granting Clause of
the Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Series "A" or "Series A Equipment Notes" means the Equipment Notes issued
and designated as "Series A" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series A".
"Series "B" or "Series B Equipment Notes" means the Equipment Notes issued
and designated as "Series B" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series B".
"Series "C" or "Series C Equipment Notes" means the Equipment Notes issued
and designated as "Series C" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series C".
"Series "D" or "Series D Equipment Notes" means the Equipment Notes issued
and designated as "Series D" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series D".
"Specified Default" means (a) an event or condition described in Section
16(a), (f), (g) or (h) of the Lease that, after the giving of notice or lapse of
time, or both, would mature into an Event of Default, or (b) any Event of
Default.
"Specified Investments" means (a) direct obligations of the United States
of America or obligations fully guaranteed by the United States of America; (b)
any mutual fund the portfolio of which is limited to obligations of the type
described in clause (a), including any proprietary mutual fund of The First
National Bank of Maryland for which such bank or an affiliate is investment
advisor or to which such bank provides other services and receives reasonable
compensation for such services; (c) commercial paper rated A-1/P-1 by S&P and
Moody's, respectively or, if such ratings are unavailable, rated by any
nationally recognized rating organization in the United States equal to the
highest rating assigned by such rating organization; (d) 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
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<PAGE>
Bankwatch, having maturities no later than 90 days following the date of such
investment; (e) overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers; or (f) overnight repurchase
agreements with respect to the securities described in clause (a) above entered
into with an office of a bank or trust company which is located in the United
States of America or any bank or trust company which is organized under the laws
of the United States or any state thereof and has capital, surplus and undivided
profits aggregating at least $500 million.
"Sublease" means any sublease agreement between the Lessee and a Permitted
Sublessee as permitted by Section 5(b) of the Lease.
"Subordination Agent" means The First National Bank of Maryland, a
national banking association, in its capacity as Subordination Agent.
"Subsequent Renewal Term" has the meaning given to such term in Section
13(a) of the Lease.
"Supplemental Rent" means (a) all amounts, liabilities and obligations
which the Lessee assumes or agrees to perform or pay under the Lease or under
the Participation Agreement or Tax Indemnity Agreement or any other Operative
Agreement to the Lessor, the Owner Participant, the Indenture Trustee, the
Subordination Agent, any Liquidity Provider or others, including payments of
Termination Value, EBO Price, and amounts calculated by reference to Termination
Value, any amounts of Make-Whole Premium payable under the Indenture to the
extent provided in Section 3(c) of the Lease, and all amounts required to be
paid by Lessee under the agreements, covenants, and indemnities contained in the
Lease or in the Participation Agreement or the Tax Indemnity Agreement or any
other Operative Agreement, but excluding Basic Rent, and (b) all amounts that
the Owner Trustee is obligated to pay in accordance with clause (b) of the last
paragraph of Section 2.04 of the Indenture.
"Tax" or "Taxes" has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
"Tax Indemnitee" means each of Trust Company, individually and as Owner
Trustee, the Owner Participant and the Indenture Trustee.
"Tax Indemnity Agreement" the Tax Indemnity Agreement to be entered into
by the Lessee and the Owner Participant on the Delivery Date.
"Term" has the meaning given to such term in Section 3(a) of the Lease.
"Termination Date" means each date listed in the column entitled
"Termination Date" in Exhibit D to the Lease.
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<PAGE>
"Termination Value" means (a) as of any Termination Date during the Basic
Term, the amount determined as set forth in Exhibit C to the Lease for that
Termination Date, and (b) during any Renewal Term, the amount for the date
involved, determined in accordance with Section 13(a) of the Lease, in either
case adjusted as required by Section 3(d) of the Lease.
"Transaction Costs" means those costs and expenses set forth in Section
8.01(a) of the Participation Agreement to be borne by the Owner Participant.
"Transportation Code" means Title 49 of the United States Code, subtitle
VII, as amended and in effect on the date of the Lease or as subsequently
amended, or any successor or substituted legislation at the time in effect and
applicable, and the regulations promulgated pursuant thereto.
"Treasury 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 on 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 public securities markets, (i) one maturing as close as possible to, but
earlier than, the Average Life Date of such Certificate and (ii) 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 Premium will be the
third Business Day prior to the applicable prepayment 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 prepayment date.
"Trust Agreement" means the Trust Agreement [N____] dated as of _________
__, between the Owner Participant and Trust Company.
"Trust Company" means First Union Trust Company, National Association.
"Trust Estate" means the Lessor's Estate.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
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<PAGE>
"Trust Indenture Estate" means all estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interest, and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of the
Owner Trustee or the Owner Participant expressly reserved to the Owner Trustee
or the Owner Participant pursuant to the Indenture.
"United States", "U.S." or "US" means the United States of America.
"U.S. Person" means a Person described in ss. 7701(a)(30) of the Code.
"Warranty Bill of Sale" means the full warranty bill of sale covering the
Aircraft (and specifically referring to each Engine) executed by the owner of
the Aircraft in favor of the Owner Trustee and to be dated the Delivery Date.
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<PAGE>
Exhibit A
to Lease
LEASE SUPPLEMENT NO.
THIS LEASE SUPPLEMENT No. ____ dated _______________, 19__, between
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, not in its individual capacity,
but solely as Owner Trustee, except as otherwise provided herein, the Lessor,
and MIDWAY AIRLINES CORPORATION, a Delaware corporation, the Lessee;
W I T N E S S E T H :
WHEREAS, the Lessor and the Lessee have heretofore entered into that
certain Lease Agreement, dated as of ______________ (the "Lease", the terms
defined therein being herein used with the same meaning), which Lease provides,
among other things, for the execution and delivery of Lease Supplements in
substantially the form hereof for the purpose of leasing a specific Aircraft
under the Lease when delivered by the Lessor to the Lessee in accordance with
the terms thereof;
WHEREAS, the Lease, a counterpart of which is attached hereto and
made a part hereof, relates to the Aircraft and Engines described in Schedule I
hereto 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, and pursuant to Section 2 of the Lease, the Lessor and
the Lessee hereby agree as follows:
1. The Lessor hereby delivers and leases to the Lessee, and the
Lessee hereby accepts and leases from the Lessor, under the Lease as herein
supplemented, the Aircraft, described in Schedule I hereto.
2. The Delivery Date is the date of this Lease Supplement set forth
in the opening paragraph hereof.
3. The Basic Term shall commence on the Delivery Date and continue
through ___________ (the "Expiration Date"), unless terminated earlier as
provided in the Lease.
4. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
5. This Lease Supplement may be executed by the parties hereto in
separate counterparts and all such counterparts shall together constitute but
one and the same instrument. To the extent, if any, that this Lease Supplement
constitutes
<PAGE>
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 or the Lease may be created through the transfer or possession of any
counterpart other than the original counterpart of each thereof containing the
receipt therefor executed by the Indenture Trustee on the signature page of each
thereof.
6. THIS LEASE SUPPLEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK
AND SHALL IN ALL RESPECTS BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Lease Supplement to be duly executed by their authorized officers as of the day
and year first above written.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
not in its individual
capacity, but solely as
Owner Trustee
By:_____________________________
Name:
Title:
MIDWAY AIRLINES CORPORATION
By:_____________________________
Name:
Title:
<PAGE>
THE LESSOR HAS ASSIGNED THIS LEASE SUPPLEMENT TO THE INDENTURE
TRUSTEE AS SECURITY. 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 THROUGH THE TRANSFER OR POSSESSION OF ANY
COUNTERPART HEREOF OTHER THAN THE ORIGINAL COUNTERPART CONTAINING THE RECEIPT
THEREFOR EXECUTED BY THE INDENTURE TRUSTEE IMMEDIATELY FOLLOWING THIS LEGEND.
Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ___ day of ___________, 199__.
THE FIRST NATIONAL BANK OF
MARYLAND, as Indenture Trustee
By:______________________________
Name:
Title:
<PAGE>
SCHEDULE I
TO EXHIBIT A
DESCRIPTION OF AIRFRAME AND ENGINES
AIRFRAME
Manufacturer's FAA Registration Manufacturer's
Manufacturer Model No. Serial No.
- - ------------ -------------- ---------------- -------------
ENGINES
Manufacturer's Manufacturer's
Manufacturer Model Serial Nos.
- - ------------ -------------- ----------------
Each Engine is of 750 or more "rated take-off horsepower" or the
equivalent of such horsepower.
<PAGE>
Exhibit B
Certain Economic Information
"EBO Amount" shall mean $____________.
"EBO Date" shall mean _________________ ____.
"Lessor's Cost" shall mean $___________.
"Minimum Liability Amount" shall mean $________.
<PAGE>
Exhibit C
Basic Rent
Basic Rent Payment Date Amount
- - ----------------------- ------
<PAGE>
Exhibit D
Termination Values
Termination Date Termination Value
- - ---------------- -----------------
<PAGE>
Exhibit E
Lists of Countries
Exhibit E-1 - Permitted for Re-Registration
Australia Italy
Austria Japan
Belgium Luxembourg
Canada Netherlands
Denmark New Zealand
Finland Spain
France Sweden
Germany Switzerland
Greece United Kingdom
Iceland
Ireland
Exhibit E-2 - Permitted for Subleasing
Argentina Iceland
Australia Ireland
Austria Italy
Belgium Jamaica
Bermuda Japan
Brazil Liechtenstein
Canada Netherlands
Chile Norway
Denmark Portugal
Finland Singapore
France Spain
Germany Sweden
Switzerland
Taiwan
United Kingdom
<PAGE>
Exhibit F
Return Conditions
The return conditions shall be as agreed to by the Lessee and the Owner
Participant on or prior to the Delivery Date.
<PAGE>
Exhibit A-2 to
Leased Aircraft
Participation Agreement
[F&J LEASED AIRCRAFT OPINION]
[Delivery Date]
To Each of the Parties Listed
on the Attached Schedule
Re: Lease Financing of One Canadair Regional Jet
Series 200ER Aircraft -- U.S. Registration No. N
Ladies and Gentlemen:
We have acted as special New York counsel for Midway Airlines Corporation,
a Delaware corporation (the "Lessee"), in connection with the Participation
Agreement dated as of _____________________, among the Lessee;
______________________________, as Owner Participant; First Union Trust Company,
National Association ("FUTC"), as Owner Trustee; and The First National Bank of
Maryland ("FNBM"), as Indenture Trustee, Pass Through Trustee and Subordination
Agent. Capitalized terms used herein and not otherwise defined herein shall have
the meanings set forth or referred to in the Participation Agreement. For
purposes hereof, "Documents" shall be a collective reference to the
Participation Agreement, the Lease, Lease Supplement No. 1, Purchase Agreement
Assignment and the Tax Indemnity Agreement.
This opinion is furnished to you pursuant to Section 3.01(b)(xviii)(B) of
the Participation Agreement.
In rendering this opinion, we have examined the Documents and such other
Operative Documents as are necessary in order to give the opinions expressed
herein. We have further examined and relied upon the accuracy of original,
certified, conformed, photographic or telecopied copies of such records,
agreements, certificates, certificates of public officials and such other
documents, and have made an investigation of such laws, as we have deemed
necessary and appropriate for the purpose of rendering this opinion. As to
certain questions of fact material to our opinions, we have relied solely upon
the accuracy of the statements, representations and warranties made in the
Documents and such other Operative Documents and we have made no independent
investigation or inquiry with respect to such factual matters.
<PAGE>
Based on the foregoing and upon an examination of such questions of law as
we have considered necessary or appropriate, and subject to the assumptions,
exceptions, qualifications and limitations set forth below, we advise you that
in our opinion:
1. Each of the Documents constitutes a legal, valid and binding obligation
of the Lessee, enforceable against the Lessee in accordance with its terms.
2. The execution and delivery by the Lessee of the Documents, the
consummation by the Lessee of the transactions contemplated thereby and the
compliance by the Lessee with any of the terms and provisions thereof do not
contravene any applicable federal law of the United States or any applicable law
of New York.
3. Except for the filings with the FAA referred to in paragraph 4 below,
the execution and delivery by the Lessee of the Documents and the consummation
by the Lessee of the transactions contemplated thereby do not require the
consent or approval of, or the giving of notice to, or the registration,
recording or filing of any document with, or the taking of any other action with
respect to any authority or agency of the federal government of the United
States of America or the State of New York.
4. The Lease as supplemented by Lease Supplement No. 1 thereto and the
Indenture as supplemented by Indenture Supplement No. 1 thereto are in due form
for filing in accordance with Subtitle VII of Title 49 of the United States Code
(the "Act"). The Indenture as supplemented by Indenture Supplement No. 1 thereto
will create, for the benefit of the Indenture Trustee, a valid security interest
in the Indenture Estate identified therein. Except for the filings with the FAA
referred to in the opinion dated today and addressed to you of Crowe & Dunlevy,
the filing of the Uniform Commercial Code financing statements referenced in
Section ___ of the Participation Agreement, which filings we assume have been
duly effected and are adequate for their intended purpose (and subject to the
timely filings in the future of continuation statements with respect to such
financing statements), and the taking of possession by the Indenture Trustee of
the original of the Lease and Lease Supplement No. 1, each with a chattel paper
receipt attached, no recording or filing in the United States of America of any
of the Operative Documents, nor any other action, is necessary or advisable in
order to establish and perfect in the United States of America, the Owner
Trustee's rights and interest in the applicable Aircraft as against the Lessee
or any third party, or the mortgage and security interest of the Indenture
Trustee under the Indenture on the Aircraft, the Lease or the other property
included in the Indenture Estate in favor of the Indenture Trustee as against
the Lessee, the Owner Trustee or any third party.
5. The Participation Agreement, the Indenture and the Equipment Notes (the
"Owner Trustee Instruments") constitute legal, valid and binding obligations of
FUTC, to the extent any of such Owner Trustee Instruments were entered into by
FUTC in its individual capacity, and the Owner Trustee, or both, as the case may
be, enforceable against FUTC or the Owner Trustee, or both, as the case may be,
in
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<PAGE>
accordance with the terms of such agreements, and the Equipment Notes are
entitled to the benefits of the Indenture.
6. The Participation Agreement and the Indenture (the "Indenture Trustee
Documents") constitute legal, valid and binding obligations of the Indenture
Trustee, enforceable against the Indenture Trustee in accordance with their
respective terms.
7. The Participation Agreement constitutes the legal, valid and binding
obligation of the Pass Through Trustee, enforceable against the Pass Through
Trustee in accordance with its terms.
8. The Participation Agreement constitutes the legal, valid and binding
obligation of the Subordination Agent, enforceable against the Subordination
Agent in accordance with its terms.
9. So long as the Lessee continues to be a "citizen of the United States,"
as defined in Section 40102 of Title 49 of the United States Code, holding an
air carrier operating certificate issued by the Secretary of Transportation
pursuant to Chapter 447 of Title 49 of the United States Code for aircraft
capable of carrying 10 or more individuals or 6,000 pounds or more of cargo, the
Owner Trustee, as lessor 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 ("Section
1110") with respect to the Aircraft.
We call your attention that the U.S. District Court for the District of
Colorado recently issued an opinion regarding Section 1110, In re Western
Pacific Airlines, Civil Action No. 98-K- 358 (D. Colo. Mar. 10 and affirmed on
rehearing May 1, 1998). The decision, reversing an order of the bankruptcy
court, held that, although an airline debtor reaffirms its obligations and cures
its defaults under an aircraft lease within the prescribed period in accordance
with Section 1110, the protections under Section 1110 will cease after the first
sixty days in a chapter 11 case. An appeal from the decision of the District
Court is pending in the Court of Appeals for the Tenth Circuit. We have filed a
brief in the Tenth Circuit on behalf of another client seeking to overturn the
District Court's ruling. Although we are of the opinion that the decision of the
District Court was in error and that the protections of Section 1110, generally
speaking, should continue after the first sixty days in chapter 11, we can give
no assurance that the decision of the District Court will be reversed.
The foregoing opinions are subject to the following assumptions,
exceptions, qualifications and limitations:
A. The foregoing opinions are expressly limited to matters under and
governed by the internal laws of the State of New York and applicable federal
laws of the United States of America, except that we express no opinion as to
the securities law of any state, including the State of New York. Our opinion in
paragraph 2 above as to the contravention of certain laws, rules and regulations
is based upon such examination
-3-
<PAGE>
of laws and regulations as in our judgment was necessary and appropriate for the
purpose of such opinion.
B. The foregoing opinions regarding the enforceability of the Operative
Documents against any of the parties thereto are subject to the following:
(i) The enforceability of any of the Operative Documents may be
limited or affected by (a) bankruptcy, insolvency,
reorganization, moratorium, liquidation, rearrangement,
probate, conservatorship, fraudulent transfer, fraudulent
conveyance and other similar laws (including court decisions)
now or hereafter in effect and affecting the rights and
remedies of creditors generally or providing for the relief of
debtors, (b) the refusal of a particular court to grant (1)
equitable remedies, including, without limiting the generality
of the foregoing, specific performance and injunctive relief
or (2) a particular remedy sought by the Owner Trustee under
the Lease or by the Indenture Trustee under the Indenture as
opposed to another remedy provided for therein or another
remedy available at law or in equity, but which does not in
our opinion make such remedies inadequate for the practical
realization of the benefits intended to be provided thereby
and (c) general principles of equity (regardless of whether
enforcement is sought in a proceeding in equity or at law).
(ii) In rendering the foregoing opinions, we express no opinion as
to the enforceability of provisions of any of the Operative
Documents (a) purporting to waive or affect rights, claims,
defenses or other benefits bestowed by law, including without
limitation the right to receive notices, to the extent that
any of the same cannot be waived or affected or (b) relating
to indemnities to the extent prohibited by public policy or
limited by federal or state securities laws or which might
require indemnification for losses or expenses caused by gross
negligence, willful misconduct, fraud or illegality of an
indemnified party, the rights of third parties, or the
exercise of rights and remedies with respect to the Aircraft
other than in a commercially reasonable manner or as otherwise
provided in the Uniform Commercial Code or other applicable
law.
(iii) We note that the enforceability of specific provisions of the
Operative Documents may be subject to standards of
reasonableness, care and diligence and "good faith"
limitations and obligations such as those provided in Sections
1-102(3) and 1-203, of the Uniform Commercial Code and similar
applicable principles of common law and judicial decisions.
-4-
<PAGE>
(iv) We express no opinion with respect to compliance with the
anti-fraud provisions of applicable federal rules or
regulations.
C. With respect to the opinion given in paragraph 4 above as to the
creation of a security interest in the Indenture Estate, we express no opinion
as to the creation of any security interest in any portion of the Indenture
Estate other than (I) that portion of the Indenture Estate consisting of the
Aircraft, (II) that portion of the Indenture Estate (except for the Aircraft)
which is not excluded by Section 9-104 of the Uniform Commercial Code of any
relevant jurisdiction and (III) if possession or control and dominion or both by
the Indenture Trustee is required or necessary, such portion of the Indenture
Estate as has been deposited with the Indenture Trustee pursuant to the
Indenture, or which possession or control and dominion or both, has otherwise
effectively occurred.
D. The foregoing opinions, to the extent they address the creation and
perfection of a security interest in any portion of the Indenture Estate are
further subject to the following: we have made no examination of, and we express
no opinion as to, (a) the title of any person to the Indenture Estate or any
portion thereof, (b) the value of any security granted to the Indenture Trustee
and (c) the priority of any such security interest.
E. We have assumed the due authorization, execution and delivery of the
Operative Documents by each of the parties thereto (including the Lessee) and
that each of such parties has the full power, authority and legal right to
execute, deliver and perform such documents.
F. Except to the extent expressly set forth in paragraphs 1, 5, 6, 7 and
8, we have assumed that each of the Operative Documents is enforceable against
each of the parties thereto.
G. With respect to the opinion given in paragraph 5, our opinion is
subject to limitations of Delaware law applicable to FUTC and the Owner Trustee,
as to which we express no opinion.
H. With respect to the opinions given in paragraphs 6, 7 and 8 our opinion
is subject to limitations of Maryland law applicable to FNBM or the Indenture
Trustee, Pass Through Trustee or Subordination Agent, as the case may be, as to
which we express no opinion.
I. We have assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals and the conformity to the originals
of all documents submitted to us as copies, which facts we have not verified
independently.
J. We express no opinion as to whether the Lease constitutes a "true
lease."
-5-
<PAGE>
K. We have assumed that the Operative Documents and the transactions
contemplated thereby are not within the prohibitions of Section 406 of the
Employee Retirement Income Security Act of 1974.
L. With respect to the opinion given in paragraph 9, we express no opinion
as to the availability of the benefits of Section 1110 of the Bankruptcy Code to
any Replacement Aircraft or Replacement Engine.
M. In giving the foregoing opinion, we have relied upon the opinions
delivered to you today of Crowe & Dunlevy with respect to the matters set forth
therein. Our opinion is subject to all applicable qualifications and exceptions
(except for those set forth in clauses (i) (subject however to paragraph A
above) and (ii) thereof set forth in such opinion.
The opinions expressed herein are solely for the benefit of, and may only
be relied upon by, the named addressees in connection with the transactions
contemplated by the Participation Agreement. This opinion may not be furnished
or relied upon by any other person without the prior written consent of this
Firm. The opinions expressed herein are as of the date hereof and we make no
undertaking to amend or supplement such opinions as facts and circumstances come
to our attention or changes in the law occur which could affect such opinions.
Very truly yours,
-6-
<PAGE>
Schedule of Addresses
[Owner Participant]
First Union Trust Company, National Association,
individually and as Owner Trustee
The First National Bank of Maryland,
as Indenture Trustee, Pass Through
Trustee and Subordination Agent
ABN AMRO Bank N.V.
Standard & Poor's Rating Services
<PAGE>
Exhibit A-3 to
Leased Aircraft
Participation Agreement
[FNBM Leased Aircraft Opinion]
_______________, 199_
To the Persons Listed in Schedule A Attached Hereto
Re: Midway Airlines Corporation
Financing of One Canadair
Regional Jet Aircraft Series 200ER Aircraft
U.S. Registration No. N___________
Gentlemen:
We have acted as special counsel to The First National Bank of Maryland,
national banking association ("First National"), in connection with the
Participation Agreement [N______], dated as of _____________, 199__ (the
"Participation Agreement"), among Midway Airlines Corporation, as Lessee,
______________________, not in its individual capacity (except as expressly set
forth therein) but solely as Owner Trustee, and First National, not in its
individual capacity (except as expressly set forth therein) but solely as
Indenture Trustee, as Pass-Through Trustee and as Subordination Agent. Pursuant
to the Participation Agreement, one Canadair Regional Jet Series 200ER Aircraft
bearing U.S. Registration No. N_________ (the "Aircraft") is being financed.
This opinion is furnished pursuant to Section 3.01(b)(xviii)(F) of the
Participation Agreement Capitalized terms used herein and not defined have the
meanings given to such terms in the Participation Agreement, except that
references herein to any instrument shall mean such instrument as in effect on
the date hereof.
We have examined executed counterparts or copies otherwise identified to
our satisfaction of the following documents:
(a) the Participation Agreement;
<PAGE>
____________, 199_
Page 2
(b) the Indenture; and
(c) the Equipment Notes
(each of the documents identified in paragraphs (a) through (c) above are
collectively referred to as the "Indenture Trustee's Documents").
We have also examined originals or copies of such other documents, such
corporate records, certificates and other statements of governmental officials
and corporate officers and other representatives of the corporations or entities
referred to herein and such other instruments as we have deemed necessary or
appropriate for the purposes of this opinion. Moreover, as to certain facts
material to the opinions expressed herein, we have relied upon representations
and warranties contained in the Indenture Trustee's Documents.
In basing the opinions and other matters set forth herein on "our
knowledge", the words "our knowledge" signify that, in the course of our review
and analysis for the purpose of rendering this opinion, no information has come
to our attention that would give us actual knowledge or actual notice that any
such opinions or other matters are not accurate or that any of the foregoing
documents, records, certificates, statements and information on which we have
relied are not accurate and complete. Except as otherwise stated herein, we have
undertaken no independent investigation or verification of such matters. The
words "our knowledge" and similar language used herein are intended to be
limited to the knowledge of the lawyers within our firm who have worked on
matters relating to this opinion letter.
Based upon the foregoing and upon an examination of such questions of law
as we have considered necessary or appropriate, and subject to the assumptions,
exceptions and qualifications set forth below, we advise you that, in our
opinion:
1. First National is a national banking association duly incorporated and
validly existing under the laws of the United States of America holding a valid
certificate to do business as a national banking association, with banking and
trust powers, and each of First National and the Indenture Trustee, as the case
may be, has or had, on the date of execution thereof, full corporate power,
authority and legal right to execute, deliver and perform its duties pursuant to
each of the Indenture Trustee's Documents to which it is or is to be a party and
to authenticate the Equipment Notes delivered on the date hereof.
2. Each of First National and the Indenture Trustee, as the case may be,
has duly authorized, executed and delivered each Indenture Trustee Document to
which it is a party; each such document constitutes a legal, valid and binding
obligation of the Indenture Trustee (and, to the extent set forth in the
respective Indenture Trustee's Documents, of First National) enforceable against
the Indenture Trustee (and, to the extent set forth in the respective Indenture
Trustee's Documents, against First National) in accordance with its terms.
<PAGE>
____________, 199_
Page 3
3. The Equipment Notes issued and dated the date hereof have been duly
authenticated and delivered by the Indenture Trustee pursuant to the terms of
the Indenture.
4. Neither the authorization, execution and delivery by the Indenture
Trustee or First National, as the case may be, of the Indenture Trustee's
Documents, nor the authentication and delivery by the Indenture Trustee of the
Equipment Notes nor the fulfillment or compliance by the Indenture Trustee or
First National, as the case may be, with the respective terms and provisions
thereof nor the consummation of any of the transactions by the Indenture Trustee
or First National, as the case may be, contemplated thereby, requires the
consent or approval of, the giving of notice to, the registration with, or the
taking of any other action in respect of, any court or administrative or
governmental authority or agency of the State of Maryland or the United States
of America governing the banking or trust powers of First National.
5. The execution, delivery and performance by the Indenture Trustee or
First National, as the case may be, of each of the Indenture Trustee's Documents
and the authentication and delivery of the Equipment Notes by the Indenture
Trustee are not in violation of the articles of association or by-laws of First
National or of any law, governmental rule, or regulation of the State of
Maryland or the United States of America governing the banking or trust powers
of First National or, to our knowledge, of any indenture, mortgage, bank credit
agreement, note or bond purchase agreement, long-term lease, license or other
agreement or instrument to which it is a party or by which it is bound that is
material to the Indenture Trustee or First National or, to our knowledge, of any
judgment or order of the State of Maryland or the United States of America
relating to the banking or trust powers of First National.
6. There are no fees, taxes or other governmental charges payable by the
Owner Trustee, the Indenture Trustee (except taxes imposed on fees payable to
First National) or the holders of the Equipment Notes to the State of Maryland
or any political subdivision thereof under the laws of the State of Maryland or
any political subdivision thereof in existence on the date hereof, in connection
with the execution, delivery or performance of any of the Operative Agreements
solely because First National (a) has its principal place of business in the
State of Maryland, (b) performs (in its individual capacity or as Indenture
Trustee) any or all of its duties under the Indenture Trustee's Documents in the
State of Maryland, and (c) engages in any activities unrelated to the
transactions contemplated by the Indenture Trustee's Documents in the State of
Maryland. Neither the Indenture Trustee nor the trust created under the
Indenture will be subject to any fee, tax or other governmental charge (except
for taxes imposed on fees payable to First National) under the laws of the State
of Maryland or any political subdivision thereof in existence on the date
hereof, on, based on or measured by, directly or indirectly, the gross receipts,
net income or value of the Trust Indenture Estate solely because First National
(a) has its principal place of business in the State of Maryland, (b) performs
(in its individual capacity or as Indenture Trustee) any or all of its duties
under the Indenture Trustee's Documents in the State of Maryland, and (c)
engages in any activities
<PAGE>
____________, 199_
Page 4
unrelated to the transactions contemplated by the Indenture Trustee's Documents
in the State of Maryland. There is no fee, tax or other governmental charges
(except for taxes imposed on fees payable to First National) under the laws of
the State of Maryland or any political subdivision thereof in existence on the
date hereof, on, based on or measured by any payments under the Equipment Notes
by reason of the creation of the trust under the Indenture solely because First
National (a) has its principal place of business in the State of Maryland, (b)
performs (in its individual capacity or as Indenture Trustee) any or all of its
duties under the Indenture Trustee's Documents in the State of Maryland, and (c)
engages in any activities unrelated to the transactions contemplated by the
Indenture Trustee's Documents in the State of Maryland. We express no opinion as
to whether or not any fees, taxes or other charges are now or hereafter may be
payable by the Owner Participant to the State of Maryland or any political
subdivision thereof in connection with (a) the execution, delivery or
performance by the Owner Participant of any of the Indenture, the Participation
Agreement or any of the other Operative Agreements, and (b) the making by the
Owner Participant of its investment in the Aircraft.
7. To our knowledge, there are no actions, suits, investigations or
proceedings pending or threatened against or affecting First National or the
Indenture Trustee, as the case may be, or any of its properties in any court or
before any administrative agency or arbitrator, which, if adversely determined,
would materially adversely affect the ability of First National or the Indenture
Trustee, as the case may be, to perform its obligations under any of the
Indenture Trustee's Documents, and to our knowledge, there are no pending or
threatened actions or proceedings before any court, administrative agency or
tribunal involving First National or the Indenture Trustee, as the case may be,
in connection with the transactions contemplated by any of the Indenture
Trustee's Documents.
The foregoing opinions are subject to the following assumptions,
exceptions and qualifications:
A. We are admitted to practice law in the State of Maryland and we do not
hold ourselves out as being experts on the laws of any other jurisdiction. The
foregoing opinions are limited to the laws of the State of Maryland and the
Federal laws of the United States of America governing the banking and trust
powers of First National. In addition, we express no opinion with respect to (i)
Federal securities laws, including the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of
1939, as amended, (ii) the Federal Aviation Act of 1958, as amended, and (iii)
state securities or blue sky laws. Insofar as the foregoing opinions relate to
the validity and enforceability in the State of Maryland of the Equipment Notes
and the other Indenture Trustee's Documents expressed to be governed by the laws
of the State of New York, we have assumed that the laws of the State of New York
are identical to the laws of the State of Maryland in all material respects, and
that the Equipment Notes and such Indenture Trustee's Documents constitute
legal, valid, binding and enforceable documents or instruments under such laws
(as to which we express no opinion).
<PAGE>
____________, 199_
Page 5
B. The foregoing opinions regarding enforceability of any document or
instrument, are subject to (i) applicable bankruptcy, insolvency, fraudulent
conveyance, moratorium, reorganization, receivership and similar laws affecting
the rights and remedies of creditors generally, and (ii) general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law).
C. We have assumed the due authorization, execution and delivery by each
of the parties thereto, other than First National and the Indenture Trustee, of
the Indenture Trustee's Documents to which each is a party and that each of such
parties has the full power, authority and legal right to execute and deliver
each such document.
D. We have assumed that all signatures (other than those of the Indenture
Trustee or First National) on documents and instruments examined by us are
genuine, that all documents and instruments submitted to us as originals are
authentic, and that all documents and instruments submitted to us as copies
conform with the originals, which facts we have not independently verified.
E. We have assumed that the Participation Agreement and the transactions
contemplated thereby are not within the prohibitions of Section 406 of the
Employee Retirement Income Security Act of 1974, as amended.
F. We do not purport to be experts in respect of, or express any opinion
concerning laws, rules or regulations applicable to the particular nature of the
Aircraft and other equipment involved in this transaction.
G. We have made no investigation of, and we express no opinion concerning,
the nature of the title to any part of the Aircraft and other equipment or the
Trust Indenture Estate involved in this transaction or the priority of any
mortgage or security interest.
H. The opinions expressed herein concern only the effect of the laws
(excluding the principles of conflict of laws) of the State of Maryland and the
United States of America as currently in effect. We assume no obligation to
supplement this opinion if any applicable laws change after the date hereof or
if we become aware of any fact that might change the opinions expressed herein
after the date hereof.
I. The opinions expressed in this letter are limited to the matters set
forth in this letter, and no other opinions should be inferred beyond the
matters expressly stated.
<PAGE>
____________, 199_
Page 6
This opinion is rendered solely for your benefit and may not be relied
upon by any other person or entity for any purpose without our prior written
consent.
Sincerely yours,
OBER, KALER, GRIMES & SHRIVER,
A PROFESSIONAL CORPORATION
By:___________________________
Shareholder
<PAGE>
____________, 199_
Page 7
SCHEDULE A
ADDRESSEES
The First National Bank of Maryland, as Indenture Trustee and as Pass-Through
Trustee Baltimore, Maryland
________________________________________, as Owner Trustee
ABN AMRO Bank N.V.
(Chicago Branch)
Chicago, Illinois
Midway Airlines
Durham, North Carolina
<PAGE>
Exhibit A-4 to
Leased Aircraft
Participation Agreement
[Owner Trustee Leased Aircraft Opinion]
____________, 1998
To Each of the Persons
Listed on Schedule A
Attached Hereto
Re: Midway Airlines Corporation
Ladies and Gentlemen:
We have acted as counsel to First Union Trust Company, National
Association (the "Trust Company"), in connection with the Trust Agreement, dated
as of ________, 1998 (the "Trust Agreement"), by and between the Trust Company
and ___________, as Owner Participant (the "Owner Participant"). Pursuant to the
Participation Agreement, dated as of ________, 1998 (the "Participation
Agreement"), by and among Midway Airlines Corporation, as Lessee (the "Lessee"),
the Owner Participant, The First National Bank of Maryland ("First National"),
as Indenture Trustee, First National, as Pass-Through Trustee, First National,
as Subordination Agent, and the Trust Company, not in its individual capacity,
except as specifically set forth therein, but solely as Owner Trustee under the
Trust Agreement (the "Owner Trustee"), financing is being provided in connection
with one Canadair Regional jet Series 200ER aircraft bearing U.S. Registration
No. N______ (the "Aircraft"). This opinion is furnished upon the request of the
Owner Trustee pursuant to Section ________ of the Participation Agreement.
Capitalized terms used herein and not otherwise defined are used as defined in
or by reference in the Participation Agreement, except that reference herein to
any instrument shall mean such instrument as in effect on the date hereof.
We have examined forms, counterparts or copies otherwise identified
to our satisfaction of the following documents:
(a) the Participation Agreement;
<PAGE>
To Each of the Persons
Listed on Schedule A
Attached Hereto
____________, 1998
Page 2
(b) the Trust Agreement;
(c) the Escrow and Paying Agent Agreement (Class A);
(d) the Lease,
[(e) the Lease Supplement No. I dated the date hereof;]
(f) the Indenture;
[(g) the Indenture Supplement No. 1 dated the date hereof;)]
(h) the Deposit Agreement; and
(i) the Equipment Notes being issued today (the "Equipment Notes").
[N.B. This list of documents (and the appropriate defined terms)
will need to be reviewed after we receive complete documents.]
The documents identified in paragraphs (a) through (h) above are
collectively referred to herein as the "Owner Trustee Agreements".
We have also examined originals or copies of such other documents,
such corporate records, certificates and other statements of governmental
officials and corporate officers and other representatives of the corporations
or entities referred to herein and such other instruments as we have deemed
necessary or appropriate for the purposes of this opinion. Moreover, as to
certain facts material to the opinions expressed herein, we have relied upon the
representations and warranties contained in the instruments referred to above.
Based upon the foregoing and upon an examination of such questions
of law as we have considered necessary or appropriate, and subject to the
assumptions, exceptions and qualifications set forth below, we advise you that,
in our opinion:
1. The Trust Company is a national banking association, duly
organized and validly existing in good standing under the laws of the United
States, is a Citizen of the United States, and has the corporate, banking and
trust powers to enter into and perform its obligations under the Trust
Agreement, and the Owner Trustee has the authority under the Trust Agreement
<PAGE>
To Each of the Persons
Listed on Schedule A
Attached Hereto
____________, 1998
Page 3
to execute, deliver and perform its obligations under the Owner Trustee
Agreements and to issue, execute, deliver and perform the Equipment Notes.
2. The Trust Agreement and each other Owner Trustee Agreement have
been duly authorized, executed and delivered by the Trust Company or by the
Owner Trustee, as the case may be, and are the legal, valid and binding
obligations of the Trust Company or the Owner Trustee, as the case may be,
enforceable against the Trust Company or the Owner Trustee, as the case may be,
in accordance with their respective terms; and the Trust Agreement is the legal,
valid and binding obligation of the Owner Participant, enforceable against the
Owner Participant in accordance with its terms and the trust has been validly
created pursuant to the terms of the Trust Agreement.
3. The Equipment Notes have been duly authorized, issued, executed
and delivered by the Owner Trustee, pursuant to authorization contained in the
Trust Agreement, and constitute legal, valid and binding obligation of the Owner
Trustee, enforceable against the Owner Trustee in accordance with their terms
and the terms of the Trust Indenture; and the Equipment Notes are entitled to
the benefits and security afforded by the Trust Indenture in accordance with
their terms and the terms of the Trust Indenture.
4. Neither the execution and delivery by the Trust Company or the
Owner Trustee, as the case may be, of the Owner Trustee Agreements, nor the
issuance, execution and delivery by the Owner Trustee of the Equipment Notes,
nor the fulfillment of or compliance by the Trust Company or the Owner Trustee,
as the case may be, with the respective provisions thereof, conflicts with, or
results in a breach of the terms, conditions or provisions of, or constitutes a
default under, or results in a violation of, the charter or by-laws of the Trust
Company, any law, governmental rule or regulation of the State of Delaware or
any federal law, governmental rule or regulation of the United States of America
governing the banking or trust powers of the Trust Company or, to the best of
our knowledge, any agreement, indenture, mortgage, bank credit agreement, note
or bond purchase agreement, instrument, order, judgment or decree to which the
Trust Company, the Owner Trustee or any of their respective properties is
subject.
5. No consent, approval or other action by or any notice to or
filing with any court or administrative or governmental body is required under
the laws of the State of Delaware or the federal laws of United States of
America governing the banking or trust powers of the Trust Company in connection
with the authorization, execution and delivery by the Trust Company or the Owner
Trustee of the Owner Trustee Agreements, the authorization, issuance, execution
and
<PAGE>
To Each of the Persons
Listed on Schedule A
Attached Hereto
____________, 1998
Page 4
delivery by the Owner Trustee of the Equipment Notes, or the fulfillment of or
compliance by the Trust Company or the Owner Trustee with the respective terms
and provisions thereof.
6. The Trust Agreement creates for the benefit of the Owner
Participant the rights and interests in the Trust Estate which the Trust
Agreement by its terms purports to create. The Trustee has received such title
and interest in the Trust Estate as was conveyed to it.
7. There is no fee, tax or other governmental charge under the laws
of the State of Delaware or any political subdivision thereof in existence on
the date hereof on, based on or measured by any payments under the Lease or the
beneficial interests in the Trust Estate, by reason of the creation of the trust
under the Trust Agreement pursuant to the laws of the State of Delaware or the
Owner Trustee's performance of its duties under the Trust Agreement within the
State of Delaware, which would not have been imposed if the Trust Company did
not have its principal place of business and did not perform its obligations
under the Owner Trustee Agreements in the State of Delaware.
8. Assuming that (i) the Aircraft is not used in the State of
Delaware and is not physically located in the State of Delaware at the
commencement or termination of the Term or during such Term, (ii) in connection
with any sale of the Aircraft, such Aircraft will not be physically delivered in
the State of Delaware to a buyer nor be shipped from a point within the State of
Delaware to a buyer, and (iii) the trust created by the Trust Agreement is
treated as a grantor trust for federal income tax purposes within the
contemplation of Sections 671 through 678 of the Internal Revenue Code of 1986,
as amended, there are no fees, taxes, or other charges (except taxes imposed on
fees payable to the Owner Trustee) payable to the State of Delaware or any
political subdivision thereof in connection with the execution, delivery or
performance by the Owner Trustee, the Indenture Trustee, the Pass-Through
Trustee, the Lessee or the Owner Participant, as the case may be, of the Owner
Trustee Agreements or in connection with the making by the Owner Participant of
its acquisition of the beneficial interest in the Trust Estate or in connection
with the issuance and acquisition of the Equipment Notes, and neither the Owner
Trustee, the Trust Estate nor the trust created by the Trust Agreement will be
subject to any fee, tax or other governmental charge (except taxes on fees
payable to the Owner Trustee) under the laws of the State of Delaware or any
political subdivision thereof on, based on or measured by, directly or
indirectly, the gross receipts, net income or value of the Trust Estate solely
by reason of the creation or continued existence of the trust under the terms of
the Trust Agreement pursuant to the laws of the State of Delaware or the Owner
Trustee's performance of its duties under the Trust Agreement.
<PAGE>
To Each of the Persons
Listed on Schedule A
Attached Hereto
____________, 1998
Page 5
9. To the best of our knowledge, there are no proceedings pending or
threatened against or affecting the Trust Company or the Owner Trustee in any
court or before any governmental authority, agency or arbitration board or
tribunal which, if adversely determined, individually or in the aggregate, would
materially and adversely affect the right, power and authority of the Trust
Company or the Owner Trustee to enter into or perform its obligations under the
Owner Trustee Agreements and the Equipment Notes.
10. Neither a Delaware Court nor a Federal court applying federal or
Delaware law, if properly presented with the issue and after having properly
considered such issue, would permit the Owner Participant to terminate the Trust
Agreement, except in accordance with its terms.
11. Under the laws of the State of Delaware, so long as the Trust
Agreement has not been terminated in accordance with its terms, creditors of any
person that is an Owner Participant, holders of a lien against the assets of any
such person and representatives of creditors of any such person, such as
trustees, receivers or liquidators (whether or not any insolvency proceeding has
been commenced) (collectively, the "Creditors") may acquire legal, valid and
enforceable claims and liens, as to the Trust Estate, only against the rights of
such Owner Participant under the Trust Agreement or in the Trust Estate, and may
not through the enforcement of such Creditor's rights, acquire any greater
rights than the rights of such Owner Participant with respect to the Trust
Agreement or Trust Estate.
12. To the extent that the Uniform Commercial Code of the State of
Delaware (the "UCC") is applicable, except for the Indenture Trustee's taking of
possession of all monies, securities, and instruments constituting part of the
Indenture Estate, no action, including the filing or recording of any document,
is necessary (i) to create in the State of Delaware the security interest in the
Indenture Estate (including the assignment of the Lease to the Indenture
Trustee) which the Trust Indenture by its terms purports to create in favor of
the Indenture Trustee, and (ii) to perfect in the State of Delaware such
security interest, except for the filing of a UCC financing statement in the
Office of the Secretary of State of the State of Delaware.
The foregoing opinions are subject to the following assumptions,
exceptions and qualifications:
A. The foregoing opinions are limited to the laws of the State of
Delaware and the federal laws of the United States of America governing the
banking and trust powers of the Trust Company, except that the opinion rendered
in paragraph 10 above is limited to the laws of the
<PAGE>
To Each of the Persons
Listed on Schedule A
Attached Hereto
____________, 1998
Page 6
State of Delaware and Title 11 of the United States Code entitled "Bankruptcy"
and the opinion rendered in paragraph 11 above is limited to the laws of the
State of Delaware. In addition, we express no opinion with respect to (i)
federal securities laws, including the Securities Act of 1933, as amended, and
the Trust Indenture Act of 1939, as amended, (ii) the Federal Aviation Act of
1958, as amended (except with respect to the opinion set forth in paragraph 1
above concerning the citizenship of the Trust Company), (iii) the Federal
Communications Act of 1934, as amended, or (iv) state securities or blue sky
laws. Insofar as the foregoing opinions relate to the validity and
enforceability of the Equipment Notes and the Owner Trustee Agreements expressed
to be governed by laws other than the laws of the State of Delaware, we have
assumed that the Equipment Notes and such Owner Trustee Agreements constitute
legal, valid, binding and enforceable documents or instruments under such laws
(as to which we express no opinion).
B. The foregoing opinions regarding the enforceability of any
document or instrument are subject to (i) applicable bankruptcy (except as set
forth in paragraph A above), insolvency, moratorium, reorganization,
receivership, and other similar laws affecting the rights and remedies of
creditors generally, and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
C. We have assumed the due authorization, execution and delivery by
each of the parties thereto, other than the Trust Company and the Owner Trustee,
of the Owner Trustee Agreements to which each is a party and that each of such
parties has the full power, authority and legal right to execute and deliver
each such document.
D. The opinion set forth in paragraph 1 above concerning the
citizenship of the Trust Company is based upon an affidavit of an officer of the
Trust Company, the facts set forth in which we have not independently verified.
E. We have assumed that all signatures, other than those of the
Trust Company or the Owner Trustee, on documents and instruments submitted to us
as originals are authentic, and that all documents and instruments submitted to
us as copies conform with the originals, which facts we have not independently
verified.
F. We do not purport to be experts in respect of, or express any
opinion concerning, aviation law or other laws, rules or regulations applicable
to the particular nature of the equipment to be acquired by the Owner Trustee.
<PAGE>
To Each of the Persons
Listed on Schedule A
Attached Hereto
____________, 1998
Page 7
G. We have assumed that the Owner Trustee Agreements and the
transactions contemplated thereby are not within the prohibitions of Section 406
of the Employee Retirement Income Security Act of 1974.
H. No opinion is expressed as to the nature of the title to any part
of the Trust Estate or the priority of any mortgage or security interest.
I. The opinions set forth in paragraphs 10 and 11 above should be
interpreted in accordance with the Special Report by the TriBar Opinion
Committee, Opinions in the Bankruptcy Context: Rating Agency. Structured
Financing and Chanter 11 Transactions, 46 Bus. Law. 717 (1991).
This opinion is rendered solely for your benefit and may not be
furnished or quoted to or relied upon by any other person or entity for any
purpose without our prior written consent.
Very truly yours,
MML/1se
<PAGE>
To Each of the Persons
Listed on Schedule A
Attached Hereto
____________, 1998
Page 8
G. We have assumed that the Owner Trustee Agreements and the
transactions contemplated thereby are not within the prohibitions of Section 406
of the Employee Retirement Income Security Act of 1974.
H. No opinion is expressed as to the nature of the title to any part
of the Trust Estate or the priority of any mortgage or security interest.
I. The opinions set forth in paragraphs 10 and 11 above should be
interpreted in accordance with the Special Report by the TriBar Opinion
Committee, Opinions in the Bankruptcy Context: Rating Agency. Structured
Financing and Chapter 11 Transactions, 46 Bus. Law. 717 (1991).
This opinion is rendered solely for your benefit and may not be
furnished or quoted to or relied upon by any other person or entity for any
purpose without our prior written consent.
Very truly yours,
MML/1se
<PAGE>
SCHEDULE A
OWNER TRUSTEE
First Union Trust Company, National Association
OWNER PARTICIPANT
LESSEE
Midway Airlines Corporation
INDENTURE TRUSTEE. PASS-THROUGH TRUSTEE AND SUBORDINATION AGENT:
The First National Bank of Maryland
INITIAL PURCHASERS:
Morgan Stanley & Co. Incorporated
Credit Suisse First State Boston Corporation
RATING AGENCY:
Standard & Poor's Rating Service
<PAGE>
[LETTERHEAD OF CROWE & DUNLEVY]
Exhibit A-5 to
Leased Aircraft
Participation Agreement
[FAA Counsel Leased Aircraft Opinion]
_____________, 1998
To the Addressees on the
Schedule Attached Hereto
Re: ___________________ model ______________aircraft with manufacturer's
serial number ______ and United States nationality and registration
marks N________ (the "Aircraft")
Ladies and Gentlemen:
This letter confirms that we filed the following described instruments
with the Federal Aviation Administration (the "FAA") today at the respective
times noted below:
[(a) AC Form 8050-2 Aircraft Bill of Sale dated ___________, 1998 (the
"FAA Bill of Sale") by ________________ (the "Lessee") to
_____________________ as Owner Trustee (the "Owner Trustee") under
Trust Agreement ____________ dated as of ______________, 1998 (the
"Trust Agreement") between ________________ as Owner Participant and
the Owner Trustee, covering the Aircraft was filed at __:__ __.M.,
C.__.T.;]*
(b) AC Form 8050-1 Aircraft Registration Application by the Owner
Trustee covering the Aircraft, to which were attached the Affidavits
required by Section 47.7(c)(2)(ii) of Part 47 of the Federal
Aviation Regulations, was filed at __:__ __.M., C.__.T.;
(c) the Trust Agreement was filed at __:__ __.M., C.__.T.;
(d) Trust Indenture and Security Agreement ____________ dated as of
______________ 1998 (the "Indenture") between the Owner Trustee and
_______________________ as Indenture Trustee (the "Indenture
Trustee"), to which was attached the Trust Agreement and Indenture
Supplement _________________ dated ______________, 1998 (the
"Indenture Supplement") covering the Aircraft and the
__________model ___________ aircraft engines with manufacturer's
serial numbers
- - ------
* To be modified if delivery direct from Manufacturer.
<PAGE>
______________________ and ________________ (the "Engines"), was
filed at __:__ __.M., C.__.T.; and
(e) Lease Agreement _____________ dated as of ______________, 1998 (the
"Lease") between the Owner Trustee as lessor and the Lessee, to
which were attached Lease Supplement No. 1 dated _____________, 1998
(the "Lease Supplement") covering the Aircraft and the Engines, the
Indenture and the Indenture Supplement, was filed at __:__ __.M.,
C.__.T.
Based upon our examination of the above described instruments and of such
records of the FAA as we deemed necessary to render this opinion and as were
made available to us by the FAA, it is our opinion that:
(a) the FAA Bill of Sale, the Indenture with the Indenture Supplement
attached and the Lease with the Lease Supplement, the Indenture and
the Indenture Supplement attached are in due form for recordation by
and have been duly filed for recordation with the FAA pursuant to
and in accordance with the provisions of Section 44107 of Title 49
of the United States Code:
(b) legal title to the Aircraft is vested in the Owner Trustee and all
instruments necessary to cause the FAA in due course to issue to the
Owner Trustee an AC Form 8050-3 Certificate of Aircraft Registration
covering the Aircraft have been duly filed with the FAA pursuant to
and in accordance with the provisions of Sections 44102 and 44103 of
Title 49 of the United States Code;
(c) the Aircraft and the Engines are free and clear of Liens (as such
term is defined in the Lease) other than such as are created by the
Indenture, as supplemented by the Indenture Supplement and and by
the Lease, as supplemented by the Lease Supplement;
(d) the Indenture, as supplemented by the Indenture Supplement,
creates a duly and validly perfected first priority security
interest in favor of the Indenture Trustee in the Aircraft and
the Engines and in all of the right, title and interest of the
Owner Trustee in and to the Lease, as supplemented by the Lease
Supplement (insofar as such security interest affects an interest
covered by the recording system established by the FAA pursuant
to Section 44107 of Title 49 of the United States Code);
(e) the rights of the Owner Trustee and the Lessee under the Lease, as
supplemented by the Lease Supplement, with respect to the Aircraft
and the Engines are perfected;
<PAGE>
(f) the Indenture, as supplemented by the Indenture Supplement, is not
required to be refiled with the FAA or filed or recorded in any
other place within the United States in order to perfect or maintain
the perfection of the security interests created thereby in the
Aircraft and the Engines under the applicable laws of any
jurisdiction within the United States; and
(g) no other registration of the Aircraft and no filings or
recordings (other than the filings and recordings with the FAA
which have been effected) are necessary to perfect in any
jurisdiction within the United States the Owner Trustee's title
to the Aircraft or the security interest created by the
Indenture, as supplemented by the Indenture Supplement, in the
Aircraft and the Engines under the applicable laws of any
jurisdiction within the United States.
No opinion is herein expressed as to: (i) laws other than the federal laws
of the United States; (ii) the validity or enforceability under local law of the
Indenture, as supplemented by the Indenture Supplement; or (iii) the recognition
of the perfection of the security interest created by the Indenture, as
supplemented by the Indenture Supplement, as against third parties in any legal
proceedings outside the United States. Since our examination was limited to
records maintained by the FAA Aircraft Registry, our opinion does not cover
liens which are perfected without the filing of notice thereof with the FAA,
such as federal tax liens, liens arising under Section 1368(a) of Title 29 of
the United States Cede and possessory artisans' liens, and was subject to the
accuracy of FAA personnel in the filing, indexing and recording of instruments
filed with the FAA and in the search for encumbrance cross-reference index cards
for the Engines. This opinion is rendered in reliance upon the opinion of the
Aeronautical Center Counsel dated ____________________, 1998 (a copy of which is
attached hereto) and upon the past practice of the FAA which is consistent with
said opinion.
Very truly yours,
ROBIN D. JENSON
For the Firm
RDJ:pkk
<PAGE>
SCHEDULE A
<PAGE>
Exhibit B to
Leased Aircraft
Participation Agreement
[Form of Assignment and Assumption Agreement]
THIS ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of ____________,
_________ between [_______________________] (the "Transferee") and BELL ATLANTIC
CREDIT CORPORATION (the "Owner Participant").
W I T N E S S E T H :
WHEREAS, the Owner Participant entered into a Participation
Agreement, dated as of _____________________, 1998 among Midway Airlines
Corporation, as Lessee, First Union Trust Company National Association, not in
its individual capacity (except as otherwise expressly provided therein) but
solely as Owner Trustee, the Owner Participant, as Owner Participant, The First
National Bank of Maryland, as Indenture Trustee, The First National Bank of
Maryland, in its capacity as Pass-Through Trustee and The First National Bank of
Maryland, in its capacity as Subordination Agent (as the same may be from time
to time amended, the "Participation Agreement"; and into certain other
Transaction Documents (as defined herein);
WHEREAS, the Owner Participant desires to sell and assign to the
Transferee all of its right, title and interest in, to and under the Trust
Agreement (as defined in the Participation Agreement), and the Transferee
desires to (i) purchase and accept from the Owner Participant the assignment of
all of the Owner Participant's right, title and interest in, to and under the
Trust Agreement and (ii) assume liability for, and undertake performance of, all
obligations of the Owner Participant under the Trust Agreement and the other
Transaction Documents to which the Owner Participant is a party relating to the
period after the Transfer Date (as defined herein); and
WHEREAS, capitalized terms used herein without definition and which
are defined in the Participation Agreement are used herein with the respective
meanings given such terms in the Participation Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements contained herein, the parties agree as follows:
1. Assignment. Effective as of the date hereof, the Owner
Participant hereby irrevocably sells, assigns, transfers, conveys and sets over
to the Transferee all its right, title and interest in, to and under the Trust
Estate, the Participation Agreement, the Trust Agreement, the Tax Indemnity
Agreement and all other
<PAGE>
Operative Agreements (as defined in the Participation Agreement), agreements,
contracts, documents and instruments executed and delivered at any time prior to
the execution and delivery of this Agreement in connection with any of the
foregoing (the "Transaction Documents"), and any proceeds therefrom, except such
rights of the Owner Participant as have accrued prior to the date hereof (the
"Transfer Date") (such excepted rights to include, without limitation, the right
to receive any amounts due or accrued to the Owner Participant under the Trust
Agreement as of a date prior to the Transfer Date and the right to receive any
Excepted Payments pursuant to the Participation Agreement or the Tax Indemnity
Agreement with respect to events occurring prior to the Transfer Date).
2. Assumption. The Transferee hereby assumes all of the obligations,
liabilities and duties of the Owner Participant under each Transaction Document
(the "Assumed Obligations") and confirms that it shall be deemed a party to each
Transaction Document to which the Owner Participant is a party and shall be
bound by all the terms thereof (including the agreements and obligations of the
Owner Participant set forth therein) as if it were named as the Owner
Participant therein.
3. Further Assurances. The Owner Participant shall, at any time and
from time to time, upon the request of the Transferee, promptly and duly execute
and deliver any and all such further instruments and documents and take such
further action as the Transferee may reasonably request to obtain the full
benefits of this Assignment and of the rights and powers herein granted.
4. Representations and Warranties. The Transferee hereby represents
and warrants to the other parties hereto that:
(a) Organization; Authority. The Transferee (i) is a ___________
duly organized, validly existing and in good standing under the laws of the
[State] of __________ and (ii) has the full corporate power and authority to
conduct its business as presently conducted, to own or hold under lease its
properties and to execute, deliver and perform this Agreement and to perform the
Assumed Obligations and each of the Transaction Documents to which the
Transferee is or will be a party.
(b) Due Authorization. The execution, delivery and performance of
this Agreement and the performance of the Assumed Obligations and each of the
Transaction Documents to which the Transferee is or will be a party have been
duly authorized by all necessary corporate action on the part of the Transferee
and do not require approval or consent of, or notice to, any trustee or holders
of any indebtedness or obligations of the Transferee or any lessor under any
lease to the Transferee.
(c) Conflict. The execution, delivery and performance by the
Transferee of this Agreement and the performance of the Assumed Obligations and
each of the Transaction Documents to which the Transferee is or will be a party
and the consummation or performance by the Transferee of the transactions
contemplated thereby will not conflict with or result in any violation of,
constitute a default under,
-2-
<PAGE>
or result in the creation of any Lien upon any property of the Transferee under
any term of the Certificate of Incorporation or By-laws of the Transferee or any
agreement, mortgage, contract, indenture, lease or other instrument, or any
Applicable Law, by which the Transferee or its properties or assets are bound.
(d) Government Consents. Neither the execution or delivery of this
Agreement and the performance of the Assumed Obligations and each of the
Transaction Documents to which the Transferee is or will be a party nor the
consummation of any of the transactions contemplated hereby or thereby by the
Transferee requires the consent or approval of, the giving of notice to, the
registration with, or the taking of any other action in respect of any United
States federal, state or other governmental authority or agency, including any
judicial body.
(e) Legal, Valid and Binding Obligations. The Assumed Obligations
and this Agreement constitute, and any other Transaction Document to which the
Transferee will be a party, effective as of the Transfer Date or, as to
Transaction Documents not in effect on or prior to the Transfer Date, when
executed and delivered, will constitute, the legal, valid and binding
obligations of the Transferee enforceable against the Transferee in accordance
with their respective terms except as such enforcement may be limited by
bankruptcy, insolvency, reorganization, moratorium, and other similar laws
affecting the rights of creditors generally and by general principles of equity,
regardless of whether enforcement is pursuant to a proceeding in equity or at
law.
(f) Defaults. The Transferee is not in default under any mortgage,
deed of trust, indenture or other instrument or agreement to which the
Transferee is a party or by which it or any of its properties or assets may be
bound, or in violation of any Applicable Law, which default or violation could
have an adverse effect on the ability of the Transferee to perform any of its
obligations under this Agreement, the Assumed Obligations or the Transaction
Documents to which the Transferee is or will be a party.
(g) Litigation. There are no pending or, to the knowledge of the
Transferee, threatened actions or proceedings by or before any court or
administrative agency or arbitrator that involve the Transaction Documents or
the transactions contemplated thereby or that, either individually or in the
aggregate, are reasonably likely to adversely affect the ability of the
Transferee to perform its obligations under this Assumption Agreement, the
Assumed Obligations or any of the Transaction Documents to which it is or will
be a party or the validity of this Assumption Agreement, the Assumed Obligations
or any of such Transaction Documents.
(h) Securities Representation. The Transferee is acquiring its
interest in the Trust Estate for investment and not with a view to any resale or
distribution thereof, but subject, nevertheless, to any requirement of law that
the disposition of its property remain within its control at all times, and that
neither it nor anyone authorized by it to act on its behalf has directly or
indirectly offered any Equipment
-3-
<PAGE>
Note or interest in the Owner Participant's Commitment, the Trust Estate, or any
similar security for sale to, or solicited any offer to acquire any of the same
from, anyone.
(i) Liens. Upon the execution of this Assumption Agreement, there
will be no Lessor's Lien attributable to the Transferee on the Owner
Participant's Commitment or any interest therein or on the Trust Estate.
(j) ERISA. No part of the funds to be used by the Transferee to
contribute to the Owner Trustee to acquire the interests to be acquired by it
hereunder constitutes assets (within the meaning of ERISA and any rules and
regulations thereunder) of an employee benefit plan subject to Title I of ERISA
or of an individual retirement account or an employee benefit plan subject to
Section 4975 of the Code, or any trust established under any such plan or
account or of a "governmental plan," as defined in Section 3(32) of ERISA or in
Section 414(d) of the Code, organized in a jurisdiction having prohibitions on
transactions with such governmental plan substantially similar to those
contained in Section 406 of ERISA or Section 4975 of the Code.
(k) Permitted Transferee. The Transferee is a Permitted Transferee.
5. Reliance. The representations, warranties, covenants and
agreements of the Transferee are made for the benefit of, and may be relied upon
by, the Owner Trustee, Lessee, Owner Participant, Indenture Trustee, each
Pass-Through Trustee, the Subordination Agent and each Holder (collectively, the
"Beneficiaries"), and each of the Beneficiaries shall be deemed to be an express
third party beneficiary with respect thereto, entitled to enforce directly and
in its own name any rights or claims it may have against such Transferee as such
beneficiary.
6. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the law of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered on the date first above written.
[____________________________]
Transferee
By:__________________________
Name:
Title:
-4-
<PAGE>
BELL ATLANTIC CREDIT
CORPORATION
Owner Participant
By:__________________________
Name:
Title:
-5-
<PAGE>
[Exhibit A-3 to Note
Purchase Agreement Form of
Leased Aircraft Indenture]
================================================================================
TRUST INDENTURE AND SECURITY AGREEMENT [N_____]
dated as of _________ ___, 199_
between
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
not in its individual capacity except as expressly
provided herein, but solely
Owner Trustee
and
THE FIRST NATIONAL BANK OF MARYLAND,
as Indenture Trustee
================================================================================
COVERING ONE CANADAIR REGIONAL JET SERIES 200ER AIRCRAFT
BEARING U.S. REGISTRATION NO. N____
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS............................................... 8
Section 1.01 Definitions........................................ 8
ARTICLE II ISSUE, EXECUTION, FORM AND
REGISTRATION OF EQUIPMENT NOTES........................... 8
Section 2.01. Authentication and Delivery of Equipment Notes..... 8
Section 2.02. Execution of Equipment Notes....................... 8
Section 2.03. Authentication..................................... 9
Section 2.04. Form and Terms of Equipment Notes; Payments on
Equipment Notes.................................... 9
Section 2.05. Payments from Trust Indenture Estate Only.......... 11
Section 2.06. Registration, Transfer and Exchange................ 12
Section 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen
Equipment Notes.................................... 13
Section 2.08. Cancellation of Equipment Notes; Destruction
Thereof............................................ 14
Section 2.09. Termination of Interest in Trust Indenture Estate.. 14
Section 2.10. Equipment Notes in Respect of Replacement
Aircraft........................................... 14
Section 2.11. Assumption of Obligations Under Equipment Notes
and Other Operative Agreements..................... 15
Section 2.12. Subordination...................................... 15
ARTICLE III COVENANTS................................................. 16
Section 3.01. Payment of Principal, Make-Whole Premium and
Interest........................................... 16
Section 3.02. Offices for Payments, etc.......................... 16
Section 3.03. Appointment to Fill a Vacancy in Office of
Indenture Trustee.................................. 16
Section 3.04. Paying Agents...................................... 16
Section 3.05. Covenants of the Owner Trustee..................... 17
Section 3.06. [Reserved]......................................... 17
Section 3.07. Disposal of Trust Indenture Estate................. 17
Section 3.08. No Representations or Warranties as to Aircraft or
Documents.......................................... 18
Section 3.09. Further Assurances; Financing Statements........... 18
ARTICLE IV HOLDER LISTS.............................................. 18
Section 4.01. Holder Lists: Ownership of Equipment Notes......... 18
-i-
<PAGE>
ARTICLE V RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE.................... 19
Section 5.01. Basic Rent Distribution............................ 19
Section 5.02. Event of Loss and Replacement; Prepayment.......... 20
Section 5.03. Payment After Indenture Event of Default, etc...... 21
Section 5.04. Certain Payments................................... 24
Section 5.05. Other Payments..................................... 25
Section 5.06. Payments to Owner Trustee.......................... 25
Section 5.07. Application of Payments............................ 25
Section 5.08. Investment of Amounts Held by Indenture Trustee.... 26
Section 5.09. Withholding Taxes.................................. 26
ARTICLE VI PREPAYMENT OF EQUIPMENT NOTES............................. 27
Section 6.01. No Prepayment Except as Specified.................. 27
Section 6.02. Prepayment of Equipment Notes...................... 27
Section 6.03. Notice of Prepayment to Holders.................... 29
Section 6.04. Deposit of Prepayment Price........................ 29
Section 6.05. Equipment Notes Payable on Prepayment Date......... 29
ARTICLE VII INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS.......................... 30
Section 7.01. Indenture Event of Default......................... 30
Section 7.02. Remedies........................................... 32
Section 7.03. Return of Aircraft, etc............................ 34
Section 7.04. Indenture Trustee May Prove Debt................... 37
Section 7.05. Remedies Cumulative................................ 39
Section 7.06. Suits for Enforcement.............................. 39
Section 7.07. Discontinuance of Proceedings...................... 39
Section 7.08. Unconditional Right of Holders to Payments on
Equipment Notes.................................... 39
Section 7.09. Control by Holders................................. 40
Section 7.10. Waiver of Past Indenture Default................... 40
Section 7.11. Notice of Indenture Default........................ 40
ARTICLE VIII RIGHTS OF THE OWNER TRUSTEE
AND THE OWNER PARTICIPANT................................. 41
Section 8.01. Certain Rights of Owner Trustee and Owner
Participant........................................ 41
Section 8.02. Owner Participant's Right to Prepay or Purchase
the Equipment Notes................................ 44
Section 8.03. Certain Rights of Owner Participant................ 45
ARTICLE IX CONCERNING THE INDENTURE TRUSTEE.......................... 47
Section 9.01. Acceptance of Trusts............................... 47
Section 9.02. Duties Before, and During, Existence of Indenture
Event of Default................................... 47
-ii-
<PAGE>
Section 9.03. Certain Rights of the Indenture Trustee............ 49
Section 9.04. Indenture Trustee Not Responsible for Recitals,
Equipment Notes, or Proceeds....................... 50
Section 9.05. Indenture Trustee and Agents May Hold Equipment
Notes; Collections, etc............................ 50
Section 9.06. Moneys Held by Indenture Trustee................... 50
Section 9.07. Right of Indenture Trustee to Rely on Officer's
Certificate, etc................................... 50
Section 9.08. Replacement Airframes and Replacement Engines...... 51
Section 9.09. Indenture Supplement for Replacements.............. 54
Section 9.10. Effect of Replacement.............................. 54
Section 9.11. Compensation....................................... 54
ARTICLE X CONCERNING THE HOLDERS.................................... 55
Section 10.01. Evidence of Action Taken by Holders................ 55
Section 10.02. Proof of Execution of Instruments and of Holding of
Equipment Notes.................................... 55
Section 10.03. Holders to Be Treated as Owners.................... 55
Section 10.04. Equipment Notes Owned by Owner Trustee or Lessee
Deemed Not Outstanding............................. 56
Section 10.05. ERISA.............................................. 56
ARTICLE XI INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE.................................. 57
ARTICLE XII SUCCESSOR TRUSTEES........................................ 58
Section 12.01. Notice of Successor Owner Trustee.................. 58
Section 12.02. Resignation and Removal of Indenture Trustee:
Appointment of Successor........................... 58
Section 12.03. Persons Eligible for Appointment as Indenture
Trustee............................................ 59
Section 12.04. Acceptance of Appointment by Successor Trustee..... 59
Section 12.05. Merger, Consolidation or Succession to Business of
Indenture Trustee.................................. 60
Section 12.06. Appointment of Separate Trustees................... 61
ARTICLE XIII SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS....................... 63
Section 13.01. Supplemental Indentures Without Consent of
Holders............................................ 63
Section 13.02. Supplemental Indentures With Consent of Holders.... 64
Section 13.03. Effect of Supplemental Indenture................... 65
Section 13.04. Documents to Be Given to Indenture Trustee......... 66
Section 13.05. Notation on Equipment Notes in Respect of
Supplemental Indentures............................ 66
-iii-
<PAGE>
Section 13.06. No Request Necessary for Lease Supplement or
Indenture Supplement............................... 66
Section 13.07. Notices to Liquidity Providers..................... 66
ARTICLE XIV SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS.......................................... 66
Section 14.01. Satisfaction and Discharge of Indenture:
Termination of Indenture........................... 66
Section 14.02. Application by Indenture Trustee of Funds Deposited
for Payment of Equipment Notes..................... 67
Section 14.03. Repayment of Moneys Held by Paying Agent........... 67
Section 14.04. Transfer of Unclaimed Money Held by Indenture
Trustee and Paying Agent........................... 67
ARTICLE XV MISCELLANEOUS............................................. 68
Section 15.01. Capacity in Which Acting........................... 68
Section 15.02. No Legal Title to Trust Indenture Estate in Holders 68
Section 15.03. Sale of Trust Indenture Estate by Indenture Trustee
is Binding......................................... 68
Section 15.04. Indenture Benefits Trustees, Participants,
Lessee, and Liquidity Providers Only............... 68
Section 15.05. No Action Contrary to Lessee's Rights Under the
Lease.............................................. 69
Section 15.06. Notices............................................ 69
Section 15.07. Officer's Certificates and Opinions of Counsel..... 69
Section 15.08. Severability....................................... 70
Section 15.09. No Oral Modifications or Continuing Waivers........ 70
Section 15.10. Successors and Assigns............................. 70
Section 15.11. Headings........................................... 70
Section 15.12. Normal Commercial Relations........................ 70
Section 15.13. Governing Law; Counterparts........................ 71
Section 15.14. Lessee's Right of Quiet Enjoyment. ............... 71
Annex A - Principal Amount of Equipment Notes
Annex B - Amortization Schedule
Appendix A - Definitions
Exhibit A - Form of Indenture Supplement
Exhibit B - Form of Equipment Note
Schedule I - Principal Amortization
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<PAGE>
TRUST INDENTURE AND SECURITY AGREEMENT [N_______]
TRUST INDENTURE AND SECURITY AGREEMENT [N ] dated as of ___________
(the "Indenture"), between FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity, except as
otherwise specifically set forth herein (when acting in such individual
capacity, "Trust Company"), but solely as owner trustee (the "Owner Trustee")
under the Trust Agreement, as defined herein, and THE FIRST NATIONAL BANK OF
MARYLAND, a national banking association (when acting in its individual
capacity, "FNBM"), as Indenture Trustee hereunder (the "Indenture Trustee").
W I T N E S S E T H:
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and Trust Company have, prior to the
execution and delivery of this Indenture, entered into a Trust Agreement [N___]
dated as of [__________], (as amended or otherwise modified from time to time in
accordance with the provisions thereof and of the Participation Agreement, the
"Trust Agreement"), whereby, among other things, Trust Company has declared a
certain trust for the use and benefit of the Owner Participant, subject,
however, to the Lien of this Indenture for the use and benefit of, and with the
priority of payment to, the holders of the Equipment Notes issued hereunder, and
the Owner Trustee is authorized and directed to execute and deliver this
Indenture;
WHEREAS, the Owner Trustee desires by this Indenture, among other
things (i) to provide for the issuance by the Owner Trustee of Equipment Notes
as provided in the Participation Agreement, and (ii) to provide for the
assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee,
as part of the Trust Indenture Estate hereunder of, among other things, certain
of the Owner Trustee's estate, right, title and interest in and to the Aircraft
and the Indenture Documents and certain payments and other amounts (other than
Excepted Payments) received hereunder or thereunder in accordance with the terms
hereof, as security for, among other things, the Owner Trustee's and the
Lessee's obligations to the Holders and the Indenture Indemnitees and for the
benefit and security of such Holders;
WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Owner Trustee, and authenticated, issued and delivered
hereunder, the valid obligations of the Owner Trustee; and
<PAGE>
WHEREAS, all things necessary to make this Indenture the valid,
binding and legal obligation of the Owner Trustee, enforceable in accordance
with its terms, have been done and performed and have happened.
NOW, THEREFORE, the parties agree as follows:
GRANTING CLAUSE
NOW, THEREFORE, in consideration of the mutual promises contained
herein and to secure (i) the prompt payment of the principal of and Make-Whole
Premium, if any, and interest on, and all other amounts due with respect to, all
the Equipment Notes from time to time outstanding under this Indenture and all
other amounts due hereunder and (ii) the performance and observance by the Owner
Trustee and the Lessee of all the agreements, covenants and provisions in this
Indenture, the Equipment Notes, the Participation Agreement and in the Lease
contained for the benefit of the Holders, and the prompt payment of any and all
amounts from time to time owing under the Participation Agreement by the Owner
Trustee or the Lessee to the Holders and each of the Indenture Indemnitees
(provided that, with respect to amounts owed to the Liquidity Providers which
relate to amounts due under the Liquidity Facilities, the amounts secured hereby
shall only include such amounts to the extent due and owing pursuant to the
final paragraph of Section 2.04 hereof) (collectively the "Secured Obligations")
and for the uses and purposes and subject to the terms and provisions of this
Indenture, and in consideration of the premises and of the covenants in this
Indenture and in the Equipment Notes and of the purchase of the Equipment Notes
by their Holders, and of the sum of $1 paid to the Owner Trustee by the
Indenture Trustee at or before the delivery of this Indenture, the receipt and
sufficiency of which are hereby acknowledged, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged, granted a
first priority security interest in and confirmed, and does hereby grant,
bargain, sell, assign, transfer, convey, mortgage, pledge and grant a first
priority security interest in and confirm to the Indenture Trustee, its
successors and assigns, in trust for the equal and ratable security and benefit
of the Holders and each of the Indenture Indemnitees, a first priority security
interest in and first mortgage Lien on all estate, right, title and interest of
the Owner Trustee in, to and under the following described property, rights and
privileges other than Excepted Payments, which collectively, excluding Excepted
Payments but including all property specifically subjected to the Lien of this
Indenture by the terms hereof, by any supplement to this Indenture (including
the Indenture Supplement) or any mortgage supplemental to this Indenture, are
included within the Trust Indenture Estate, subject always to the rights granted
to the Owner Trustee or any Owner Participant hereunder and to the other terms
and conditions of this Indenture:
(1) The Airframe, as described in the Indenture Supplement, and any
airframe substituted in replacement thereof pursuant to the provisions of this
Indenture; the Engines, as the same are more particularly described in the
Indenture
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<PAGE>
Supplement, whether or not such Engines shall be installed in or attached to the
Airframe or any other airframe, and any Replacement Engine therefor; and all
Parts in respect of the Airframe and the Engines and all records, logs and other
documents at any time maintained with respect to the foregoing property;
(2) The Lease and all Rent thereunder, including, without
limitation, all amounts of Basic Rent and Supplemental Rent, and payments of any
kind thereunder and including all rights of the Owner Trustee to execute any
election or option or to give or receive any notice, consent, waiver or approval
under or in respect of the Lease or to accept any surrender of the Aircraft or
any part thereof as well as any rights, powers or remedies on the part of the
Owner Trustee, whether arising under the Lease or by statute or at law or in
equity or otherwise arising out of any Event of Default;
(3) The Purchase Agreement (to the extent assigned by the Purchase
Agreement Assignment), the Purchase Agreement Assignment, the PAA Consent, the
Engine Manufacturer's Consent, the FAA Bill of Sale, the Warranty Bill of Sale
and the Participation Agreement (to the extent of amounts payable to the Owner
Trustee thereunder) (collectively, and together with the Lease and the Equipment
Notes, the "Indenture Documents"), including all rights of the Owner Trustee to
execute any election or option or to give or receive any notice, consent, waiver
or approval under or in respect of any of the foregoing documents and
instruments;
(4) All the tolls, rents, issues, profits, products, revenues and
other income (including sales proceeds) of the property subjected or required to
be subjected to the Lien of this Indenture, and all of the estate, right, title
and interest of the Owner Trustee in and to the same and every part of said
property;
(5) All other moneys and securities (including Permitted
Investments) 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 Agreement, except the Tax
Indemnity Agreement, and held or required to be held by the Indenture Trustee
hereunder;
(6) All requisition and insurance proceeds with respect to the
Aircraft or any part thereof (to the extent of the Owner Trustee's interest
therein pursuant to the terms of the Lease), including insurance required to be
maintained by the Lessee under Section 9 of the Lease; and
(7) All proceeds of the foregoing.
EXCLUDING, HOWEVER, from the foregoing grant of the Lien and
security interest of this Indenture and from the Trust Indenture Estate, (i) all
Excepted Payments, including without limitation all right, title and interest of
any Owner Participant in, to and under the Tax Indemnity Agreement and any
moneys due or to become due under the Tax Indemnity Agreement and all rights to
collect and enforce
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<PAGE>
Excepted Payments and (ii) rights granted to or retained by the Owner Trustee or
any Owner Participant hereunder and SUBJECT TO the following provisions:
(a) (i) whether or not an Indenture Event of Default shall occur and
be continuing, the Owner Trustee and any Owner Participant shall at all
times retain the right, to the exclusion of the Indenture Trustee: (A) to
Excepted Payments and to commence an action at law to obtain or otherwise
demand, sue for or receive and enforce the payment of such Excepted
Payments, (B) to exercise any election or option or make any decision or
determination or to give or receive any notice (including notice of
Default), consent, waiver or approval in respect of any such Excepted
Payment, (C) to adjust (and make any decision or determination or give any
notice or consent with respect to) Basic Rent and the percentages relating
to Termination Value and the EBO Price, and the EBO Date, as provided in
Section 3(d) of the Lease and Section 13.01 of the Participation
Agreement, (D) to exercise any election or option to make any decision or
determination, or to give or receive any notice, consent, waiver or
approval, or to take any other action in respect of, but in each case only
to the extent relating to, Excepted Payments (except for, in respect of
any portion of Basic Rent constituting an Excepted Payment, any action
changing the manner by which such Basic Rent is to be paid), (E) to retain
the rights of the "Lessor" with respect to solicitations of bids, and the
election to retain the Aircraft pursuant to Section 14(c) of the Lease,
(F) to retain the right of "Lessor" to determine the Fair Market Rental
Value or Fair Market Sales Value pursuant to the respective definitions
thereof, (G) to exercise all other rights of the Lessor under Section 13
of the Lease with respect to the retention or purchase by the Lessee or
the Lessor of the Aircraft or the exercise by the Lessee of the Lessee's
renewal or purchase options, (H) to retain all rights with respect to
insurance maintained for its own account which Section 9(f) of the Lease
specifically confers on the "Owner Participant", (I) to approve
appraisers, lawyers and other professionals and receive notices,
certificates, reports, filings, opinions and other documents, in each case
with respect to matters relating to the Owner Participant's tax position,
(J) to approve any accountants to be used in the verification of any Rent
adjustment, and (K) to exercise, to the extent necessary to enable it to
exercise its rights under Section 8.03 hereof, the rights of the "Lessor"
under Section 18 of the Lease;
(ii) whether or not an Indenture Event of Default shall occur and be
continuing, the Owner Trustee and the Indenture Trustee shall each have
the rights separately but not to the exclusion of the other: (A) to
receive from the Lessee all notices, certificates, reports, filings,
opinions of counsel, copies of all documents and all information which the
Lessee is permitted or required to give or furnish to the "Lessor"
pursuant to the Lease or to the Owner Trustee pursuant to any other
Operative Agreement, (B) to exercise inspection rights pursuant to Section
6 of the Lease (provided that if an Indenture Event of Default shall be
continuing, no inspection right of the Owner Trustee shall interfere with
the efforts of the Indenture Trustee to exercise remedies under the
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<PAGE>
Lease or this Indenture), (C) to maintain separate insurance pursuant to
Section 9(f) of the Lease and to retain all rights with respect to such
insurance maintained for its own account, and (D) to give any notice of
default under Section 16 of the Lease;
(iii) subject to the last sentence of this clause (a), so long as no
Indenture Event of Default shall have occurred and be continuing (but
subject to the provisions of Section 8.01), the Owner Trustee shall retain
the right, to the exclusion of the Indenture Trustee, to exercise all
rights of the "Lessor" under the Lease (other than the right to receive
any funds to be delivered to the "Lessor" under the Lease (except funds
which constitute or are delivered with respect to Excepted Property)) and
under the Purchase Agreement;
(iv) subject to the last sentence of this clause (a), at all times
the Owner Trustee shall have the right as Lessor, but not to the exclusion
of the Indenture Trustee, to seek specific performance of the covenants of
the Lessee under the Lease relating to the protection, insurance,
maintenance, possession and use of the Aircraft;
(v) at all times the Owner Trustee and the Owner Participant shall
have the rights granted to them under Articles VI, VIII and X and Section
7.02 hereof; and
Notwithstanding the foregoing, but subject always to the provisions
of Section 15.05 hereof, the Indenture Trustee shall at all times have the
right, to the exclusion of the Owner Trustee and the Owner Participant, to (A)
(other than with respect to Excepted Payments) declare the Lease to be in
default under Section 17 thereof and (B) subject only to the provisions of this
Indenture (other than in connection with Excepted Payments), exercise the
remedies set forth in such Section 17 of the Lease.
(b) The leasehold interest granted to the Lessee by the Lease shall
not be subject to the security interest granted by this Indenture, and nothing
in this Indenture shall affect the rights of the Lessee under the Lease so long
as no Event of Default has occurred and is continuing.
HABENDUM CLAUSE
TO HAVE AND TO HOLD the aforesaid property unto the Indenture Trustee, its
successors and assigns, in trust for the equal and ratable benefit and security
of the Holders and the Indenture Indemnitees, except as provided in Section 2.12
and Article V hereof, without any priority of any one Equipment Note over any
other and for the uses and purposes and subject to the terms and conditions set
forth in this Indenture and the rights of the Owner Trustee and the Owner
Participant under this Indenture.
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<PAGE>
It is expressly agreed that anything contained in this Indenture to the
contrary notwithstanding, the Owner Trustee shall remain liable under the
Indenture Documents to perform all of the obligations assumed by it under any of
those documents, all in accordance with and pursuant to the terms and provisions
of those documents, and the Indenture Trustee, the Holders and the Indenture
Indemnitees shall have no obligation or liability under the Indenture Documents
by reason of or arising out of the assignment under this Indenture, nor shall
the Indenture Trustee or the Holders or the Indenture Indemnitees be required or
obligated in any manner to perform or fulfill any obligations of the Owner
Trustee under or pursuant to the Indenture Documents or, except as expressly
provided in this Indenture, 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.
Effective upon the occurrence and continuance of an Indenture Event of
Default, to the extent permitted by Applicable Law, the Owner Trustee hereby
constitutes 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), subject to the terms and conditions of this Indenture, to ask,
require, demand, receive, compound and give acquittance for any and all Basic
Rent, Supplemental Rent payable to the Owner Trustee and Termination Value
payments, insurance proceeds and any and all moneys and claims for moneys due
and to become due under or arising out of the Lease (subject to Section 8.01
hereof) or the other Indenture Documents (other than Excepted Payments), to
endorse any checks or other instruments or orders in connection with the same
and to file any claims, take any action or institute any proceeding which the
Indenture Trustee may deem to be necessary or advisable in the premises. Without
limiting the generality of the foregoing, but subject to the rights of the Owner
Trustee and the Owner Participant under Sections 8.02, 7.02 and 7.03 hereof,
during the continuance of any Indenture Event of Default, to the extent
permitted by Applicable Law, the Indenture Trustee shall have the right under
such power of attorney to accept any offer in connection with the exercise of
remedies as set forth herein of any purchaser to purchase the Airframe and
Engines and upon such purchase to execute and deliver in the name of and on
behalf of the Owner Trustee an appropriate bill of sale and other instruments of
transfer relating to the Airframe and Engines, when purchased by such purchaser,
and to perform all other necessary or appropriate acts with respect to any such
purchase, and in its discretion to file any claim or take any other action or
proceedings, either in its own name or in the name of the Owner Trustee or
otherwise, which the Indenture Trustee may deem necessary or appropriate to
protect and preserve the right, title and interest of the Indenture Trustee in
and to such Rents and other sums and the security intended to be afforded
hereby; provided, however, that no action of the Indenture Trustee pursuant to
this paragraph shall increase the obligations or liabilities of the Owner
Trustee to any Person beyond those obligations and liabilities specifically set
forth in this Indenture and in the other Operative Agreements.
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<PAGE>
Under the Lease the Lessee is directed to make all payments of Rent (other
than Excepted Payments not constituting Basic Rent) payable to the Owner Trustee
and all other amounts (other than Excepted Payments not constituting Basic Rent)
which are required to be paid to or deposited with the Owner Trustee pursuant to
the Lease directly to the Indenture Trustee at such address in the United States
of America as the Indenture Trustee shall specify for application as provided in
this Indenture. The Owner Trustee agrees that if, notwithstanding such
provision, it shall have received any such amounts, promptly on receipt of any
such payment, it will transfer to the Indenture Trustee any and all moneys from
time to time received by the Owner Trustee constituting part of the Trust
Indenture Estate for distribution by the Indenture Trustee pursuant to this
Indenture, except that the Owner Trustee shall accept for distribution pursuant
to the Trust Agreement (i) any amounts distributed to it by the Indenture
Trustee under this Indenture and (ii) any Excepted Payments.
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, at the expense
of the Lessee, 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;
provided however, that the Owner Trustee shall have no obligation to execute and
deliver or cause to be executed or delivered to the Indenture Trustee any such
instrument or document if such execution and delivery would result in the
imposition of additional liabilities on the Owner Trustee or the Owner
Participant or would result in a burden on the Owner Participant's business
activities, unless the Owner Trustee or the Owner Participant, as the case may
be, is indemnified to its reasonable satisfaction against any losses,
liabilities and expenses incurred in connection with such execution and
delivery.
The Owner Trustee does hereby warrant and represent that it has not
assigned, pledged or otherwise disposed of, and hereby covenants that it will
not assign or pledge or otherwise dispose of, so long as the assignment
hereunder shall remain in effect and shall not have been terminated pursuant to
Section 14.01 hereof, any of its right, title or interest hereby assigned, to
anyone other than the Indenture Trustee, and that it will not, except in respect
of Excepted Payments or otherwise as provided in or permitted by this Indenture,
enter into an agreement amending or supplementing any of the Indenture
Documents, settle or compromise any claim (other than claims in respect of
Excepted Payments) against the Lessee arising under any of the Indenture
Documents, or 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.
Concurrently with the delivery of this Indenture, the Owner Trustee has
delivered to the Indenture Trustee executed counterparts of the Trust Agreement.
It is hereby further covenanted and agreed by and between the parties as
follows:
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<PAGE>
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Unless the context otherwise requires,
capitalized terms utilized herein shall have the meanings set forth or
incorporated by reference, and shall be construed in the manner described, in
Appendix A to the Lease Agreement [N___] dated as of the date hereof between the
Owner Trustee and Midway Airlines Corporation.
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF EQUIPMENT NOTES
Section 2.01. Authentication and Delivery of Equipment Notes. Upon the
execution and delivery of this Indenture, and from time to time thereafter,
Equipment Notes in the aggregate principal amount set forth on Annex A hereto
shall be executed by the Owner Trustee and delivered to the Indenture Trustee
for authentication, and the Indenture Trustee shall thereupon authenticate and
deliver said Equipment Notes to or upon the oral or written order of the Owner
Trustee, signed, if written, by an authorized officer of the Owner Trustee,
without any further action by the Owner Trustee.
Section 2.02. Execution of Equipment Notes. The Equipment Notes shall be
signed on behalf of the Owner Trustee by an authorized officer of Trust Company.
Such signatures may be the manual or facsimile signatures of such officer and
minor errors or defects in any reproduction of any such signature shall not
affect the validity or enforceability of any Equipment Note which has been duly
authenticated and delivered by the Indenture Trustee. In case any officer of
Trust Company who shall have signed any of the Equipment Notes shall cease to be
such officer before the Equipment Notes so signed shall be authenticated and
delivered by the Indenture Trustee or disposed of by Trust Company, such
Equipment Note nevertheless may be authenticated and delivered or disposed of as
though the person who signed such Equipment Note had not ceased to be such
officer of Trust Company; and any Equipment Note may be signed on behalf of the
Owner Trustee by such person or persons as, at the actual date of the execution
of such Equipment Note, shall be the proper officers of Trust Company, although
at the date of the execution and delivery of this Indenture any such person was
not such an officer. Equipment Notes bearing the facsimile signatures of
individuals who were authorized officers of Trust Company at the time such
Equipment Notes were issued 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.
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<PAGE>
Section 2.03. Authentication. Only such Equipment Notes as shall bear
thereon a certificate of authentication substantially in the form set forth in
Exhibit B, executed by the Indenture Trustee by manual signature of one of its
authorized officers, shall be entitled to the security and benefits of this
Indenture or be valid or obligatory for any purpose. Such certificate by the
Indenture Trustee upon any Equipment Note executed by the Owner Trustee shall be
conclusive evidence that the Equipment Note so authenticated has been duly
authenticated and delivered hereunder and that the Holder, as evidenced on the
Register, is entitled to the security and benefits of this Indenture.
Section 2.04. Form and Terms of Equipment Notes; Payments on Equipment
Notes. The Equipment Notes and the Indenture Trustee's certificate of
authentication shall be substantially in the form set forth in Exhibit B hereto.
The Equipment Notes shall be issuable as registered securities without coupons
and shall be numbered, lettered, or otherwise distinguished in such manner or in
accordance with such plans as the Owner Trustee may determine with the approval
of the Indenture Trustee.
The Equipment Notes shall be issued in registered form only and in
denominations of $1,000 and any integral multiple thereof, shall be dated the
Delivery Date, shall be issued in four separate series consisting of Series A,
Series B, Series C, and Series D and shall be issued in the principal amounts,
and shall bear interest at the rates per annum, specified on Annex A. Interest
shall be calculated on the basis of a 360-day year of twelve 30-day months.
Any of the Equipment Notes may be issued with appropriate insertions,
omissions, substitutions and variations, and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the provisions
of this Indenture, as may be required to comply with any law or with any rules
or regulations pursuant thereto, or with the rules of any securities market in
which the Equipment Notes are admitted to trading, or to conform to general
usage.
Each Equipment Note shall bear interest from the date of original issuance
thereof or from the most recent date to which interest has been paid, and shall
be payable in arrears on _______________, 199__, and on each January 2 and July
2 thereafter until maturity; provided that, under certain circumstances provided
in the Registration Rights Agreement, including in the event a Registration
Event does not occur on or prior to the date (the "Increase Date") required
pursuant to the Registration Rights Agreement, such interest rate shall be
increased by 0.5% from and including the Increase Date to but excluding the date
such Registration Event does occur. The principal amount of each Equipment Note
shall be payable on the dates and in the installments as set forth in Annex B
hereto.
Notwithstanding the preceding paragraph, each Equipment Note shall bear
interest at the Past Due Rate on any principal, interest and any other amount
payable hereunder or under such Equipment Note, which shall not be paid in full
when due
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<PAGE>
(whether at stated maturity, by acceleration, by mandatory prepayment or
otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full, payable from time to time on demand
of the Indenture Trustee.
The principal of, and Make-Whole Premium, if any, and interest on, the
Equipment Notes shall be payable at the Corporate Trust Department of the
Indenture Trustee or at any office or agency maintained for such purpose
pursuant to Section 3.02 hereof in immediately available funds prior to 12:00
noon (New York time) on the due date thereof and the Indenture Trustee shall
remit all such amounts received by it to the Holders at such account or accounts
at such financial institution or institutions as the Holders shall have
designated to the Indenture Trustee in writing, in immediately available funds,
such payment to be made if the payment was received prior to 12:00 noon New York
time by the Indenture Trustee on any Business Day, by 1:00 p.m. New York time on
such Business Day; otherwise, the Indenture Trustee shall make payment promptly,
but not later than 11:00 A.M. New York time on the next succeeding Business Day.
If any amount payable under the Equipment Notes, or under this Indenture, falls
due on a day that is not a Business Day, then such sum shall be payable on the
next succeeding Business Day, without (provided that payment is made on such
next succeeding Business Day) additional interest thereon for the period of such
extension.
The Holder at the close of business on any Record Date with respect to any
Payment Date shall be entitled to receive the interest if any payable on such
Payment Date notwithstanding any transfer or exchange of such Equipment Note
subsequent to the Record Date and prior to such Payment Date, except if and to
the extent the Owner Trustee shall default in the payment of the interest due on
such Payment Date, in which case such defaulted interest shall be paid to the
Holder at the close of business on a subsequent Record Date (which shall be not
less than five or more than 15 Business Days prior to the date of payment of
such defaulted interest) established by notice given by mail by or on behalf of
the Owner Trustee to the Holders not less than 15 days preceding such subsequent
Record Date.
The Owner Trustee agrees to pay to the Indenture Trustee (but only to the
extent not payable under Section 6(a) or 6(b) of the Note Purchase Agreement
(whether or not in fact paid) for distribution in accordance with Section 5.04
hereof (a) any and all indemnity amounts received by the Owner Trustee which are
payable by the Lessee to (i) the Indenture Trustee in its individual capacity,
(ii) the Subordination Agent or (iii) each Liquidity Provider, in each case
pursuant to Article 6 or 7 of the Participation Agreement (it being acknowledged
that the Lessee has been instructed to pay such amounts to the Person or Persons
entitled thereto) and (b) the Owner Trustee's pro rata share of all amounts owed
to each Liquidity Provider by the Subordination Agent under each Liquidity
Facility other than amounts due as (i) repayments of the principal of advances
thereunder, (ii) interest on Downgrade Drawings and Non-Extension Drawings,
except to extent exceeding investment earnings thereon and (iii) interest on
Interest Drawings and Final Drawings except to the extent included in Net
Interest and
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<PAGE>
Related Charges. As used in this Section, the 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 under
this Indenture other than the Series D Equipment Notes and the denominator
of which is the aggregate principal balance of all Equipment Notes issued
under this Indenture and the Related Indentures other than the Series D
Equipment Notes, and
(B) with respect to all Net Interest and Related Charges (x)
if there exists a Payment Default under any Equipment Note issued under
this Indenture a fraction, the numerator of which is the aggregate
principal balance then outstanding of Equipment Notes issued under this
Indenture other than the Series D Equipment Notes and the denominator of
which is the aggregate principal balance then outstanding of all Equipment
Notes issued under this Indenture and the Related Indentures other than
the Series D Equipment Notes under which there exists a Payment Default or
(y) at all other times, zero.
As used in this Section, "Net Interest and Related Charges" means the sum of (i)
the amount, if any, by which interest payable to each Liquidity Provider on any
Interest Drawing and Final Drawing exceeds the amount which would be payable if
such drawings bore interest at the weighted average Past Due Rate applicable to
amounts in default on all Equipment Notes 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 replacement Liquidity Facility)
which result from any Interest Drawing or Final Drawing. As used in this
Section, a "Payment Default" when used in connection with an Equipment Note
issued hereunder or a Equipment Note issued under any Related Indenture means a
default in the payment of principal thereof or interest thereon (which default
has not been cured), other than solely because of acceleration.
Section 2.05. Payments from Trust Indenture Estate Only. All payments to
be made by the Owner Trustee under this Indenture shall be made only from the
income and the proceeds from the Lessor's Estate to the extent included in the
Trust Indenture Estate and from any other amounts of the type described in
Section 5.01 hereof (but only to the extent actually received by the Indenture
Trustee) and only to the extent that the Owner Trustee shall have sufficient
income or proceeds from the Lessor's Estate to the extent included in the Trust
Indenture Estate (and such other amounts) to enable the Indenture Trustee to
make distributions of the amounts due in respect of the Equipment Notes in
accordance with the terms hereof and thereof. Each Holder by its acceptance of a
Equipment Note agrees that it will look solely to the income and proceeds from
the Trust Indenture Estate (and such other amounts of the type described in
Section 5.01 hereof but only to the extent actually received by the Indenture
Trustee) to the extent available for distribution to it as provided herein and
that none of the Owner Participant, the Owner Trustee, Trust Company or the
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Indenture Trustee is personally liable to such Holder for any amounts payable
under this Indenture or such Equipment Note or for any amounts payable or
liability under any Equipment Note or this Indenture, except as expressly
provided herein in the case of Trust Company, the Owner Trustee or the Indenture
Trustee.
Trust Company is not personally liable to any Holder, the Lessee, the
Owner Participant or the Indenture Trustee for any amounts payable under this
Indenture or for any liability under this Indenture or the Equipment Notes,
except as a result of Trust Company's gross negligence or willful misconduct (or
simple negligence in the handling of funds), or as otherwise expressly provided
herein or in the Participation Agreement.
If (1) all or any part of the Lessor's Estate becomes the property of a
debtor subject to the reorganization provisions of the Bankruptcy Code, (2)
pursuant to such reorganization provisions any Owner Participant is required, by
reason of such Owner Participant being held to have recourse liability to the
debtor or the trustee of the debtor directly or indirectly, to make payment on
account of any amount payable as principal of or interest, Make-Whole Premium or
other amounts payable on the Equipment Notes, and (3) the Indenture Trustee
actually receives any Recourse Amount which reflects any payment by an Owner
Participant on account of (2) above, then the Indenture Trustee shall promptly
refund to such Owner Participant such Recourse Amount. Nothing contained in this
paragraph shall prevent the Indenture Trustee from enforcing any personal
recourse obligation (and retaining the proceeds thereof) of any Owner
Participant under the Participation Agreement, or from retaining any amount paid
by any Owner Participant under Sections 5.01, 8.02 and 8.03 hereof.
Section 2.06. Registration, Transfer and Exchange. The Indenture Trustee
will keep, on behalf of the Owner Trustee, at each office or agency to be
maintained for the purpose as provided in Section 3.02 hereof a Register or
Registers on which, subject to such reasonable regulations as it may prescribe,
it will register, and will register the transfer of, Equipment Notes as provided
in this Article. Such Register shall be in written form in the English language
or in any other form capable of being converted into such form within a
reasonable period of time. Upon due presentation for registration of transfer of
any Equipment Note at any such office or agency, the Owner Trustee shall execute
and the Indenture Trustee shall authenticate and deliver in the name of the
transferee or transferees, in authorized denominations, a new Equipment Note or
Equipment Notes of the same Series, and with same principal amount, interest
rate and amortization schedule, for an equal aggregate principal amount;
provided, that such Equipment Note being transferred shall be canceled in
accordance with Section 2.08 hereof simultaneously with the issuance of the new
Equipment Note. Any Equipment Note or Equipment Notes may be exchanged for an
Equipment Note or Equipment Notes of the same Series but in other authorized
denominations, in an equal aggregate principal amount. Equipment Notes to be
exchanged shall be surrendered at any office or agency to be maintained by the
Indenture Trustee for the purpose as provided in Section 3.02 hereof, and the
Owner Trustee shall execute and the Indenture Trustee shall authenticate and
deliver in exchange therefor the Equipment Note or
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Equipment Notes which the Holder making the exchange shall be entitled to
receive, bearing numbers not contemporaneously or previously outstanding.
All Equipment Notes presented for registration of transfer, exchange,
prepayment or payment shall (if so required by the Owner Trustee or the
Indenture Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Owner Trustee
and the Indenture Trustee duly executed by the Holder or its attorney duly
authorized in writing and (except in the case of transfers pursuant to Article
13 of the Participation Agreement) the Indenture Trustee may require evidence
satisfactory to it as to the compliance of any such transfer with the Securities
Act. The Indenture Trustee may require payment from the Holder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any exchange or registration of transfer of Equipment Notes. No
service charge shall be levied for any such transaction. The Indenture Trustee
shall not be required to exchange or register a transfer of any Equipment Notes
(a) for a period of 15 days immediately preceding the first mailing of notice of
prepayment of such Equipment Notes or (b) with respect to which notice of
prepayment has been given pursuant to Section 6.03 hereof and such notice has
not been revoked. All Equipment Notes issued upon any transfer or exchange of
Equipment Notes shall be valid obligations of the Owner Trustee, evidencing the
same debt, and entitled to the same security and benefits under this Indenture,
as the Equipment Notes surrendered upon such transfer or exchange.
Section 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen Equipment
Notes. In case any Equipment Note shall become mutilated, defaced or be
apparently destroyed, lost or stolen, the Owner Trustee in its discretion may
execute, and upon the written request of any Holder shall execute, and the
Indenture Trustee shall authenticate and deliver in replacement thereof, a new
Equipment Note, payable to the same Holder, bearing the same principal amount
and interest rate as the Equipment Note being replaced and bearing a number not
contemporaneously or previously outstanding, in exchange and substitution for
the mutilated or defaced Equipment Note, or in lieu of and substitution for the
Equipment Note so apparently destroyed, lost or stolen. In the case of any
Equipment Note so apparently destroyed, lost or stolen, the applicant for a
substitute Equipment Note shall furnish to the Owner Trustee and to the
Indenture Trustee such security or indemnity as may be required by them to
indemnify and defend and to hold each of them harmless and evidence to their
satisfaction of the apparent destruction, loss or theft of such Equipment Note
and of the ownership thereof.
Upon the issuance of any substitute Equipment Note, the Owner Trustee or
the Indenture Trustee may require payment from the Holder of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses incurred in connection therewith. In
case any Equipment Note which has matured or is about to mature, or has been
called for prepayment in full, shall become mutilated or defaced or be
apparently destroyed, lost or stolen, the Owner Trustee may, instead of issuing
a substitute Equipment Note, pay or authorize
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the payment of the same (without surrender thereof except in the case of a
mutilated or defaced Equipment Note), if the applicant of any Equipment Note so
apparently destroyed, lost or stolen, for such payment shall furnish to the
Owner Trustee and to the Indenture Trustee such security or indemnity as any of
them may require to hold each of them harmless and the applicant shall also
furnish to the Owner Trustee and the Indenture Trustee evidence to their
satisfaction of the apparent destruction, loss or theft of such Equipment Note
and of the ownership thereof.
Every substitute Equipment Note issued pursuant to the provisions of this
Section by virtue of the fact that any Equipment Note is apparently destroyed,
lost or stolen shall constitute an original additional contractual obligation of
the Owner Trustee, whether or not the apparently destroyed, lost or stolen
Equipment Note shall be enforceable at any time by anyone and shall be entitled
to all the security and benefits of (but shall be subject to all the limitations
of rights set forth in) this Indenture equally and proportionately with any and
all other Equipment Notes duly authenticated and delivered hereunder. All
Equipment Notes shall be held and owned upon the express condition that, to the
extent permitted by law, the foregoing provisions are exclusive with respect to
the replacement or payment of mutilated, defaced, or apparently destroyed, lost
or stolen Equipment Notes and shall preclude any and all other rights or
remedies notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment of negotiable instruments or
other securities without their surrender.
Section 2.08. Cancellation of Equipment Notes; Destruction Thereof. All
Equipment Notes surrendered for payment, prepayment, registration of transfer or
exchange, if surrendered to the Owner Trustee or any agent of the Owner Trustee
or the Indenture Trustee, shall be delivered to the Indenture Trustee for
cancellation or, if surrendered to the Indenture Trustee, shall be canceled by
it; and no Equipment Notes shall be issued in lieu thereof except as expressly
permitted by any of the provisions of this Indenture. The Indenture Trustee
shall destroy cancelled Equipment Notes held by it and deliver a certificate of
destruction to the Owner Trustee. If the Owner Trustee shall acquire any of the
Equipment Notes, such acquisition shall not operate as a prepayment or
satisfaction of the indebtedness represented by such Equipment Notes unless and
until the same are delivered to the Indenture Trustee for cancellation.
Section 2.09. Termination of Interest in Trust Indenture Estate. A Holder
shall not, as such, have any further interest in, or other right with respect
to, the Trust Indenture Estate when and if the principal amount of and
Make-Whole Premium, if any, and interest on and other amounts due under all
Equipment Notes held by such Holder and all other sums payable to such Holder
hereunder and under the other Operative Agreements shall have been paid in full.
Section 2.10. Equipment Notes in Respect of Replacement Aircraft. Upon the
execution and delivery of a supplement to this Indenture covering a Replacement
Airframe and/or Replacement Engine, as provided in Section 9.09 hereof, each
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Equipment Note shall be deemed to have been issued in connection with such
Replacement Airframe and/or Replacement Engine and (in the case of a Replacement
Airframe) each Equipment Note issued thereafter upon a transfer or exchange of,
or as a replacement for, an Equipment Note, shall be designated as having been
issued in connection with such Replacement Airframe, but without any other
change therein except as provided for in this Article II.
Section 2.11. Assumption of Obligations Under Equipment Notes and Other
Operative Agreements. If, in accordance with and subject to the satisfaction of
the conditions set forth in Section 5.10 of the Participation Agreement, the
Lessee shall assume all of the obligations of the Owner Trustee hereunder, under
the Equipment Notes, and under all other Operative Agreements, the Owner
Participant and the Owner Trustee shall be released and discharged from any
further obligations hereunder and under the Equipment Notes and all other
Operative Agreements (except for any recourse obligations of the Owner
Participant or the Owner Trustee in its individual capacity with respect to
matters arising out of events occurring prior to such assumption).
Section 2.12. Subordination. (a) The Owner Trustee and, by acceptance of
its Equipment Notes of any Series, each 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 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 clause (iv), (v) or (vi) of Section 7.01
hereof, except as expressly provided in Article V hereof.
(b) By the acceptance of its Equipment Notes of any Series (other than
Series A), each Holder of such Series agrees that in the event that such Holder,
in its capacity as a 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 2.12 or Article V hereof, it will hold any amount so
received in trust for the Senior Holder (as defined in Section 2.12(c) hereof)
and will forthwith turn over such payment to the Indenture Trustee in the form
received to be applied as provided in Article V hereof.
(c) As used in this Section 2.12, the term "Senior Holder" shall mean, (i)
the Holders of Series A Equipment Notes 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
Holders of Series B Equipment Notes until the Secured Obligations in respect of
Series B Equipment Notes have been paid in full, (iii) after the Secured
Obligations in respect of Series B Equipment Notes have been paid in full, the
Holders of Series C Equipment Notes until the Secured Obligations in respect of
Series C Equipment Notes have been paid in full, and (iv) after the Secured
Obligations in respect of Series C Equipment Notes have been paid in full, the
Holders of Series D Equipment Notes until the Secured Obligations in respect of
Series D Equipment Notes have been paid in full.
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ARTICLE III
COVENANTS
Section 3.01. Payment of Principal, Make-Whole Premium and Interest. The
Owner Trustee covenants and agrees that it will, subject to Section 2.05 hereof,
duly and punctually pay or cause to be paid the principal of, and interest and
Make-Whole Premium, if any, and all other amounts due on, each of the Equipment
Notes and under this Indenture at the place or places, at the respective times
and in the manner provided in this Indenture and in the Equipment Notes.
Section 3.02. Offices for Payments, etc. So long as any of the Equipment
Notes remain outstanding, the Indenture Trustee will maintain the following: (a)
an office or agency where the Equipment Notes may be presented for payment and
(b) a facility or agency where the Equipment Notes may be presented for
registration of transfer and for exchange and for prepayment as provided in this
Indenture (the "Registrar"). The Registrar shall keep a register (the
"Register") with respect to the Equipment Notes and their transfer and exchange.
The Indenture Trustee may appoint one or more co-registrars ("Co-Registrars")
for the Equipment Notes and may terminate any such appointment at any time upon
written notice. The term "Registrar" includes any Co-Registrar. The Indenture
Trustee shall initially act as Registrar.
Section 3.03. Appointment to Fill a Vacancy in Office of Indenture
Trustee. The Owner Trustee, whenever necessary to avoid or fill a vacancy in the
office of Indenture Trustee, will, with the consent of the Lessee, appoint, in
the manner provided in Section 12.02 hereof, an Indenture Trustee, so that there
shall at all times be an Indenture Trustee hereunder.
Section 3.04. Paying Agents. Whenever the Indenture Trustee in its sole
discretion shall appoint a paying agent (the "Paying Agent"), it will cause the
Paying Agent to execute and deliver an instrument in which the Paying Agent
shall agree with the Indenture Trustee, subject to the provisions of this
Section:
(a) that it will hold all sums received by it as such agent
for the payment of the principal of, and interest and Make-Whole Premium,
if any, on the Equipment Notes (whether such sums have been paid to it by
the Indenture Trustee or the Owner Trustee) in trust for the benefit of
the Holders or of the Indenture Trustee, and
(b) that it will give the Indenture Trustee notice of any
failure by the Owner Trustee to make any payment of the principal of or
interest or Make-Whole Premium, if any, on the Equipment Notes when the
same shall be due and payable.
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Anything in this Section to the contrary notwithstanding, the agreements
to hold sums in trust as provided in this Section are subject to the provisions
of Sections 14.03 and 14.04 hereof.
Section 3.05. Covenants of the Owner Trustee.
(a) The Owner Trustee hereby covenants and agrees as follows:
(i) in the event a Responsible Officer of the Owner Trustee
shall have actual knowledge of an Indenture Event of Default, an Indenture
Default or an Event of Loss, the Owner Trustee will give prompt written
notice of such Indenture Event of Default, Indenture Default or Event of
Loss to the Indenture Trustee, the Lessee and the Owner Participant;
(ii) the Owner Trustee will furnish to the Indenture Trustee,
promptly upon receipt thereof by a Responsible Officer of the Owner
Trustee, 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 from an insurer or an insurance broker received
pursuant to Section 9 of the Lease, to the extent that the Operative
Documents do not provide that the same shall have been furnished to the
Indenture Trustee;
(iii) the Owner Trustee will not enter into any business or
other activity other than the business of owning the Aircraft, the leasing
thereof to the Lessee and the carrying out of the transactions
contemplated hereby and by the Lease, the Participation Agreement, the
Trust Agreement and the other Indenture Documents; and
(iv) except as contemplated by the Operative Agreements, the
Owner Trustee will not contract for, create, incur or assume any debt, and
will not guarantee (directly or indirectly or by an instrument having the
effect of assuring another's payment or performance on any obligation or
capability of so doing, or otherwise), endorse or otherwise take action to
become contingently liable, directly or indirectly, in connection with the
debt of any other Person.
Section 3.06. [Reserved]
Section 3.07. Disposal of Trust Indenture Estate. At any time and from
time to time any part of the Trust Indenture Estate may be sold or disposed of
in accordance with the provisions of this Indenture and the Lease. The Indenture
Trustee shall, from time to time, release any part of the Trust Indenture Estate
so sold or disposed of or as to which an Event of Loss has occurred or as to
which the Lease has been terminated from the Lien of this Indenture. In
addition, to the extent that such property constitutes an Airframe or Engine,
the further requirements of Section 9.08 hereof shall be satisfied.
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Section 3.08. No Representations or Warranties as to Aircraft or
Documents. NEITHER THE INDENTURE TRUSTEE NOR THE OWNER TRUSTEE NOR TRUST COMPANY
NOR THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS,
WORKMANSHIP, VALUE, CONDITION, DESIGN, COMPLIANCE WITH SPECIFICATIONS,
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR USE OR PURPOSE OF THE AIRCRAFT OR
ANY ENGINE, 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
WHATSOEVER, except that Trust Company warrants that on the Delivery Date (a) the
Owner Trustee shall have received whatever title was conveyed to it by the
Seller, and (b) the Aircraft shall be free and clear of Lessor's Liens
attributable to Trust Company. Neither 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 Document or as to the correctness of any
statement contained in any thereof, except for the representations and
warranties of Trust Company and the Indenture Trustee made under this Indenture
or in the Participation Agreement or of the Owner Participant made under the
Participation Agreement.
Section 3.09. Further Assurances; Financing Statements. At any time and
from time to time, upon the request of the Indenture Trustee or the Lessee, at
the expense of the Lessee, 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 advisable to perfect, preserve or
protect the Liens 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 granted herein, 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 Liens
or assignments created or intended to be created hereby.
ARTICLE IV
HOLDER LISTS
Section 4.01. Holder Lists: Ownership of Equipment Notes. (a) The
Indenture Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Indenture Trustee is not the Registrar, the Registrar shall
furnish to the Indenture Trustee semi-annually not more than ten days after each
Record Date, as of such Record Date, or at such other times as the Indenture
Trustee may request in writing, a list, in such form and as of such date as the
Indenture Trustee may reasonably
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require, containing all the information in the possession or control of the
Registrar as to the names and addresses of the Holders and the amounts and
Maturities of the Equipment Notes held by such Holders.
(b) Ownership of the Equipment Notes shall be proved by the Register kept
by the Registrar.
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
Section 5.01. Basic Rent Distribution. Except as otherwise provided in
Section 5.03 hereof, each installment of Basic Rent, any payment of interest on
overdue installments of Basic Rent and any payment received by the Indenture
Trustee pursuant to Section 8.03(a) hereof and shall be distributed by the
Indenture Trustee no later than the time herein provided 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 principal and interest (as well
as any interest on any overdue principal and, to the extent
permitted by applicable law, on any overdue interest) then due under
all Series A Equipment Notes shall be distributed to the Holders of
Series A Equipment Notes 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 paragraph (i) above, so much of such
installment or payment as shall be required to pay in full the
aggregate amount of principal and interest (as well as any interest
on any overdue principal and, to the extent permitted by applicable
law, on any overdue interest) then due under all Series B Equipment
Notes shall be distributed to the Holders of Series B Equipment
Notes 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 paragraph (ii) above, so much of such
installment or payment as shall be required to pay in full the
aggregate amount of principal and interest (as well as any interest
on any overdue principal and, to the extent permitted by applicable
law, on any overdue interest) then due under all Series C Equipment
Notes shall be distributed
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to the Holders of Series C Equipment Notes 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 paragraph (iii) above, so much of such
installment or payment as shall be required to pay in full the
aggregate amount of principal and interest (as well as any interest
on any overdue principal and, to the extent permitted by applicable
law, on any overdue interest) then due under all Series D Equipment
Notes shall be distributed to the Holders of Series D Equipment
Notes 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 Event of Default shall have occurred and be continuing,
then such balance shall not be distributed as provided in this
clause "second" but shall be held by the Indenture Trustee as part
of the Trust Indenture Estate and invested in accordance with
Section 5.08 hereof until whichever of the following shall first
occur: (i) all Events of Default shall have been cured or waived, in
which event such balance shall be distributed as provided in this
clause "second", (ii) Section 5.03 hereof shall be applicable, in
which event such balance shall be distributed in accordance with the
provisions of such Section 5.03, or (iii) the 120th day after the
receipt of such payment in which case such payment shall be
distributed as provided in this clause "second".
Section 5.02. Event of Loss and Replacement; Prepayment. (a) Except as
otherwise provided in Section 5.03 hereof, any payment received by the Indenture
Trustee as the result of or in connection with an Event of Loss with respect to
the Aircraft (and with respect to which the Lessee has not made the replacement
election in Section 8(a)(i) of the Lease) or as the result of, or in connection
with any event under the Lease giving rise to, a prepayment pursuant to Section
6.02 hereof, shall be promptly distributed by the Indenture Trustee in the
following order of priority:
first, to reimburse the Indenture Trustee and the Holders for any costs or
expenses reasonably incurred in connection with such prepayment and
(b) then to pay any other similar amounts then due to the other
Indenture Indemnitees;
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second, (i) to pay the amounts specified in paragraph (i) of clause "second"
of Section 5.03 hereof then due and payable in respect of the Series
A Equipment Notes;
(ii) after giving effect to paragraph (i) above, to pay the amounts
specified in paragraph (ii) of clause "second" of Section 5.03
hereof then due and payable in respect of the Series B Equipment
Notes;
(iii) after giving effect to paragraph (ii) above, to pay the
amounts specified in paragraph (iii) of clause "second" of Section
5.03 hereof then due and payable in respect of the Series C
Equipment Notes; and
(iv) after giving effect to paragraph (iii) above, to pay the
amounts specified in paragraph (iv) of clause "second" of Section
5.03 hereof then due and payable in respect of the Series D
Equipment Notes;
provided, that payments pursuant to this clause "second" shall be
made without the payment of Make-Whole Premium; and
third, as provided in clause "third" of Section 5.03 hereof;
provided that if a Replacement Airframe shall be substituted for an Airframe
subject to an Event of Loss as provided in Section 8(a)(i) of the Lease and
Section 9.08 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 and, unless otherwise applied pursuant to Section
5.01 or 5.03 hereof, such proceeds shall be released to the Lessee upon the
release of such damaged Airframe and the replacement thereof as herein provided.
(b) Any amounts received directly or indirectly from any governmental
authority, insurer or other party pursuant to any provision of Section 8 or 9 of
the Lease as the result of loss or damage not constituting an Event of Loss with
respect to the Aircraft, or as a result of such loss or damage constituting an
Event of Loss if and to the extent that such amounts would at the time be
required to be paid to the Lessee pursuant to Section 8 or 9 but for the fact
that a Specified Default exists shall be held by the Indenture Trustee as
security for the obligations of the Lessee under the Lease and the Participation
Agreement and shall be invested in accordance with the terms of Section 5.08
hereof and at such time as the conditions for payment to the Lessee specified in
Section 8 or 9, as the case may be, shall be fulfilled and no Specified Default
exists, such amount, and the proceeds of any investment thereof, shall, to the
extent not theretofore applied, be paid to the Lessee to the extent provided in
the Lease.
Section 5.03. Payment After Indenture Event of Default, etc. Except as
otherwise provided in Sections 5.02(b), 5.04(b), 5.04(c) and 5.05 hereof, all
payments (other than Excepted Payments) received and all amounts held or
realized by the Indenture Trustee after an Indenture Event of Default shall have
occurred and be
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continuing and the Equipment Notes shall have become due and payable as provided
in Section 7.02(b) or (c) hereof, shall be promptly distributed by the Indenture
Trustee in the following order of priority:
first, so much of such payments or amounts as shall be required to pay or
reimburse (i) the Indenture Trustee for any tax (except to the
extent resulting from a failure of the Indenture Trustee to withhold
pursuant to Section 5.09 hereof), 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 7.03(b) hereof) incurred by the
Indenture Trustee (to the extent not previously reimbursed), the
expenses of any sale, taking or other proceeding, attorneys' fees
and expenses, court costs, and any other expenditures incurred or
expenditures or advances made by the Indenture Trustee or the
Holders in the protection, exercise or enforcement of any right,
power or remedy or any damages sustained by the Indenture Trustee or
the Holders, liquidated or otherwise, upon such Indenture Event of
Default, shall be applied by the Indenture Trustee as between itself
and the Holders in reimbursement of such expenses and (ii) all
similar amounts payable to the other Indenture Indemnitees hereunder
and under the Participation Agreement; and in the case the aggregate
amount to be so distributed is insufficient to pay as set forth in
this clause "first", then ratably, without priority of one over the
other, in proportion to the amounts owed each hereunder;
second, so much of such payments or amounts remaining as shall be required
to reimburse the then existing or prior Holders for payments made
pursuant to Section 9.03(d) hereof (to the extent not previously
reimbursed) shall be distributed to such then existing or prior
Holders ratably, without priority of one over the other, in
accordance with the amount of the payment or payments made by each
such then existing or prior Holder pursuant to said Section 9.03(d)
hereof;
third, (i) so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid principal amount of all
Series A Equipment Notes, and the accrued but unpaid interest and
other amounts due thereon and all other Secured Obligations (other
than Make- Whole Premium) in respect of the Series A Equipment Notes
to the date of distribution, shall be distributed to the Holders of
Series A Equipment Notes, 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
Premium) to the date of distribution,
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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 (other than Make-Whole
Premium) 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 (other than Make-Whole
Premium) in respect of the Series B Equipment Notes to the date of
distribution, shall be distributed to the Holders of Series B
Equipment Notes, 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
Premium) 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 (other than Make-Whole Premium) 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 (other than Make-Whole
Premium) in respect of the Series C Equipment Notes to the date of
distribution, shall be distributed to the Holders of Series C
Equipment Notes, 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
Premium) 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 (other than Make-Whole Premium) 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 (other than Make-Whole
Premium) in respect of the Series D Equipment Notes to the date of
distribution, shall be
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distributed to the Holders of Series D Equipment Notes, 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 Premium) 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 (other than
Make-Whole Premium) to the date of distribution;
(it being understood that amounts payable under this clause "second"
shall not in any event include Make-Whole Premium); 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.
Section 5.04. Certain Payments. (a) Any payments received by the Indenture
Trustee which are to be held or applied according to any provision in any other
Indenture Document shall be held or applied thereunder in accordance therewith,
except to the extent this Indenture expressly provides for such payments to be
held or applied in a different manner.
(b) Notwithstanding anything to the contrary contained in this Article V,
the Indenture Trustee will distribute, promptly upon receipt, any indemnity or
other payment received by it from the Owner Trustee or the Lessee in respect of
(i) the Indenture Trustee in its individual capacity, (ii) the Subordination
Agent, (iii) each Liquidity Provider, (iv) the Pass-Through Trustee, and (v) any
other Indenture Indemnitee, in each case whether pursuant to Article 6 or 7 of
the Participation Agreement or as Supplemental Rent, directly to the Person
(which may include the Indenture Trustee) entitled thereto. Any payment received
by the Indenture Trustee under clause (b) of the last paragraph of Section 2.04
shall be distributed to the Subordination Agent to be distributed in accordance
with the terms of the Intercreditor Agreement.
(c) Notwithstanding anything to the contrary contained herein, any sums
received by the Indenture Trustee which constitute Excepted Payments shall be
distributed promptly upon receipt by the Indenture Trustee directly to the
Person or Persons entitled thereto.
(d) Notwithstanding any provision of this Indenture to the contrary, any
amounts held by Indenture Trustee pursuant to the terms of the Lease shall be
held by the Indenture Trustee as security for the obligations of Lessee under
the Indenture
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Documents and, if and when required by the Lease, paid and/or applied in
accordance with the applicable provisions of the lease.
Section 5.05. Other Payments. Any payments received by the Indenture
Trustee for which no provision as to the application thereof is made elsewhere
in this Indenture or in any other Indenture Document shall be distributed by the
Indenture Trustee (a) to the extent received or realized at any time prior to
the payment in full of all obligations to the Holders, in the order of priority
specified in Section 5.01 hereof, and (b) to the extent received or realized at
any time after payment in full of all obligations to the Holders, in the
following order of priority:
first, in the manner provided in clause "first" of Section 5.03 hereof, and
second, in the manner provided in clause "third" of Section 5.03 hereof.
Section 5.06. 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 immediately available 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 hereunder for distribution in accordance with the Trust Agreement shall
be distributed by wire transfer of immediately available funds of the type
received by the Indenture Trustee to such account of the Owner Participant as
may be specified pursuant to Section 2.06 of the Trust Agreement.
Section 5.07. Application of Payments. Each payment of principal of and
interest or other amounts due on each Equipment Note shall, except as otherwise
provided herein, be applied,
first, to the payment of interest on such Equipment Note due and payable to
the date of such payment, as provided in such Certificate, as well
as any interest on overdue principal and Make-Whole Premium, if any,
and, to the extent permitted by law, interest and other amounts due
thereunder,
second, the payment of any other amount (other than the principal of such
Equipment Note), including any Make-Whole Premium, due hereunder to
the Holder of such Equipment Note or under such Equipment Note; and
third, to the payment of the principal of such Equipment Note if then due
hereunder or under such Equipment Note.
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Section 5.08. Investment of Amounts Held by Indenture Trustee. Amounts
held by the Indenture Trustee pursuant to Section 5.02(b) hereof or pursuant to
any provision of any Indenture Document providing for investment by the
Indenture Trustee of sums pursuant to Section 15 of the Lease or this Section
5.08 shall be invested by the Indenture Trustee from time to time in securities
selected by (i) so long as no Event of Default shall have occurred and be
continuing, the Lessee (and in the absence of written direction by the Lessee,
the Indenture Trustee shall invest such monies in direct obligations of the
United States of America) or (ii) so long as an Event of Default shall have
occurred and be continuing, the Indenture Trustee and in each case shall be of
the type meeting the criteria for Permitted Investments. Unless otherwise
expressly provided in this Indenture, any income realized as a result of any
such investment, net of the Indenture Trustee's reasonable fees and expenses in
making such investment, shall be held and applied by the Indenture Trustee in
the same manner as the principal amount of such investment is to be applied and
any losses, net of earnings and such reasonable fees and expenses, shall be
charged against the principal amount invested. The Lessee shall be responsible
for and will promptly pay to the Indenture Trustee or the Owner Trustee, as the
case may be, on demand, the amount of any loss realized as the result of any
such investment (together with any fees, commissions and other costs and
expenses, if any, incurred by the Indenture Trustee or the Owner Trustee in
connection with such investment), such amount to be disposed of in accordance
with the terms hereof or the Lease, as the case may be. The Indenture Trustee
shall not be liable for any loss resulting from any investment made by it or any
investment sold by it under this Indenture in accordance with instructions from
the Lessee 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.
Unless otherwise confirmed in writing, an account statement delivered by
the Indenture Trustee to the Owner Trustee (with a copy to the Lessee) shall be
deemed written confirmation by the Owner Trustee that the investment
transactions identified therein accurately reflect the investment directions
given to the Indenture Trustee by or on behalf of the Lessee, unless the Lessee
notifies the Indenture Trustee in writing to the contrary within 30 days of the
date of receipt of such statement.
Section 5.09. Withholding Taxes. The Indenture Trustee, as agent for the
Owner Trustee, shall exclude and withhold from each payment of principal,
premium, if any, and interest and other amounts due hereunder or under the
Equipment Notes, any and all 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 taxes or similar charges
are required to be withheld with respect to any amounts payable in respect of
the Equipment Notes, it will withhold such amounts and timely pay the same to
the appropriate authority in the name of and on behalf of the Holders, 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 Holder
appropriate documentation showing the payment thereof, together with
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such additional documentary evidence as such Holder may reasonably request from
time to time.
ARTICLE VI
PREPAYMENT OF EQUIPMENT NOTES
Section 6.01. No Prepayment Except as Specified. Except as provided in
Sections 6.02 and 8.02 hereof, the Equipment Notes may not be prepaid.
Section 6.02. Prepayment of Equipment Notes. (a) The Outstanding Equipment
Notes shall be prepaid in full and not in part:
(i) If an Event of Loss occurs with respect to the Airframe or
with respect to the Airframe and the Engines or engines then installed on
the Airframe (unless pursuant to Section 8(a)(i) of the Lease and Section
9.08 hereof replacement equipment is substituted therefor);
(ii) If the Lessee, pursuant to Section 13(b) of the Lease,
gives notice of purchase of the Aircraft (and Section 2.11 hereof is not
applicable in connection with such purchase);
(iii) If the Owner Participant, or the Owner Trustee on behalf
of the Owner Participant, gives notice of prepayment to the Indenture
Trustee pursuant to Section 8.02 hereof;
(iv) If the Lessee, pursuant to Section 14(a) of the Lease,
gives notice of a voluntary termination for obsolescence or surplus, but
subject to Section 6.02(c) below;
(v) Pursuant to Section 13.01 of the Participation Agreement
in connection with a refinancing of the Equipment Notes, but subject to
Section 6.02(c) below; or
(vi) At the option of the Owner Trustee, with the prior
written consent of the Lessee and the Owner Participant, upon not less
than 25 days' prior written notice.
(b) In the event of a prepayment of the Equipment Notes pursuant to
Sections 6.02(a)(ii), (iv) and (v) above, the Owner Trustee, a Responsible
Officer of which having received notice from the Lessee in accordance with and
subject to the terms of Section 13(b) or 14(a) of the Lease or Article 13 of the
Participation Agreement, as the case may be, shall give written notice to the
Indenture Trustee and to the Holders of all of the Equipment Notes specifying
the Business Day on which the Equipment Notes shall be prepaid. In the case of a
prepayment of the Equipment Notes pursuant to Section
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6.02(a)(i) above, the Equipment Notes shall be prepaid in full on the Loss
Payment Date specified in Section 8(a)(ii) of the Lease. In the case of a
prepayment of the Equipment Notes pursuant to Section 6.02(a)(iii) above, the
Equipment Notes shall be prepaid in full on the date so designated in the notice
referred to in Section 8.02 hereof. In the case of a prepayment of the Equipment
Notes pursuant to Section 6.02(a)(ii) or (iv) above, the Equipment Notes shall
be prepaid in full on the Termination Date. In the case of a prepayment of the
Equipment Notes pursuant to Section 6.02(a)(v) above, the Equipment Notes shall
be prepaid on the effective date of the Refinancing. In the case of a prepayment
of the Equipment Notes pursuant to Section 6.02(a)(vi) above, the Equipment
Notes shall be prepaid on the date designated in the notice referred to therein.
The day on which the Equipment Notes are to be prepaid pursuant to this Section
6.02(b) is herein referred to as the "Prepayment Date".
On or prior to the Prepayment Date, immediately available funds shall be
deposited with the Indenture Trustee in an amount in respect of the Equipment
Notes equal to:
(1) if such prepayment is made pursuant to Section 6.02(a)(i)
or (iii) (if clause (i), but not clause (ii) or clause (iii) of the first
sentence of Section 8.02(a) of the Indenture is applicable and such
prepayment is made when an Event of Default has occurred and been
continuing for 180 days or more, or if clause (ii) or clause (iii) of the
first sentence of Section 8.02(a) hereof is applicable), the sum of (A)
the aggregate principal amount of such Equipment Notes then Outstanding,
(B) accrued interest on the Equipment Notes to the Prepayment Date and (C)
all other aggregate sums due the Indenture Trustee hereunder or under the
Participation Agreement or the Lease, but excluding any Make-Whole Premium
or other premium or penalty, or
(2) if such prepayment is made pursuant to Section
6.02(a)(ii), 6.02(a)(iii) (if clause (i), but not clause (ii) or clause
(iii) of the first sentence of Section 8.02(a) of the Indenture is
applicable and such prepayment is made when an Event of Default has
occurred and been continuing for less than 180 days) 6.02(a)(iv),
6.02(a)(v) or 6.02(a)(vi) above, the sum of the amounts specified in
clauses (A), (B) and (C) of the preceding clause (1) plus any Make-Whole
Premium payable in respect of all Equipment Notes
(the aggregate amount required to be paid pursuant to this sentence being herein
referred to as the "Prepayment Price").
(c) Notwithstanding the foregoing provisions of this Section 6.02, if (x)
a prepayment notice has been given in respect of Section 6.02(a)(iv) and no
termination of the Lease actually occurs or (y) a prepayment notice has been
given in respect of Section 6.02(a)(v) and no refinancing shall occur pursuant
to Article 13 of the Participation Agreement, any notice of prepayment given
pursuant to Section 6.02(b) in respect thereof shall be deemed revoked.
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Section 6.03. Notice of Prepayment to Holders. In order to effect any
prepayment set forth in Section 6.02(a) hereof, the Indenture Trustee shall give
prompt notice by first class mail of prepayment to each Holder. Any notice of
prepayment given by the Owner Trustee shall be irrevocable except (x) as
provided in Section 6.02(c) or (y) in the case of a notice given pursuant to
Section 6.02(a)(vi), which notice may be revoked by the Owner Trustee at any
time on or before the third Business Day preceding the Prepayment Date by prompt
notice to the Holders.
All notices of prepayment shall state: (1) the Prepayment Date, (2) the
applicable basis for determining the Prepayment Price, (3) that on the
Prepayment Date, subject to the provisions hereof, the Prepayment Price will
become due and payable, and that interest on the Equipment Notes shall cease to
accrue on and after such Prepayment Date, and (4) the place or places where such
Equipment Notes are to be surrendered for payment.
Section 6.04. Deposit of Prepayment Price. On the Prepayment Date, the
Owner Trustee shall, to the extent an amount equal to the Prepayment Price shall
not then be held in cash by the Indenture Trustee in immediately available funds
and deposited for the purpose, pay to the Indenture Trustee an amount equal to
the difference between (a) the amount then so held and (b) the Prepayment Price.
If there shall so be on deposit and/or deposited the applicable Prepayment Price
on or prior to a Prepayment Date, interest shall cease to accrue in respect of
all the Outstanding Equipment Notes on and after such Prepayment Date.
Section 6.05. Equipment Notes Payable on Prepayment Date. On the
Prepayment Date, the Outstanding Equipment Notes shall (except (A) if the Owner
Trustee has requested the Indenture Trustee to revoke such notice of prepayment
in accordance with Section 6.03 hereof or such notice is deemed to be revoked
pursuant to Section 6.02(c) hereof or (B) as otherwise provided in the Lease)
become due and payable and from and after such Prepayment Date (unless there
shall be a default in the payment of the Prepayment Price) such Equipment Notes
shall cease to bear interest. Upon surrender by any Holder of its Equipment Note
for prepayment in accordance with said notice, such Holder shall be paid the
principal amount of its Equipment Note then outstanding, accrued interest
thereon to the Prepayment Date, all other sums due to such Holder hereunder
plus, if a Make-Whole Premium is payable pursuant to Section 6.02(b) hereof, the
Make-Whole Premium in respect of such Equipment Certificate.
If any Equipment Note called for prepayment shall not be so paid upon
timely surrender thereof for prepayment, the principal shall, until paid,
continue to bear interest from the Prepayment Date at the interest rate
applicable to such Equipment Note.
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ARTICLE VII
INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS
Section 7.01. Indenture Event of Default. "Indenture Event of Default"
means any of the following events (whatever the reason for such Indenture Event
of Default and whether it 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):
(i) any Event of Default specified in Section 16 of the Lease
(other than an Event of Default arising solely as the result of the
failure to make an Excepted Payment unless the Owner Participant shall
notify the Indenture Trustee in writing that such failure shall constitute
an Indenture Event of Default); or
(ii) the failure of the Owner Trustee other than by reason of
a Default or an Event of Default (i) to pay principal, interest or
Make-Whole Premium, if any, on any Equipment Note when due, and such
failure shall have continued unremedied for ten Business Days after the
date when due or (ii) to pay any other amounts hereunder or under the
Equipment Notes when due and such failure shall have continued unremedied
for a period of 30 days after the Owner Trustee and the Owner Participant
shall receive written demand therefor from the Indenture Trustee or by any
Holder; or
(iii) (A) any representation or warranty made by the Owner
Trustee, the Owner Participant or any Owner Participant Guarantor in any
Operative Agreement or in any certificate the Owner Trustee, the Owner
Participant or any Owner Participant Guarantor furnished to the Indenture
Trustee or any Holder in connection herewith or therewith or pursuant
hereto or thereto shall prove to have been false or incorrect in any
material respect when made and was and remains in any respect materially
adverse to the interests of the Holders and such misrepresentation shall
not have been corrected within 30 days following notice thereof identified
as a "Notice of Indenture Event of Default" being given to the Owner
Trustee and the Owner Participant by the Indenture Trustee or by a
Majority in Interest of Holders, unless such misrepresentation is capable
of being corrected, and Owner Trustee or Owner Participant shall, after
the delivery of such notice, be diligently proceeding to correct such
misrepresentation and shall in fact correct such misrepresentation within
60 days after delivery of such notice; or
(B) any (x) covenant made by the Owner Trustee in the fifth
paragraph following the Habendum Clause hereof or in Section 5.02(b) of
the Participation Agreement shall be breached in any material respect and
any such
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breach shall not be cured within 10 Business Days after the Owner
Participant has received notice thereof from any Holder or the Indenture
Trustee (for purposes of Section 7.02(b) of the Participation Agreement,
it being agreed that such breach may be cured by replacement of the Owner
Trustee), or (y) any other covenant made by the Owner Trustee, by the
Owner Participant or by any Owner Participant Guarantor in any Operative
Agreement shall be breached in any material respect and such breach shall
remain unremedied for a period of 30 days after there has been given to
the Owner Trustee and the Owner Participant by Holders holding not less
than a Majority in Interest of Holders a written notice identified as a
"Notice of Indenture Event of Default" specifying such breach and
requiring it to be remedied unless such failure is curable and the Owner
Trustee or the Owner Participant shall, after the delivery of such notice,
be diligently proceeding to correct such failure and shall in fact correct
such failure 60 days after delivery of such notice; or
(iv) the Owner Trustee, the Lessor's Estate, the Owner
Participant or any Owner Participant Guarantor shall file any petition or
answer seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present
or future bankruptcy, insolvency or similar statute, law or regulation;
(v) an order for relief shall be entered in respect of the
Owner Trustee, the Owner Participant or any Owner Participant Guarantor or
the Lessor's Estate by a court having jurisdiction in the premises in an
involuntary case under the federal bankruptcy laws as now or hereafter in
effect; or the Owner Trustee, the Owner Participant or any Owner
Participant Guarantor or the Lessor's Estate shall file any answer
admitting or not contesting the material allegations of a petition filed
against the Owner Trustee, the Owner Participant or any Owner Participant
Guarantor or the Lessor's Estate in any proceeding referred to in clause
(vi) below or seek or consent or acquiesce in the appointment of any
trustee, custodian, receiver or liquidator of the Owner Trustee, the Owner
Participant or any Owner Participant Guarantor or the Lessor's Estate, as
the case may be, or of all or any substantial part of its properties; or
(vi) without the consent or acquiescence of the Owner Trustee,
the Owner Participant or any Owner Participant Guarantor or the Lessor's
Estate, as the case may be, an order shall be entered constituting an
order for relief or approving a petition for relief or reorganization or
any other petition seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or other similar relief under any
present or future bankruptcy, insolvency or similar statute, law or
regulation, or if any such petition shall be filed against the Owner
Trustee, the Owner Participant or any Owner Participant Guarantor or the
Lessor's Estate, as the case may be, and such petition shall not be
dismissed within 60 days, or if, without the consent or acquiescence of
the Owner Trustee, the Owner Participant or any Owner
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Participant Guarantor or the Lessor's Estate, as the case may be, an order
shall be entered appointing a trustee, custodian, receiver or liquidator
of the Owner Trustee, the Owner Participant or any Owner Participant
Guarantor or the Lessor's Estate, as the case may be, or of all or any
substantial part of the properties of the Owner Trustee, the Owner
Participant or any Owner Participant Guarantor or the Lessor's Estate, as
the case may be, and such order shall not be dismissed within 60 days;
Section 7.02. Remedies. (a) If an Indenture Event of Default shall have
occurred and be continuing and so long as the same shall be continuing
unremedied, then and in every such case, the Indenture Trustee may, and when
required by the provisions of Article IX or Section 7.02(c) hereof, shall (i)
exercise any or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article VII, and (ii) in the event such Indenture
Event of Default is an Indenture Event of Default referred to in clause (i) of
Section 7.01 hereof, exercise any and all of the remedies pursuant to Section 17
of the Lease; provided that without the consent of the Owner Trustee and the
Owner Participant such exercise of remedies shall not occur until after the
latest date on which the Owner Trustee may cure the related Event of Default
pursuant to Section 8.03 hereof. The Indenture Trustee may (subject to the
provisions of the next succeeding paragraph) take possession of all or any part
of the properties covered or intended to be covered by the Lien and security
interest created hereby or pursuant hereto and may exclude the Owner
Participant, the Owner Trustee, the Lessee and any transferee of the Lessee
(subject to Section 15.05 hereof), and all Persons claiming under any of them
wholly or partly therefrom. In addition, the Indenture Trustee may (subject to
the provisions of the next succeeding paragraph) exercise any other right or
remedy in lieu of or in addition to the foregoing that may be available to it
under applicable law, or proceed by appropriate court action to enforce the
terms hereof, of the Lease, or both, or to rescind the Lease. 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 as a result of an
Indenture Event of Default which arises solely by reason of one or more events
or circumstances which constitute a Lease Event of Default unless the Indenture
Trustee as security assignee of the Owner Trustee shall have declared the Lease
to be in default and shall have exercised or concurrently be exercising one or
more of the dispossessory remedies provided for in Section 17 of the Lease with
respect to the Aircraft; provided, however, that such requirement to exercise
one or more of such remedies under the Lease shall not apply in circumstances
where the Indenture Trustee is, and has been, for a continuous period in excess
of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of
the Bankruptcy Code (such 60-day or other period being the "Section 1110
Period"), involuntarily stayed or prohibited by applicable law or court order
from exercising such remedies under the Lease (a "Continuous Stay Period");
provided further, however, that the requirement to exercise one or more of such
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remedies under the Lease shall nonetheless be applicable during a Continuous
Stay Period subsequent to the expiration of the Section 1110 Period to the
extent that the continuation of such Continuous Stay Period subsequent to the
expiration of the Section 1110 Period (A) results from an agreement by the
trustee or the debtor-in-possession in such proceeding during the Section 1110
Period with the approval of the relevant court to perform the Lease in
accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to
perform as required by Section 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is
an extension of the Section 1110 Period with the consent of the Indenture
Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from
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 and
Lessee's continuous performance of the Lease as so assumed or (D) is the
consequence of the Indenture Trustee's own failure to give any requisite notice
to any person. In the event that the applicability of Section 1110 of the
Bankruptcy Code to the Aircraft is being contested by Lessee in judicial
proceedings, both of the Indenture Trustee and the Owner Trustee shall have the
right to participate in such proceedings; provided that any such participation
by the Owner Trustee shall not affect in any way any rights or remedy of the
Indenture Trustee hereunder.
(b) If an Indenture Event of Default under clause (i) (attributable to an
Event of Default under Section 16(f), (g) and (h) of the Lease) (iv), (v) or
(vi) of Section 7.01 hereof shall occur and be continuing, the unpaid principal
of all Outstanding Equipment Notes, together with interest accrued but unpaid
thereon and all other amounts due thereunder, but without Make-Whole Premium,
shall immediately become due and payable, without presentment, demand, protest
or notice, all of which are hereby waived.
(c) If any Indenture Event of Default not described in the preceding
paragraph (b) shall have occurred and be continuing, then and in every such
case, the Indenture Trustee may on its own accord or at the direction of a
Majority in Interest of Holders, at any time, by written notice to the Owner
Trustee, the Owner Participant and the Lessee, declare the principal of all the
Equipment Notes to be due and payable, whereupon the unpaid principal amount of
all Outstanding Equipment Notes, together with accrued interest thereon and all
other amounts due thereunder, but without Make-Whole Premium, shall immediately
become due and payable without presentment, demand, protest or other notice, all
of which are hereby waived. At any time after such declaration and prior to the
sale or disposition of the Trust Indenture Estate, however, a Majority in
Interest of Holders, by notice to the Indenture Trustee, the Owner Trustee and
the Lessee, may rescind such declaration, whether made by the Indenture Trustee
on its own accord or as directed, if (x) there has been paid or deposited with
the Indenture Trustee a sum sufficient to pay all overdue installments of
interest on all Equipment Notes (together, to the extent permitted by law, with
interest on such overdue installments of interest), the principal on any
Equipment Notes that would have become due otherwise than by such declaration of
acceleration, all sums paid or advanced by the Indenture Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, its agents and counsel,
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or (y) all Indenture Events of Default (other than the nonpayment of principal
that has become due solely because of such acceleration) have been either cured
or waived as provided in Section 7.11 hereof. No such rescission shall affect
any subsequent default or impair any right consequent thereon.
(d) Each Holder shall be entitled at any sale to credit against any
purchase price bid at such sale by such Holder all or any part of the unpaid
obligations owing to such Holder secured by the Lien of this Indenture (but only
to the extent that an amount equal to such purchase price would have been paid
to such Holder pursuant to Article V hereof if such purchase price were paid in
cash and the foregoing provisions of this subsection (d) were not given effect).
(e) In the event of any sale of the Trust Indenture Estate, or any part
thereof, pursuant to any judgment or decree of any court or otherwise in
connection with the enforcement of any of the term of this Indenture, the unpaid
principal amount of all Equipment Notes then outstanding, together with accrued
interest thereon (without Make-Whole Amount), and other amounts due thereunder,
shall immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(f) Notwithstanding anything contained herein, so long as the Pass Through
Trustee under any Pass Through Trust Agreement (or its designee) is a Holder,
the Indenture Trustee will not be authorized or empowered to acquire title to
the Trust Indenture Estate or take any action with respect to the Trust
Indenture Estate so acquired by it if such acquisition or action would cause any
Trust to fail to qualify as a "grantor trust" for federal income tax purposes.
Section 7.03. Return of Aircraft, etc. (a) Subject to Section 7.02 hereof,
if an Indenture Event of Default shall have occurred and be continuing, at the
request of the Indenture Trustee, the Owner Trustee shall promptly execute and
deliver to the Indenture Trustee such documents as the Indenture Trustee may
reasonably 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 to which the
Indenture Trustee shall at the time be entitled under this Indenture. Subject to
the foregoing, if the Owner Trustee shall for any reason fail to execute and
deliver such documents after such request by the Indenture Trustee, the
Indenture Trustee may pursue all or part of such Trust Indenture Estate wherever
it may be found and enter any of the premises of the Lessee or the Owner Trustee
wherever such Trust Indenture Estate may be or be supposed to be and search for
such Trust Indenture Estate and take possession of and remove such Trust
Indenture Estate. All expenses of pursuing, searching for and taking such Trust
Indenture Estate shall, until paid, be secured by the Lien of this Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may, from
time to time, at the expense of the Trust Indenture Estate, make all such
expenditures
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for maintenance, use, operation, storage, insurance, leasing, control,
management, disposition, modification, alterations and repairs to and of such
Trust Indenture Estate, as the Indenture Trustee may reasonably deem proper. In
each case subject to Section 7.02 hereof, the Indenture Trustee shall have the
right to maintain, use, operate, store, insure, lease, dispose of, modify,
alter, control or manage the Trust Indenture Estate and to carry on the business
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 may
reasonably 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, modification, alteration or disposition of all or
any part of the Trust Indenture Estate as the Indenture Trustee may determine.
Further, 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 other than 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 under this Indenture
(other than Excepted Payments). Such tolls, rents (including Rent), revenues,
issues, income, products and profits shall be applied to pay the expenses of the
use, operation, storage, insurance, leasing, control, management, modification,
alteration or disposition of the Trust Indenture Estate, and of all maintenance
and repairs, and of conducting the business thereof, and to make all payments
which the Indenture Trustee may be required or may reasonably elect to make for
any taxes, assessments, insurance or other proper charges upon the Trust
Indenture Estate (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 the Lessee), and all other payments which the Indenture
Trustee may be required or authorized to make under any provision of this
Indenture, as well as just and reasonable compensation for the services of the
Indenture Trustee and of all persons properly engaged and employed for such
purposes by the Indenture Trustee; provided, that any excess amounts shall be
promptly distributed in accordance with Section 5.03 hereof.
(c) Subject to Section 7.02 hereof, if an Indenture Event of Default shall
have occurred and be continuing and the Indenture Trustee shall be entitled to
exercise remedies hereunder, and subject to Article VIII hereof, the Indenture
Trustee, either with or without taking possession, and either before or after
taking possession, and without instituting any legal proceedings whatsoever, may
sell, assign, transfer and deliver the whole or, from time to time, to the
extent permitted by law, any part of the Trust Indenture Estate, or interest
therein, at any private sale or public auction to the highest bidder, with or
without demand, advertisement or notice, except that in respect of any private
sale 30 days' prior written notice by registered mail to the Owner Trustee and
the Owner Participant will be provided, for cash or, with the consent of the
Owner Trustee and the Owner Participant, credit or for other property, for
immediate or future delivery, and for such price or prices and on such terms as
the Indenture Trustee in exercising reasonable commercial discretion may
determine; provided, that any such action shall be at the time lawful and that
all mandatory legal
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requirements shall be complied with. Any notice required pursuant to the terms
hereof in the case of a public sale, shall state the time and place fixed for
such sale. Any such public sale shall be held at such time or times within
ordinary business hours as the Indenture Trustee shall fix in the notice of such
sale. At any such sale, the Trust Indenture Estate may be sold in one lot as an
entirety or in separate lots. The Indenture Trustee shall not be obligated to
make any sale pursuant to such notice. The Indenture Trustee may, without notice
or publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for such
sale, and any such sale may be made at any time or place to which the same may
be so adjourned without further notice or publication. The Indenture Trustee may
exercise such right of sale without possession or production of the Equipment
Notes or proof of ownership thereof, and as representative of the Holders may
exercise such right without notice to the Holders or without including the
Holders as parties to any suit or proceedings relating to the foreclosure of any
part of the Trust Indenture Estate. The Owner Trustee shall execute any and all
such bills of sale, assignments and other documents, and perform and do all
other acts and things requested by the Indenture Trustee in order to permit
consummation of any sale of the Trust Indenture Estate in accordance with this
Section 7.03(c) and to effectuate the transfer or conveyance referred to in the
first sentence of this Section 7.03(c). Notwithstanding any other provision of
this Indenture, the Indenture Trustee shall not sell the Trust Indenture Estate
or any part thereof unless the Equipment Notes shall have been accelerated.
(d) To the extent permitted by Applicable Law, and subject to Section 7.02
hereof, the Indenture Trustee or any Holder may be a purchaser of the Trust
Indenture Estate or any part thereof or any interest therein at any sale
thereof, whether pursuant to foreclosure or power of sale or otherwise. The
Indenture Trustee may apply against the purchase price therefor the amount then
due hereunder or under any of the Equipment Notes secured hereby and any Holder
may apply against the purchase price therefor the amount then due to it
hereunder, under any other Indenture Document or under the Equipment Notes held
by such Holder to the extent of such portion of the purchase price as it would
have received had it been entitled to share any distribution thereof. The
Indenture Trustee or any Holder or nominee thereof shall, upon any such
purchase, acquire good title to the property so purchased, free of the Lien of
this Indenture and, to the extent permitted by applicable law, free of all
rights of redemption in the Owner Trustee or the Owner Participant in respect of
the property so purchased.
(e) The Indenture Trustee shall, as a matter of right, be entitled to the
appointment of a receiver (who may be the Indenture Trustee or any successor or
nominee) 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
the taking of possession thereof or otherwise, and the Owner Trustee hereby
consents to the appointment of such receiver and will not oppose any such
appointment. Any receiver appointed for all or any part of the Trust Indenture
Estate shall be entitled to exercise
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all of the rights and powers of the Indenture Trustee with respect to the Trust
Indenture Estate.
(f) Subject to the provisions of this Indenture, to the extent permitted
by Applicable Law, upon the occurrence and during the continuation of an
Indenture Event of Default the Owner Trustee irrevocably appoints the Indenture
Trustee the true and lawful attorney-in-fact of the Owner Trustee (which
appointment is coupled with an interest) in its name and stead and on its
behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Indenture, whether pursuant to
foreclosure or power of sale, assignments and other instruments as may be
necessary or appropriate, with full power substitution, the Owner Trustee hereby
ratifying and confirming all that such attorney or any substitute shall do by
virtue hereof in accordance with applicable law. Nevertheless, if so requested
by the Indenture Trustee or any purchaser, the Owner Trustee shall ratify and
confirm any such sale, assignment, transfer or delivery, by executing and
delivering to the Indenture Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
Section 7.04. Indenture Trustee May Prove Debt. If the Owner Trustee shall
fail to pay any amount payable hereunder or under the Equipment Notes, the
Indenture Trustee, in its own name and as trustee of an express trust, shall be
entitled and empowered to institute any action or proceedings at law or in
equity for the collection of the sums so due and unpaid, and may prosecute any
such action or proceedings to judgment or final decree, and may enforce any such
judgment or final decree against the Owner Trustee and collect in the manner
provided by law out of the property of the Owner Trustee wherever situated, the
moneys adjudged or decreed to be payable; provided, that any sale of any portion
of the Trust Indenture Estate shall be done in accordance with Sections 7.02 and
7.03(c) hereof.
In case there shall be pending proceedings relative to the Owner Trustee
under the Bankruptcy Code or any other applicable Federal or state bankruptcy,
insolvency or other similar law, or in case a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official shall
have been appointed for or taken possession of the Owner Trustee or its
property, or in case of any other comparable judicial proceedings relative to
the Owner Trustee, or to the creditors or property of the Owner Trustee, the
Indenture Trustee, irrespective of whether the principal of the Equipment Notes
shall then be due and payable as therein or herein expressed or by declaration
or otherwise and irrespective of whether the Indenture Trustee shall have made
any demand pursuant to the provisions of this Section, shall be entitled and
empowered, by intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount
of principal, interest and other amounts owing and unpaid in respect of
the Equipment Notes or hereunder, and to file such other papers or
documents as may be necessary or advisable in order to have the claims of
the Indenture
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Trustee (including any claim for reasonable compensation to the Indenture
Trustee and each predecessor Indenture Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of the Indenture
Trustee and each predecessor Indenture Trustee, except as a result of
negligence or bad faith) and of the Holders allowed in any judicial
proceedings relative to the Owner Trustee or to the creditors or property
of the Owner Trustee,
(b) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders in any election of a trustee or a standby
trustee in arrangement, reorganization, liquidation or other bankruptcy or
insolvency proceedings or person performing similar functions in
comparable proceedings, and
(c) to collect and receive any moneys or other property
payable or deliverable on any such claims, and to distribute all amounts
received with respect to the claims of the Holders and of the Indenture
Trustee on their behalf;
and any trustee, receiver, or liquidator, custodian or other similar official is
hereby authorized by each of the Holders to make payments to the Indenture
Trustee, and, in the event that the Indenture Trustee shall consent to the
making of payments directly to the Holders, to pay to the Indenture Trustee such
amounts as shall be sufficient to cover reasonable compensation to the Indenture
Trustee, each predecessor Indenture Trustee and their respective agents,
attorneys and counsel, and all other expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor Indenture Trustee
except as a result of negligence or willful misconduct.
Nothing contained herein shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Equipment Notes or the rights of any Holder thereof, or to
authorize the Indenture Trustee to vote in respect of the claim of any Holder in
any such proceeding except, as aforesaid, to vote for the election of a trustee
in bankruptcy or similar person.
All rights of action and rights to assert claims under this Indenture, or
under any of the Equipment Notes, may be enforced by the Indenture Trustee
without the possession of such Equipment Notes. Any trial or other proceedings
instituted by the Indenture Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents and attorneys, shall
be for the ratable benefit of the Holders, as provided herein.
In any proceedings brought by the Indenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party) the Indenture Trustee shall be
held to represent all the
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Holders of the Equipment Notes, and it shall not be necessary to make any
Holders parties to such proceedings.
Section 7.05. Remedies Cumulative. Each and every right, power and remedy
given to the Indenture Trustee in this Indenture shall be cumulative and shall
be in addition to every other right, power and remedy specifically given herein
or now or hereafter existing at law, in equity or by statute, and each and every
right, power and remedy whether specifically given herein 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 or the Holders, 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 later any other right,
power or remedy. No delay or omission by the Indenture Trustee or of any Holder
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 in any such default.
Section 7.06. Suits for Enforcement. If an Indenture Event of Default has
occurred, has not been waived and is continuing, the Indenture Trustee may in
its discretion and subject to its rights of appropriate indemnification under
Sections 7.09 and 9.03 and Article XI hereof proceed to protect and enforce its
rights and rights of the Holders by such appropriate judicial proceedings as the
Indenture Trustee shall deem most effectual to protect and enforce any of such
rights, either at law or in equity or in bankruptcy or otherwise, whether for
the specific enforcement of any covenant or agreement contained in this
Indenture or in aid of the exercise of any power granted in this Indenture or to
enforce any other legal or equitable right vested in the Indenture Trustee or
the Holders by this Indenture or by law; provided that, any sale of any portion
of the Trust Indenture Estate shall be done in accordance with Sections 7.02 and
7.03(c) hereof.
Section 7.07. Discontinuance of Proceedings. In case the Indenture Trustee
or any Holder shall have instituted any proceeding to enforce any right, power
or remedy under this Indenture 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 Indenture Trustee or such Holder, then the
Owner Trustee, the Indenture Trustee, any Owner Participant, the Holders and the
Lessee shall, subject to any binding determination in such proceeding, be
restored to their former positions and rights under this Indenture with respect
to the Trust Indenture Estate, and all rights, remedies and powers of the
Indenture Trustee and the Holders shall continue as if no such proceeding had
been instituted.
Section 7.08. Unconditional Right of Holders to Payments on Equipment
Notes. Notwithstanding any other provision in this Indenture and any provision
of any Equipment Note, the right of any Holder to receive payment of the
principal of and interest and Make-Whole Premium, if any, on such Equipment Note
on or after the respective due dates and in the manner expressed in such
Equipment Note or to
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institute suit for the enforcement of any such payment on or after such
respective dates as provided herein, shall not be impaired or affected without
the consent of such Holder.
Section 7.09. Control by Holders. The Majority in Interest of Holders
shall have the right to direct the Indenture Trustee as to the time, method, and
place of conducting any proceeding for any remedy available to the Indenture
Trustee under this Indenture, or exercising any trust or power conferred on the
Indenture Trustee by this Indenture; provided that such direction shall not be
otherwise than in accordance with law and the provisions of this Indenture and
the Indenture Trustee shall have received, to the extent provided in Sections
7.06 and 9.03 and Article XI hereof, such reasonable indemnification as it may
require against the costs, expenses and liabilities to be incurred by the
Indenture Trustee; and provided further that (subject to the provisions of
Section 9.02 hereof) the Indenture Trustee shall have the right to decline to
follow any such direction if the Indenture Trustee, being advised by counsel,
shall determine that the action or proceeding so directed may not lawfully be
taken or if the Indenture Trustee in good faith by its board of directors, the
executive committee, or a trust committee of directors or Responsible Officers
of the Indenture Trustee shall determine that the action or proceedings so
directed would involve the Indenture Trustee in personal liability or if the
Indenture Trustee in good faith shall so determine that the actions or
forbearance specified in or pursuant to such direction shall be unduly
prejudicial to the interests of Holders not joining in the giving of said
direction, it being understood that (subject to Section 9.02 hereof) the
Indenture Trustee shall have no duty to ascertain whether or not such actions or
forbearance are unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the Indenture Trustee
in its discretion to take any action deemed proper by the Indenture Trustee and
which is not inconsistent with the direction by the Majority in Interest of
Holders.
Section 7.10. Waiver of Past Indenture Default. Upon written instructions
from the Majority in Interest of Holders, the Indenture Trustee shall waive any
past Indenture Default 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 all Holders and each Liquidity Provider,
the Indenture Trustee shall not waive any Indenture Default (a) in the payment
of the principal of or Make-Whole Premium, if any, or interest on, or other
amounts due under, any Equipment Note then Outstanding, or (b) in respect of a
covenant or provision of this Indenture which, under Article XIII hereof, cannot
be modified or amended without the consent of each Holder.
Section 7.11. Notice of Indenture Default. The Indenture Trustee shall
transmit to the Owner Trustee, the Holders, the Liquidity Provider and the Owner
Participant notice of any Indenture Event of Defaults actually known to a
Responsible
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Officer of the Indenture Trustee or any Indenture Event of Default or Indenture
Default arising under Section 7.01(i) (arising out of a Lease Event of Default
under Section 16(a) of the Lease) or 7.01(ii), such notice to be transmitted by
mail to the Holders, the Liquidity Provider, the Owner Trustee and any Owner
Participant promptly after the occurrence thereof, unless any such Indenture
Default or Indenture Event of Default shall have been cured before the giving of
such notice; provided that, except in the case of default in the payment of the
principal of or interest on or any other amount due under any of the Equipment
Notes, the Indenture Trustee shall be protected in withholding such notice to
the Holders if and so long as the board of directors, the executive committee,
or a trust committee of directors or trustees and/or Responsible Officers of the
Indenture Trustee in good faith determines that the withholding of such notice
is in the interests of the Holders. In the case of any Indenture Event of
Default relating to a Lease Event of Default, the Indenture Trustee agrees to
give the Holders, the Owner Trustee and the Owner Participant not less than ten
Business Days prior notice of the date on which the Indenture Trustee may
commence the exercise of any remedy made under Section 7.02.
ARTICLE VIII
RIGHTS OF THE OWNER TRUSTEE
AND THE OWNER PARTICIPANT
Section 8.01. Certain Rights of Owner Trustee and Owner Participant. (a)
Except as provided in paragraph (a) immediately following the Granting Clause
hereof and in Section 13.01 hereof, without the consent of a Majority in
Interest of Holders, the respective parties to the Indenture Documents may not
modify, amend or supplement any of said agreements, or give any consent, waiver,
authorization or approval thereunder, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions thereof or of
modifying in any manner the rights of the respective parties thereunder;
provided, however, that the actions specified in subsection (b) of this Section
8.01 may be taken without the consent of the Indenture Trustee or any Holder.
(b) Subject to the provisions of subsection (c) of this Section 8.01, the
Lessor and the respective parties to the Indenture Documents, at any time and
from time to time, without the consent of the Indenture Trustee or of any
Holder, may:
(1) so long as no Indenture Event of Default shall have
occurred and be continuing, modify, amend or supplement the Lease, or give
any waiver with respect thereto, except that without compliance with
subsection (a) of this Section 8.01 the parties to the Lease shall not
modify, amend or supplement, or give any waiver for the purpose of adding
any provisions to or changing in any manner or eliminating any of the
provisions thereof or of modifying in any manner the rights of the
respective parties thereunder, with respect to the
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following provisions of the Lease as in effect on the effective date
hereof: Sections 2, 3(c) (except to the extent such Section relates to
amounts payable (whether directly or pursuant to this Indenture) to
Persons other than Holders, each Liquidity Provider, the Subordination
Agent and the Indenture Trustee in its individual capacity), 3(e) (except
insofar as it relates to the address or account information of the Owner
Trustee or the Indenture Trustee), 3(f), 3(g), 4, 6 (except in order to
increase the Lessee's liabilities or enhance the Lessor's rights
thereunder), 8 (except that additional requirements may be imposed on the
Lessee), 9 (except for Section 9(f) and except that additional insurance
requirements may be imposed on the Lessee), 10, 11(b) (except to impose
additional requirements on the Lessee) 14(a) (except that further
restrictions may be imposed on the Lessee), 16 (except to impose
additional or more stringent Events of Default), 17 (except to impose
additional remedies), 20(b) and 23(e) and any definition of terms used in
the Lease, to the extent that any modification of such definition would
result in a modification of the Lease not permitted pursuant to this
subsection (b); provided that the parties to the Lease may take any such
action without the consent of the Indenture Trustee or any Holder to the
extent such action relates to the payment of amounts constituting, or the
Owner Trustee's, the Owner Participant's or the Lessee's rights or
obligations with respect to, Excepted Payments;
(2) modify, amend or supplement the Trust Agreement and any
other Indenture Document (other than the Lease and the Participation
Agreement), or give any consent, waiver, authorization or approval with
respect thereto, in each case only to the extent any such action shall not
materially adversely impact the interests of the Holders;
(3) modify, amend or supplement the Participation Agreement,
or give any consent, waiver, authorization or approval with respect
thereto, except that without compliance with subsection (a) of this
Section 8.01 the parties to the Participation Agreement shall not modify,
amend or supplement, or give any consent, waiver, authorization or
approval for the purpose of adding provisions to or changing in any manner
or eliminating any of the provisions thereof or of modifying in any manner
the rights of the respective parties thereunder, with respect to the
following provisions of the Participation Agreement as in effect on the
effective date hereof: Article 4 and Section 8.01(b) (insofar as such
Article 4 and Section 8.01(b) relate to the Indenture Trustee, the
Pass-Through Trustee and the Holders), Article 5 and Sections 13.01, 15.08
and Articles 6 and 7 (insofar as such Articles relate to the Indenture
Trustee; it being understood that only the Indenture Trustee's consent in
respect thereof need be obtained) and any definition of terms used in the
Participation Agreement, to the extent that any modification of such
definition would result in a modification of the Participation Agreement
not permitted pursuant to this subsection (b); and
(4) modify, amend or supplement any of the Indenture Documents
in order to cure any ambiguity, to correct or supplement any
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provisions thereof which may be defective or inconsistent with any other
provision thereof or of any provision of this Indenture, or to make any
other provision with respect to matters or questions arising thereunder or
under this Indenture which shall not be inconsistent with the provisions
of this Indenture, provided the making of any such other provision shall
not adversely affect the interests of the Holders.
(c) No modification, amendment, supplement, consent, waiver, authorization
or approval with respect to the Lease or the Participation Agreement, whether
effected pursuant to subsection (a) or pursuant to subsection (b) of this
Section 8.01 and anything in such subsections or elsewhere in this Indenture to
the contrary notwithstanding, shall, without the consent of the Holder of each
Outstanding Equipment Note affected thereby, and each Liquidity Provider,
(1) modify, amend or supplement the Lease in such a way as to
extend the time of payment of Basic Rent or Termination Value or
Supplemental Rent payable to the Holders or any Liquidity Provider or any
other amounts payable for the account of the Holders or any Liquidity
Provider (subject in any event to Section 3(e) of the Lease) upon the
occurrence of an Event of Loss or Termination Value and any other amounts
payable for the account of the Holders (subject in any event to Section
3(e) of the Lease) upon termination of the Lease with respect to the
Aircraft payable under, or as provided in, the Lease as in effect on the
effective date hereof, or reduce the amount of any installment of Basic
Rent or Supplemental Rent so that the same is less than the payment of
principal of, and interest on the Equipment Notes and Make-Whole Premium,
if any, and amounts due to each Liquidity Provider, as the case may be, to
be made from such installment of Basic Rent or Supplemental Rent, or
reduce the aggregate amount of Termination Value, or any other amounts
payable under, or as provided in, the Lease as in effect on the date of
the Indenture Supplement, upon the occurrence of an Event of Loss so that
the same is, as of the applicable Loss Payment Date, less than the accrued
interest on and the principal of the Equipment Notes at the time
Outstanding or reduce the aggregate amount of Termination Value and any
other amounts payable under, or as provided in, the Lease as in effect on
the date of the Indenture Supplement, upon termination of the Lease with
respect to the Aircraft so that the same is, as of the applicable
Termination Date, less than the accrued interest on, principal of and
Make-Whole Premium, if any, of Equipment Notes at the time Outstanding, or
(2) modify, amend or supplement the Lease in such a way as to,
or consent to any assignment of the Lease or give any consent, waiver,
authorization or approval which would, release the Lessee from its
absolute and unconditional obligations in respect of payment of Basic Rent
or Supplemental Rent, or Termination Value and any other amounts payable
for the account of the Holders (subject in any event to Section 3(e) of
the Lease) upon the occurrence of an Event of Loss, or Termination Value
and any other amounts payable for the account of the Holders (subject in
any event to Section 3(e) of the
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Lease) with respect to the Aircraft, payable under, or as provided in, the
Lease as in effect on the date of the Indenture Supplement, except for any
such assignment pursuant to Section 2.11 hereof, and except as provided in
the Lease as in effect on the date of the Indenture Supplement.
(d) At all times so long as this Indenture is in effect and
notwithstanding that an Indenture Event of Default has occurred and is
continuing, the consent of the Owner Trustee (at the direction of the Owner
Participant) shall be required in order (i) to amend, modify or supplement the
Lease or any other Operative Document to which the Owner Trustee is a party or
to waive compliance by the Lessee with any of its obligations thereunder and
(ii) to grant any consent requested under the Lease.
Notwithstanding the foregoing, but subject always to the provision of Section
15.05 hereof, the Indenture Trustee shall at all times have the right, to the
exclusion of the Owner Trustee and the Owner Participant, to (A) declare the
Lease to be in default under Section 17 (other than with respect to Excepted
Payments) thereof and (B) subject only to the provisions of this Indenture,
exercise the remedies set forth in Section 17 of the Lease (other than in
connection with Excepted Payments).
Nothing in this Indenture shall be deemed to prohibit the Owner
Participant or the Owner Trustee from making demand on the Lessee for, or from
commencing an action at law to obtain the payment of, or from receiving payment
of, any Excepted Payment; provided, however, that if the Owner Trustee is
proceeding under the Lease, the Owner Trustee shall proceed pursuant to Section
17(e), and only Section 17(e), of the Lease.
Section 8.02. Owner Participant's Right to Prepay or Purchase the
Equipment Notes. (a) If (i) an Event of Default shall have occurred and be
continuing, (ii) the Indenture Trustee shall have taken action, or notified the
Owner Trustee or Owner Participant that it intends to take action, to foreclose
the Lien of this Indenture or otherwise commence the exercise of any significant
remedy under Section 7.02 of this Indenture or Section 17 of the Lease or (iii)
the Equipment Notes shall have become due and payable pursuant to Section
7.02(b) or (c) hereof, the Owner Participant (or the Owner Trustee on behalf of
the Owner Participant) may, but shall be under no obligation to do either of the
following:
(1) direct the Owner Trustee to cause the prepayment of all, but not less
than all, of the Equipment Notes then Outstanding by notifying the Indenture
Trustee of such election, which notice in order to be effective shall state that
it is irrevocable and shall designate a Prepayment Date which shall be a
Business Day which shall be not less than 15 days after the date of such notice
on which the Owner Trustee shall, in the manner provided for in Section 6.04
hereof, deposit the sum of amounts contemplated by paragraph "first" under
Section 5.03 and the aggregate Prepayment Price (determined in accordance with
Section 6.02(b) hereof) of all such Equipment Notes with the Indenture Trustee.
If such payment by the Owner Trustee to the Indenture Trustee is made, the
Equipment Notes shall cease to accrue interest from and after the
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Prepayment Date, and after distribution of such payment to the Holders, the
Indenture Trustee shall release the Trust Indenture Estate from the Lien of this
Indenture; or
(2) purchase all, but not less than all, of the Outstanding Equipment
Notes by notifying the Indenture Trustee of such election, which notice in order
to be effective shall state that it is irrevocable and shall designate a date
which shall be a Business Day which shall be not less than 15 days after the
date of such notice on which the Owner Trustee shall pay to the Indenture
Trustee an amount equal to the aggregate unpaid principal amount of all
Outstanding Equipment Notes, together with accrued interest on such amount to
the date of purchase, plus all other sums due any Holder or the Indenture
Trustee hereunder or under the Participation Agreement or the Lease, but without
any Make-Whole Premium (provided that the Make-Whole Premium shall be included
if the purchase is made pursuant to clause (a)(i) above (but not pursuant to
clause (a)(ii) or (a)(iii) above) when the Event of Default shall have occurred
and been continuing for less than 180 days). Upon receipt by the Indenture
Trustee of such amount, each Holder will be deemed, whether or not Equipment
Notes shall have been delivered to the Indenture Trustee on such date, to have
thereupon sold, assigned, transferred and conveyed (and shall promptly take such
actions as the Owner Participant shall reasonably request to evidence such sale,
assignment, transfer and conveyance) to the Owner Participant (without recourse
or warranty of any kind except for its own acts), all of the right, title and
interest of such Holder in and to the Trust Indenture Estate and this Indenture
and all Equipment Notes held by such Holder and the former Holders shall not be
entitled to receive any interest on the principal amount of such Equipment Notes
after the purchase date, and the Owner Participant shall be deemed to have
assumed (and shall promptly take such actions as any Holder shall reasonably
request to evidence such assumption) all of such Holder's obligations under the
Participation Agreement and this Indenture arising subsequent to such sale. If
the Owner Trustee shall so request, such Holder will comply with all the
provisions of Section 2.06 of this Indenture to enable new Equipment Notes to be
issued to the Owner Participant in such authorized denominations as the Owner
Participant shall request. All charges and expenses required pursuant to Section
2.06 hereof in connection with the issuance of any such new Equipment Notes
shall be borne by the Owner Participant.
(b) From and after the deposit by the Owner Trustee of the applicable
Prepayment Price or purchase price with the Indenture Trustee pursuant to
Section 8.02(a) hereof, the Owner Trustee shall be entitled to exercise all
remedies of the Indenture Trustee under Article VII hereof as well as of the
Lessor under the Lease.
Section 8.03. Certain Rights of Owner Participant. (a) If (A) there shall
occur an Event of Default under the Lease as a result of the Lessee's failure to
make any payment of an installment of Basic Rent, and (B) the Owner Trustee
shall have paid or caused to be paid on or prior to the date which is 15
Business Days after the Owner Participant's receipt of written notice of such
Event of Default all principal and interest on the Equipment Notes then due (as
well as any interest on overdue principal and (to the extent permitted by
applicable law) interest), but not including any
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principal or interest becoming due on account of such Event of Default, then the
failure of the Lessee to make the payment of such installment of Basic Rent or
of interest on account of such installment's being overdue shall not constitute
or result in an Indenture Event of Default under this Indenture and any
declaration based solely on the same shall be deemed to be automatically
rescinded. Nothing contained in the preceding sentence shall be deemed to
entitle the Owner Trustee to exercise any rights and powers or pursue any
remedies pursuant to Section 17 of the Lease or otherwise except as set forth in
this Indenture, and except that the Owner Trustee or the Owner Participant may
attempt to recover any amount paid by it or them under this Indenture by
demanding of the Lessee payment of such amount pursuant to Section 17(e), but
only said Section 17(e), of the Lease. Upon curing any such Event of Default
pursuant to this Section 8.03, the Owner Trustee or the Owner Participant, as
the case may be, shall be subrogated on an unsecured basis to all the rights of
the Indenture Trustee under the Lease in respect of the payment giving rise to
such Event of Default, and any right to any interest in respect of the same, and
shall be entitled to any payment of Basic Rent (or interest thereon) actually
made by the Lessee in respect of such cured payment upon receipt by the
Indenture Trustee; provided that no such amount shall be paid to the Owner
Trustee or the Owner Participant until all amounts then due and payable to each
Holder hereunder and thereunder shall have been paid in full and no Indenture
Event of Default shall have occurred and be continuing and the Owner Trustee
will not be entitled to recover any such payments, except pursuant to the
foregoing right of subrogation, by demand or suit for damages. Notwithstanding
anything in this Indenture or the Lease to the contrary, the Owner Participant
and the Owner Trustee collectively, shall not be entitled to cure more than six
Events of Default (no more than three of which may be consecutive) occasioned by
defaults in the payment of Basic Rent.
(b) If (A) there shall occur an Event of Default under the Lease for any
reason other than the Lessee's failure to make any payment of an installment of
Basic Rent and (B) the Owner Trustee shall have taken or caused to be taken such
action necessary to cure and shall have cured such Event of Default prior to the
date which is 15 Business Days after the Owner Participant's receipt of the
written notice of such Event of Default, then the failure of the Lessee to
perform such covenant, condition or agreement, the observance or performance of
which was accomplished by the Owner Trustee hereunder shall not constitute or
result in an Indenture Event of Default under this Indenture and any declaration
based solely on the same shall be deemed to be automatically rescinded. Nothing
contained in the preceding sentence shall be deemed to entitle the Owner Trustee
or the Owner Participant to exercise any rights and powers or pursue any
remedies pursuant to Section 17 of the Lease or otherwise except as set forth in
this Indenture, and except that the Owner Trustee or the Owner Participant may
attempt to recover any amount paid by it or them in effecting such cure by
demanding of the Lessee payment of such amount, plus any interest due, or by
commencing an action at law or in equity against the Lessee for the payment of
such amount pursuant to Section 17(e), but only Section 17(e), of the Lease.
Upon curing any such Event of Default pursuant to this Section 8.03(b), the
Owner Trustee or the Owner Participant, as the case may be, shall be subrogated
to all the rights of the
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Indenture Trustee under the Lease in respect of the payment, agreement or
covenant giving rise to such Event of Default, and any right to any interest in
respect of the same, and shall be entitled to any payment or other performance
upon receipt by the Indenture Trustee; provided that no such amount shall be
paid to the Owner Trustee or the Owner Participant until all amounts then due
and payable to each Holder hereunder and thereunder shall have been paid in full
and no Indenture Event of Default shall have occurred and be continuing.
ARTICLE IX
CONCERNING THE INDENTURE TRUSTEE
Section 9.01. Acceptance of Trusts. The Indenture Trustee in its
individual capacity hereby accepts the trusts imposed upon it by this Indenture,
and covenants and agrees to perform the same as expressed herein and agrees to
receive and disburse all moneys constituting part of the Trust Indenture Estate
in accordance with the terms hereof.
Section 9.02. Duties Before, and During, Existence of Indenture Event of
Default. (a) The Indenture Trustee, prior to the occurrence of an Indenture
Event of Default and after the curing or waiving of all Indenture Events of
Default which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. So long as an Indenture
Event of Default has occurred and has not been cured or waived, the Indenture
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs. No provision of this Indenture shall be construed to relieve the
Indenture Trustee from liability for its own negligent action, its own negligent
failure to act (or any simple negligence in the handling of funds) or its own
willful misconduct, except that:
(i) prior to the occurrence of an Indenture Event of Default and after the
curing or waiving of all Indenture Events of Default which may have occurred:
(x) the duties and obligations of the Indenture Trustee shall
be determined solely by the express provisions of this Indenture, and the
Indenture Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read in to this Indenture
against the Indenture Trustee; and
(y) in the absence of bad faith on the part of the Indenture
Trustee, the Indenture Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon
any statements, certificates or opinions furnished to the Indenture
Trustee and
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conforming to the requirements of this Indenture; but in the case of any
such statements, certificate or opinions which by any provision hereof are
specifically required to be furnished to the Indenture Trustee, the
Indenture Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Indenture;
(ii) the Indenture Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers of the
Indenture Trustee, unless it shall be proved that the Indenture Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to any action
taken or not taken by it in good faith in accordance with the direction of the
Holders of not less than a majority in aggregate principal amount of Outstanding
Equipment Notes relating to the time, method and place of conducting any
proceeding for any remedy available to the Indenture Trustee, or exercising any
trust or power conferred upon the Indenture Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if the Indenture Trustee shall have determined
in good faith that the repayment of such funds or adequate indemnity against
such liability is not reasonably assured to it.
The Indenture Trustee agrees that it will execute and the Owner Trustee
agrees that it will, at the expense of the Lessee, 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 the Holders of not less
than 25% in aggregate principal amount of Equipment Notes (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
execute and file or cause to be filed any financing statement which it from time
to time deems appropriate.
(b) [Reserved].
(c) 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 XI hereof or under any other Operative
Agreement) promptly take such action as may be necessary duly to discharge all
Indenture Trustee's Liens on any part of the Trust Indenture Estate.
(d) [Reserved]
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(e) The Indenture Trustee will furnish to each Holder promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and other instruments furnished to
the Indenture Trustee, to the extent that the same shall not have been otherwise
furnished to such Holder pursuant to this Indenture or to the extent the
Indenture Trustee does not reasonably believe that the same shall have been
furnished by the Lessee directly to such Holder.
Section 9.03. Certain Rights of the Indenture Trustee. Subject to Section
9.02 hereof:
(a) the Indenture Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, note, coupon, security 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, direction, order or demand of the Owner Trustee mentioned
herein shall be sufficiently evidenced by an Officer's Certificate (unless other
evidence in respect thereof be herein specifically prescribed) upon which the
Indenture Trustee may rely to prove or establish a matter set forth therein;
(c) the Indenture Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by it hereunder in
good faith and in accordance with such advice or Opinion of Counsel;
(d) the Indenture Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Indenture Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred therein or thereby;
(e) the Indenture Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Indenture Event of Default hereunder and
after the curing or waiving of all Indenture Events of Default, the Indenture
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, appraisal, bond, debenture, note,
coupon, security, or other paper or document unless requested in writing to do
so by the Majority in Interest of Holders; provided that, if the payment within
a reasonable time to the Indenture Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Indenture Trustee, not reasonably assured to the Indenture
Trustee by the security afforded to it by the terms of this Indenture, the
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Indenture Trustee may require reasonable indemnity against such costs, expenses
or liabilities as a condition to proceeding; the reasonable expenses of every
such examination shall be paid by the Owner Trustee or, if paid by the Indenture
Trustee or any predecessor trustee, shall be repaid by the Owner Trustee upon
demand; and
(g) the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys not regularly in its employ and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of any such
agent or attorney appointed with due care by it hereunder.
Section 9.04. Indenture Trustee Not Responsible for Recitals, Equipment
Notes, or Proceeds. The Indenture Trustee assumes no responsibility for the
correctness of the recitals contained herein and in the Equipment Notes, except
the Indenture Trustee's certificates of authentication. The Indenture Trustee
makes no representation as to the validity or sufficiency of this Indenture or
of the Equipment Notes. The Indenture Trustee shall not be accountable for the
use or application by the Owner Trustee of any of the Equipment Notes or of the
proceeds thereof.
Section 9.05. Indenture Trustee and Agents May Hold Equipment Notes;
Collections, etc. The Indenture Trustee or any agent of the Indenture Trustee in
its individual or any other capacity may become the owner or pledgee of
Equipment Notes with the same rights it would have if it were not the Indenture
Trustee or such agent and may otherwise deal with the Owner Trustee and receive,
collect, hold and retain collections from the Owner Trustee with the same rights
it would have if it were not the Indenture Trustee or such agent.
Section 9.06. Moneys Held by Indenture Trustee. Subject to Sections 5.08
hereof and 14.04 hereof, all moneys received by the Indenture Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated from other funds except to
the extent required by mandatory provisions of law. Neither the Owner Trustee
nor, subject to Section 5.08 hereof, the Indenture Trustee nor any agent thereof
shall be under any liability for interest on any moneys received by it
hereunder.
Section 9.07. Right of Indenture Trustee to Rely on Officer's Certificate,
etc. Subject to Sections 9.02 and 9.03 hereof, whenever in the administration of
the trusts of this Indenture the Indenture Trustee shall deem it necessary or
desirable that a matter be proved or established prior to taking or suffering or
omitting any action hereunder, such matter (unless other evidence in respect
thereof be specifically prescribed herein) may, in the absence of bad faith on
the part of the Indenture Trustee, be deemed to be conclusively proved and
established by an Officer's Equipment Note delivered to the Indenture Trustee,
and such certificate, in the absence of bad faith on the part of the Indenture
Trustee, shall be full warrant to the Indenture Trustee for any action taken,
suffered or omitted by it under the provisions of this Indenture upon the faith
thereof.
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Section 9.08. Replacement Airframes and Replacement Engines. At any time
and from time to time any Airframe or Engine may, or is required to, be replaced
under Section 8(a) or 7(e) of the Lease by a Replacement Airframe or Replacement
Engine, as the case may be, shall be replaced in accordance with the provisions
of this Section 9.08 and the provisions of such Sections of the Lease, the Owner
Trustee shall, from time to time, 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 as appropriate from the Lien of
this Indenture and the Indenture Trustee shall execute and deliver such
instrument as aforesaid without recourse or warranty, 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) to be so released.
(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 subject to the Event of Loss
including the manufacturer, model, FAA registration number (or other
applicable registration information) and manufacturer's serial number;
(ii) a description of the Replacement Airframe, including the
manufacturer, model, FAA registration number (or other applicable
registration information) and manufacturer's serial number;
(iii) that on the date of the supplement to this Indenture
relating to the Replacement Airframe the Owner Trustee will be the legal
owner of and have good title to such Replacement Airframe free and clear
of all Liens except Permitted Liens that such Replacement Airframe will on
such date be in at least as good operating condition and repair as
required by the terms of the Lease, and that such Replacement Airframe has
been or, substantially concurrently with such replacement, will be duly
registered in the name of the Owner Trustee under the Transportation Code
or under the law then applicable to the registration of the Airframe
subject to the Event of Loss and that an airworthiness certificate has
been duly issued under the Aviation Act (or such other applicable law)
with respect to such Replacement Airframe and that such registration and
certificate is, or will be, in full force and effect, and that the Lessee
will have the full right and authority to use such Replacement Airframe;
(iv) that the insurance required by Section 9 of the Lease is
in full force and effect with respect to such Replacement Airframe;
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(v) that the Replacement Airframe is of the same or an
improved make or model as the Airframe requested to be released from this
Indenture;
(vi) that the value of the Replacement Airframe as of the date
of such certificate is not less than the value of the Airframe requested
to be released (assuming such Airframe was in the condition and repair
required to be maintained under the Lease);
(vii) that no Event of Default exists or would result from the
making and granting of the request for release and the addition of a
Replacement Airframe;
(viii) that the release of the Airframe subject to the Event
of Loss will not impair the security of the Indenture in contravention of
any of the provisions of this Indenture;
(ix) that upon such replacement, the Lien of this Indenture
will apply to the Replacement Airframe and such Lien will be a first
priority security interest in favor of the Indenture Trustee; and
(x) that each of the conditions specified in Section 8(d) of
the Lease with respect to such Replacement Airframe has been satisfied.
B. With respect to the replacement of any Engine:
(i) a description of the Engine subject to the Event of Loss
including the manufacturer's serial number;
(ii) a description of the Replacement Engine including the
manufacturer's name, the engine model and serial number;
(iii) that on the date of the supplement to this Indenture
relating to the Replacement Engine the Owner Trustee will be the legal
owner of such Replacement Engine free and clear of all Liens except
Permitted Liens, and that such Replacement Engine will on such date be in
at least as good operating condition and repair as required by the terms
of the Lease and will otherwise conform to the requirements set forth in
the definition of "Replacement Engine";
(iv) that the value of the Replacement Engine as of the date
of such certificate is not less than the value of the Engine to be
released (without regard to the number of hours or cycles remaining until
the next scheduled maintenance visit, and assuming such Engine was in the
condition and repair required to be maintained under the Lease);
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(v) that the release of the Engine subject to the Event of
Loss will not impair the security of the Indenture in contravention of any
of the provisions of this Indenture;
(vi) that upon such replacement, the Lien of this Indenture
will apply to the Replacement Engine and such Lien will be a first
priority security interest in favor of the Indenture Trustee; and
(vii) that each of the conditions specified in Section 7(e) of
the Lease with respect to such Replacement Engine has been satisfied.
(3) The appropriate instruments (i) transferring to the Owner Trustee
title to the Replacement Airframe or Replacement Engine to be received as
consideration for the Airframe or Engine to be released and (ii) assigning to
the Owner Trustee the benefit of all manufacturer's and vendor's warranties, if
any, generally available with respect to such Replacement Airframe or
Replacement Engine, and a supplement to this Indenture subjecting such
Replacement Airframe or Replacement Engine to the Trust Agreement and to the
Lien of this Indenture.
(4) A certificate from a firm of independent aircraft appraisers of
national standing reasonably satisfactory to the Indenture Trustee and the Owner
Trustee confirming the accuracy of the information set forth in clause (2)A(vi)
of this Section 9.08.
(5) The opinions of counsel to the Lessee (which may be Lessee's General
Counsel), or (with respect to those matters set forth in clause (ii) below
relating to the filing of documents pursuant to the Transportation Code) of the
Lessee's special aviation counsel, or (in either case) other counsel reasonably
satisfactory to the Indenture Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property which have been or are therewith delivered to and deposited with
the Indenture Trustee conform to the requirements of this 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; and
(ii) the Replacement Airframe or Replacement Engine has been
validly subjected to the Lien of this Indenture and covered by the Lease,
the instruments subjecting such Replacement Airframe or Replacement Engine
to the Lease and to the Lien of this Indenture, as the case may be, have
been duly filed for recordation pursuant to the Transportation Code or any
other law then applicable to the registration of the Aircraft, and no
further action, filing or recording of any document is necessary or
advisable in order to establish and perfect the title of the Owner Trustee
to and the Lien of this Indenture on such Replacement Airframe or
Replacement Engine and, with respect to a
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Replacement Airframe, the Indenture Trustee would be entitled to the
benefits of Section 1110 of the Bankruptcy Code with respect to such
Replacement Airframe, provided, that such opinion need not be to the
effect specified in the foregoing clause to the extent that the benefits
of such Section 1110 would not have been, by reason of a change in law or
governmental interpretation thereof after the date hereof, available to
the Indenture Trustee with respect to the Aircraft immediately prior to
such substitution had such Event of Loss not occurred.
Section 9.09. Indenture Supplement for Replacements. In the event of the
substitution of a Replacement Airframe or a Replacement Engine as contemplated
by Section 8(a) or 7(e) of the Lease, as the case may be, the Owner Trustee and
the Indenture Trustee agree for the benefit of the Holders and the Lessee,
subject to fulfillment of the conditions precedent and compliance by the Lessee
with its obligations set forth in Section 8(a) or 7(e) of the Lease, as the case
may be, to execute and deliver a supplement to this Indenture as contemplated by
Section 9.08(3) hereof and, provided no Event of Default shall have occurred and
be continuing, execute and deliver to the Lessee an appropriate instrument
releasing the Airframe or Engine being replaced from the Lien of this Indenture.
Section 9.10. Effect of Replacement. In the event of the substitution of a
Replacement Airframe or a Replacement Engine as contemplated by Section 8(a) or
7(e) of the Lease, as the case may be, and Section 9.08 hereof, all provisions
of this Indenture relating to the Airframe or Engine or Engines being replaced
shall be applicable to such Replacement Airframe or Replacement Engine or
Engines with the same force and effect as if such Replacement Airframe or
Replacement Engine or Engines were the same Airframe or engine or engines, as
the case may be, as the Airframe or Engine or Engines being replaced but for any
Event of Loss with respect to the Airframe or Engine or Engines being replaced.
Section 9.11. Compensation. The Owner Trustee covenants and agrees to pay,
and the Indenture Trustee shall be entitled to receive, reasonable compensation
and payment or reimbursement for its reasonable advances, expenses and
disbursements (including the reasonable compensation and expenses and
disbursements of its counsel, agents and other persons not regularly in its
employ) in connection with its services rendered hereunder or in any way
relating to or arising out of the administration of the Trust Indenture Estate
and shall have a priority claim on the Trust Indenture Estate for the payment of
such compensation, advances, expenses and disbursements to the extent that such
compensation, advances, expenses and disbursements 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; provided that, so long as
the Lease is in effect, the Indenture Trustee shall not make any claim for
payment under this Section 9.11 against the Owner Trustee without first making
demand on the Lessee for payment of such claim. The Indenture Trustee agrees
that it shall have no right against any Holder, Trust Company, or the Owner
Participant for any fee as compensation for its services as trustee under this
Indenture.
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ARTICLE X
CONCERNING THE HOLDERS
Section 10.01. Evidence of Action Taken by Holders. (a) Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Holders in person or by an agent duly appointed in writing, and, except
as otherwise expressly provided herein, 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 9.02 and 9.03 hereof)
conclusive in favor of the Indenture Trustee and the Owner Trustee, if made in
the manner provided in this Article.
(b) For the purpose of determining the Holders entitled to vote or consent
to any direction, waiver or other action of such Holders under Section 7.10 or
7.11 hereof, the Lessee may set a record date for such vote or consent by
specifying such record date in an Officer's Certificate delivered to the
Indenture Trustee. Such record date shall be a date not more than 15 days prior
to the first solicitation of such vote or consent.
Section 10.02. Proof of Execution of Instruments and of Holding of
Equipment Notes. Subject to Sections 9.02 and 9.03 hereof, the execution of any
instrument by a Holder or his agent or proxy may be proved in accordance with
such reasonable rules and regulations as may be prescribed by the Indenture
Trustee. The holding of Equipment Notes shall be proved by the Register or by a
certificate of the Registrar.
Section 10.03. Holders to Be Treated as Owners. Prior to due presentment
for registration of transfer of any Equipment Note, the Owner Trustee, the
Indenture Trustee, any agent of the Owner Trustee or the Indenture Trustee, the
Paying Agent, if any, the Registrar and the Lessee shall deem and treat the
Person in whose name such Equipment shall be registered upon the Register as the
absolute owner of such Equipment Note (whether or not such Equipment Note shall
be overdue and notwithstanding any notation of ownership or other writing
thereon) for the purpose of receiving payment of or on account of the principal
of and, subject to the provisions of this Indenture, interest on such Equipment
Note and for all other purposes; and neither the Owner Trustee nor the Indenture
Trustee (nor any agent of the Owner Trustee or the Indenture Trustee) nor the
Paying Agent, if any, nor the Registrar nor the Lessee shall be affected by any
notice to the contrary. All such payments so made to any such person, or upon
his order, shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Equipment Note.
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Section 10.04. Equipment Notes Owned by Owner Trustee or Lessee Deemed Not
Outstanding. In determining whether the Holders of the requisite aggregate
principal amount of Equipment Notes have concurred in any direction, consent or
waiver under this Indenture, Equipment Notes which are owned by the Owner
Trustee, any Owner Participant, the Lessee or any Affiliate thereof shall be
disregarded and deemed not to be Outstanding for the purpose of any such
determination; provided that for the purpose of determining whether the
Indenture Trustee shall be protected in relying on any such direction, consent
or waiver, only if a Responsible Officer of the Indenture Trustee has actual
knowledge that certain Equipment Notes are so owned by any person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Owner Trustee, such Owner Participant, Trust Company or the
Lessee shall such Equipment Notes be so disregarded; and provided further that
if all Equipment Notes which would be deemed Outstanding in the absence of the
foregoing provision are owned by the Owner Trustee, Trust Company or any Owner
Participant or by any Affiliate thereof, then such Equipment Notes shall be
deemed Outstanding for the purpose of any such determination. Equipment Notes so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Indenture Trustee the
pledgee's right so to act with respect to such Equipment Notes and that the
pledgee is not the Owner Trustee, the Owner Participant, Trust Company or the
Lessee or any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Owner Trustee, the Owner
Participant, Trust Company or the Lessee. In case of a dispute as to such right,
the advice of counsel shall be full protection in respect of any decision made
by the Indenture Trustee in accordance with such advice, unless the Lessee, the
Owner Trustee, Trust Company, or the Owner Participant are actually named in the
Register. Upon request of the Indenture Trustee, the Owner Trustee, the Owner
Participant, Trust Company and the Lessee shall furnish to the Indenture Trustee
promptly an Officer's Certificate listing and identifying all Equipment Notes,
if any, known by the Owner Trustee, the Owner Participant, Trust Company or the
Lessee to be owned or held by or for the account of any of the above-described
persons; and, subject to Sections 9.02 and 9.03 hereof, the Indenture Trustee
shall be entitled to accept such Officer's Certificate as conclusive evidence of
the facts set forth therein and of the fact that all Equipment Notes not listed
therein are outstanding for the purpose of any such determination.
Section 10.05. ERISA. Any Person, other than the Subordination Agent and
any Pass-Through Trustee, who is acquiring the Equipment Notes will be deemed to
represent and warrant that (i) no assets of an employee benefit plan subject to
Title I of ERISA or an individual retirement account or plan subject to Section
4975 of the Code, or any trust established under any such plan or account, have
been used to acquire or hold any of the Equipment Notes, or (ii) that one or
more administrative or statutory exemptions from the prohibited transaction
rules under Section 406 of ERISA and Section 4975 of the Code applies to its
purchase and holding of the Equipment Notes such that its purchase and holding
of the Equipment Notes will not result in a non-exempt prohibited transaction
under Section 406 of ERISA and Section 4975 of the Code.
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ARTICLE XI
INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE
The Owner Trustee, not individually but solely in its capacity as Owner
Trustee, hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated, to assume liability for, and does hereby indemnify,
protect, save and keep harmless the Indenture Trustee, in its individual
capacity, and its successors, assigns, agents and servants solely from the
Lessor's Estate, with respect to the claims of the Indenture Trustee for payment
or reimbursement under Section 9.11 hereof and 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 and any taxes
excluded from the Lessee's indemnity obligation under Section 6.01(b) of the
Participation Agreement), claims, actions, suits, costs, expenses or
disbursements (including legal fees and expenses) of any kind and nature
whatsoever which may be imposed on, incurred by or asserted against the
Indenture Trustee (whether or not also agreed to be indemnified against by any
other person under any other document) in any way relating to or arising out of
this Indenture, or any 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, 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 (a) in the case of willful
misconduct or gross negligence of the Indenture Trustee in the performance of
its duties hereunder, (b) as may result from the inaccuracy of any
representation or warranty of the Indenture Trustee in the Participation
Agreement, (c) as otherwise provided in Section 9.02(c) hereof or (d) as
otherwise excluded by the terms of Article 6 or Article 7 of the Participation
Agreement from the Lessee's general indemnity or general tax indemnity to the
Indenture Trustee under said Article; provided that so long as the Lease is in
effect, the Indenture Trustee shall not make any claim under this Article XI for
any claim or expense indemnified by the Lessee under the Participation Agreement
without first making demand on the Lessee for payment of such claim or expense.
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
Article XI 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 Article XI shall survive the
termination of this Indenture and the resignation or removal of the Indenture
Trustee. Upon payment in full by the Owner Trustee of any indemnity pursuant to
this Article XI, the Owner Trustee shall, so long as no Indenture Event of
Default shall have
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occurred and be continuing, be subrogated to the rights of the Indenture
Trustee, if any, in respect of the matter as to which the indemnity was paid.
ARTICLE XII
SUCCESSOR TRUSTEES
Section 12.01. Notice of Successor Owner Trustee. In the case of any
appointment of a successor to the Owner Trustee pursuant to the Trust Agreement
or any merger, conversion, consolidation or sale of substantially all of the
corporate trust business of the Owner Trustee pursuant to the Trust Agreement,
the successor Owner Trustee shall give prompt written notice thereof to the
Indenture Trustee.
Section 12.02. 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 days' prior written notice to the
Owner Trustee, the Owner Participant, the Lessee and each Holder, such
resignation to be effective upon the acceptance of the trusteeship by a
successor Indenture Trustee. In addition, the Lessee, the Majority in Interest
of the Holders or the Owner Trustee (with the consent of the Lessee and the
Majority in Interest of the Holders) may at any time remove the Indenture
Trustee without cause by an instrument in writing delivered to the Lessee, the
Owner Trustee, the Owner Participant, and the Indenture Trustee, and the
Indenture Trustee shall promptly notify each Holder thereof of such action 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, the Majority in Interest of the Holders (based on the
recommendation of the Lessee) or the Owner Trustee (with the consent of the
Lessee and the Majority in Interest of the Holders), may appoint a successor
Indenture Trustee by an instrument signed by such Holders. If a successor
Indenture Trustee shall not have been appointed within 30 days after such notice
of resignation or removal, the Indenture Trustee, the Owner Trustee, the Lessee,
the Owner Participant, or any Holder may apply to any court of competent
jurisdiction to appoint a successor Indenture Trustee to act until such time, if
any, as a successor shall have been appointed as provided above. The successor
Indenture Trustee so appointed by such court shall immediately and without
further act be superseded by any successor Indenture Trustee appointed as
provided above.
(b) In case at any time any of the following shall occur:
(i) the Indenture Trustee shall cease to be eligible in
accordance with the provisions of Section 12.03 hereof and shall fail to
resign after written request therefor by the Owner Trustee or by any
Holder; or
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(ii) the Indenture Trustee shall become incapable of acting,
or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator
of the Indenture Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Indenture Trustee or of
its property or affairs for the purpose of rehabilitation, conservation or
liquidation;
then the Owner Trustee may remove the Indenture Trustee and, with the consent of
the Lessee, appoint a successor trustee by written instrument, in duplicate,
executed by a Responsible Officer of the Owner Trustee, one copy of which
instrument shall be delivered to the Indenture Trustee so removed and one copy
to the successor trustee, or, subject to the provisions of Section 7.13 hereof,
any Holder who has been a bona fide Holder for at least six months may, on
behalf of himself and all others similarly situated Holders, petition any court
of competent jurisdiction for the removal of the Indenture Trustee and the
appointment of a successor trustee. Such court may thereupon, after such notice,
if any, as it may deem proper and prescribe, remove the Indenture Trustee and
appoint a successor trustee, which removal and appointment shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 12.04 hereof. The successor Indenture Trustee so appointed by such court
shall immediately and without further act be superseded by any successor
Indenture Trustee appointed as provided above within one year from the date of
appointment by such court.
Section 12.03. Persons Eligible for Appointment as Indenture Trustee.
There shall at all times be an Indenture Trustee hereunder which shall be (i)(x)
a bank or trust company organized and doing business under the laws of the
United States of America or any state or the District of Columbia having a
combined capital and surplus of at least $75,000,000 or (y) a bank or trust
company whose obligations hereunder are fully guaranteed by a direct or indirect
parent thereof having a combined capital and surplus of at least $75,000,000 and
(ii) a Person authorized under applicable law to exercise corporate trust powers
and subject to supervision of examination by Federal, state or District of
Columbia authority. If such corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purposes of this Section, 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 Indenture Trustee shall cease to be eligible in accordance
with the provisions of this Section, the Indenture Trustee shall resign
immediately in the manner and with the effect specified in Section 12.02 hereof.
Section 12.04. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 12.02 hereof shall execute
and deliver to the Owner Trustee, the Lessee, and to its predecessor trustee an
instrument accepting such appointment hereunder, in form and substance
reasonably satisfactory to the Owner Trustee, and thereupon the resignation or
removal of the predecessor trustee shall become effective and such successor
trustee, without any further act, deed or conveyance, shall become vested with
all rights, powers, duties and obligations of its
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predecessor hereunder, with like effect as if originally named as trustee
herein; but, nevertheless, on the written request of the Owner Trustee or of the
successor trustee, upon payment of its charges then unpaid, the trustee ceasing
to act shall, subject to Section 14.04 hereof, pay over to the successor trustee
all moneys at the time held by it hereunder and shall execute and deliver an
instrument transferring to such successor trustee all such rights, powers,
duties and obligations. Upon request of any such successor trustee, the Owner
Trustee shall execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor trustee all such rights
and powers. Any trustee ceasing to act shall, nevertheless, retain a prior claim
upon all property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Article XI hereof.
No successor trustee shall accept appointment as provided in this Section
12.04 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 12.03 hereof.
Upon acceptance of appointment by a successor trustee as provided in this
Section 12.04, the successor trustee shall mail notice thereof by first-class
mail to the Holders at their last addresses as they shall appear in the
Register, and shall mail a copy of such notice to the Lessee and the Owner
Trustee. If the acceptance of appointment is substantially contemporaneous with
the resignation, then the notice called for by the preceding sentence may be
combined with the notice called for by Section 12.02 hereof.
Section 12.05. Merger, Consolidation or Succession to Business of
Indenture Trustee. 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 succeeding to the corporate trust
business of the Indenture Trustee, shall be the successor to the Indenture
Trustee hereunder, provided that, anything herein to the contrary
notwithstanding, such corporation shall be eligible under the provisions of
Section 12.03 hereof, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
In case at the time such successor to the Indenture Trustee shall succeed
to the trusts created by this Indenture any of the Equipment Notes shall have
been authenticated but not delivered, any such successor to the Indenture
Trustee may adopt the certificate of authentication of any predecessor Indenture
Trustee and deliver such Equipment Notes so authenticated; and, in case at that
time any of the Equipment Notes shall not have been authenticated, any successor
to the Indenture Trustee may authenticate such Equipment Notes either in the
name of any predecessor hereunder or in the name of the successor Indenture
Trustee; and in all such cases such certificate shall have the full force which
it is anywhere in the Equipment Notes or in this Indenture provided that the
certificate of the Indenture Trustee shall have; provided, that the right to
adopt the certificate of authentication of any predecessor Indenture Trustee or
to authenticate Equipment Notes in the name of any predecessor Indenture
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Trustee shall apply only to its successor or successors by merger, conversion or
consolidation.
Section 12.06. 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 a 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 or they shall be vested with such title to the Trust Indenture Estate or any
part thereof, and with such rights, powers, duties and obligations, as shall be
specified in the instrument of appointment, and such rights, powers, duties and
obligations shall be conferred or imposed upon and exercised or performed by the
Indenture Trustee, or the Indenture Trustee and such separate trustee or
separate trustees or co-trustee jointly with the Indenture Trustee subject to
all the terms of this Indenture, 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 shall be
exercised and performed by such separate trustee or separate trustees or
co-trustee, as the case may be. Any separate trustee or separate trustees or
co-trustee may, at any time by an instrument in writing, constitute the
Indenture Trustee its or his attorney-in-fact and agent with full power and
authority to do all acts and things and to exercise all discretion on its or his
behalf and in its or his 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, duties and
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 (including without limitation Article XI hereof) shall extend
to and apply to each separate trustee or co-trustee appointed pursuant to the
foregoing provisions of this Section 12.06.
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(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 exercisable 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 liable either personally or
in its capacity as such trustee, by reason of any act or omission of any
other trustee hereunder.
If at any time the Indenture Trustee shall deem it no longer necessary or
prudent in order to conform to any such law, the Indenture Trustee shall execute
and deliver an indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any additional trustee or separate
trustee.
(e) Any request, approval or consent in writing by the Indenture Trustee
to any additional trustee or separate trustee shall be sufficient warrant to
such additional trustee or separate trustee, as the case may be, to take such
action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 12.06, the powers
of any additional trustee or separate trustee shall not exceed those of the
Indenture Trustee hereunder.
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ARTICLE XIII
SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
Section 13.01. Supplemental Indentures Without Consent of Holders. The
Owner Trustee (when authorized by the Owner Participant) and the Indenture
Trustee, without consent of the Holders, may enter into an indenture or
indentures supplemental hereto for one or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge any property or assets
to the Indenture Trustee as security for the Equipment Notes;
(b) to evidence the succession of another corporation to the Owner Trustee
or successive successions, and the assumption by the successor corporation of
the covenants, agreements and obligations of the Owner Trustee herein and in the
Equipment Notes;
(c) to add to the covenants of the Owner Trustee such further covenants,
restrictions, conditions or provisions as it and the Indenture Trustee shall
consider to be for the protection of the Holders, and to make the occurrence, or
the occurrence and continuance, of a default in any such additional covenants,
restrictions, conditions or provisions an Indenture Event of Default permitting
the enforcement of all or any of the several remedies provided herein; provided,
that in respect of any such additional covenant, restriction, condition or
provision such supplemental indenture may provide for a particular period of
grace after default (which period may be shorter or longer than that allowed in
the case of other defaults) or may provide for an immediate enforcement upon
such an Indenture Event of Default or may limit the remedies available to the
Indenture Trustee upon such an Indenture Event of Default or may limit the right
of not less than the Majority in Interest of Holders to waive such an Indenture
Event of Default;
(d) to surrender any right or power conferred herein upon the Owner
Trustee or the Owner Participant;
(e) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture; or to make such other provisions in regard to matters or questions
arising under this Indenture or under any supplemental indenture as the Owner
Trustee may deem necessary or desirable and which shall not adversely affect the
interests of the Holders;
(f) 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 or to subject any Replacement Airframe or Replacement
Engine to the Lien
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of this Indenture in accordance with the provisions hereof or with the Lease or
to release from the Lien of this Indenture property that has been substituted on
or removed from the Aircraft as contemplated in Section 3.07 hereof; provided
that supplements to this Indenture entered into for the purpose of subjecting
any Replacement Airframe or Replacement Engine to the Lien of this Indenture
need only be executed by the Owner Trustee and the Indenture Trustee;
(g) to provide for the issuance under this Indenture of Equipment Notes in
coupon form (including Equipment Notes registrable as to principal only) and to
provide for exchangeability of such Equipment Notes with Equipment Notes issued
hereunder in fully registered form, and to make all appropriate changes for such
purpose;
(h) to effect the re-registration of the Aircraft pursuant to Section
4.02(b) of the Participation Agreement; and
(i) to add, eliminate or change any provision hereunder so long as such
action shall not adversely affect the interests of the Holders.
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture, to make any further appropriate agreements and
stipulations which may be contained therein 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.
Any such supplemental indenture may be executed without the consent of the
Holders notwithstanding any of the provisions of Section 13.02 hereof.
Section 13.02. Supplemental Indentures With Consent of Holders. With the
consent (evidenced as provided in Article X) of the Majority in Interest of
Holders, the Owner Trustee (when authorized by the Owner Participant) and the
Indenture Trustee may, from time to time and at any time, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of any supplemental indenture or of modifying in any manner
the rights of the Holders; provided, however, that, without the consent of each
and every Holder and each Liquidity Provider, no such amendment of or supplement
to this Indenture or any indenture supplemental hereto, or modification of the
terms of, or consent under, any thereof, shall (a) modify any of the provisions
of Section 7.11 hereof or this Section 13.02, (b) reduce the amount or extend
the time of payment of any amount owing or payable under any Equipment Note or
reduce the interest payable on any Equipment Note, or alter or modify the
provisions of Article V hereof with respect to the order of priorities in which
distributions thereunder shall be made as among Holders of different Series of
Equipment Notes or as between the Holder and the Owner Trustee or the Owner
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Participant or with respect to the amount or time of payment of any such
distribution, or alter or modify the circumstances under which a Make-Whole
Premium shall be payable, or alter the currency in which any amount payable
under any Equipment Note is to be paid, or impair the right of any Holder to
commence legal proceedings to enforce a right to receive payment hereunder or
(c) create or permit the creation of any Lien on the Trust Indenture Estate or
any part thereof prior to or pari passu with the Lien of this Indenture, except
as expressly permitted herein, or deprive any Holder of the benefit of the Lien
of this Indenture on the Trust Indenture Estate, except as provided in Section
7.02 hereof or in connection with the exercise of remedies under Article VII.
This Section 13.02 shall not apply to any indenture or indentures supplemental
hereto permitted by, and complying with the terms of, Section 13.06 hereof.
Upon the request of the Owner Trustee (at the direction of the Owner
Participant) and upon the filing with the Indenture Trustee of evidence of the
consent of Holders and other documents, if any, required by Section 10.01, the
Indenture Trustee shall join with the Owner Trustee and the Lessee in the
execution of such supplemental indenture unless such supplemental indenture
affects the Indenture Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Indenture Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Holders under this
Section 13.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Promptly after the execution by the Owner Trustee, the Indenture Trustee
and the Lessee of any supplemental indenture pursuant to the provisions of this
Section, the Indenture Trustee shall mail a notice thereof by first-class mail
to the Holders at their addresses as they shall appear on the registry books of
the Registrar, setting forth in general terms the substance of such supplemental
indenture. Any failure of the Indenture Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.
Section 13.03. 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, the Lessee and
the 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 any and all purposes.
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Section 13.04. Documents to Be Given to Indenture Trustee. The Indenture
Trustee, subject to the provisions of Sections 9.02 and 9.03, may receive an
Officer's Certificate and an Opinion of Counsel as conclusive evidence that any
such supplemental indenture complies with the applicable provisions of this
Indenture.
Section 13.05. Notation on Equipment 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 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 Outstanding Equipment Notes.
Section 13.06. No Request Necessary for Lease Supplement or Indenture
Supplement. Notwithstanding anything contained in Section 13.02 hereof, no
written request or consent of the Indenture Trustee, any Holder or the Owner
Participant pursuant to Section 13.02 hereof shall be required to enable the
Owner Trustee to enter into any supplement to the Lease with the Lessee in
accordance with the terms and conditions of the Lease to subject a Replacement
Airframe or Replacement Engine thereto or to execute and deliver any supplement
to the Indenture (including the Indenture Supplement) pursuant to the terms
hereof.
Section 13.07. Notices to Liquidity Providers. Any request made to any
Holder for consent to any amendment, supplement or waiver pursuant to Section
7.11, 8.01 or this Article XIII shall be promptly furnished by the Indenture
Trustee to each Liquidity Provider.
ARTICLE XIV
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 14.01. Satisfaction and Discharge of Indenture: Termination of
Indenture. If at any time after (a) the Owner Trustee shall have paid or caused
to be paid the principal of and interest on all the Equipment Notes outstanding
hereunder, as and when the same shall have become due and payable and provided
that there shall be no Secured Obligations due to the Indenture Indemnitees, or
(b) the Owner Trustee shall have delivered to the Indenture Trustee for
cancellation all Equipment Notes theretofore authenticated (other than any
Equipment Notes which shall have been destroyed, lost or stolen and which shall
have been replaced or paid as provided in Section 2.07 hereof), then this
Indenture shall cease to be of further effect, and the Indenture Trustee, on
demand of the Owner Trustee and at the cost and expense of the
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Owner Trustee, shall execute proper instruments acknowledging such satisfaction
of and discharging this Indenture. The Owner Trustee agrees to reimburse and
indemnify the Indenture Trustee for any costs or expenses thereafter reasonably
and properly incurred and to compensate the Indenture Trustee for any services
thereafter reasonably and properly rendered by the Indenture Trustee in
connection with this Indenture or the Equipment Notes.
Upon (or at any time after) payment in full to the Indenture Trustee, as
trust funds, of the principal of and interest on and Make-Whole Premium, if any,
and all other amounts due hereunder and under all Equipment Notes and of any
Secured Obligations owed to the Indenture Indemnitees, and provided that there
shall then be no other amounts due to the Indenture Trustee hereunder or under
the Participation Agreement or otherwise secured hereby, the Owner Trustee shall
direct the Indenture Trustee to execute and deliver to or as directed in writing
by the Owner Trustee an appropriate instrument releasing the Aircraft from the
Lien of this Indenture and releasing the Indenture Documents from the assignment
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 release; provided, however, that this
Indenture and the trusts created hereby shall terminate earlier and this
Indenture shall be of no further force or effect upon any sale or other final
disposition by the Indenture Trustee of all property forming a 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 14.02. Application by Indenture Trustee of Funds Deposited for
Payment of Equipment Notes. Subject to Section 14.04 hereof, all moneys
deposited with the Indenture Trustee pursuant to Section 14.01 hereof shall be
held in trust and applied by it to the prompt payment, either directly or
through any Paying Agent, to the Holders of the particular Equipment Notes for
the payment or prepayment of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal,
interest and Make-Whole Premium, if any, but such money need not be segregated
from other funds except to the extent required by law.
Section 14.03. Repayment of Moneys Held by Paying Agent. Upon the
satisfaction and discharge of this Indenture all moneys then held by any Paying
Agent under the provisions of this Indenture shall, upon demand of the Owner
Trustee, be repaid to it or paid to the Indenture Trustee and thereupon such
Paying Agent shall be released from all further liability with respect to such
moneys.
Section 14.04. Transfer of Unclaimed Money Held by Indenture Trustee and
Paying Agent. Any moneys deposited with or paid to the Indenture Trustee or any
Paying Agent for the payment of the principal of or interest or Make-Whole
Premium
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on any Equipment Note and not applied but remaining unclaimed for two years and
eleven months after the date upon which such principal, interest or Make-Whole
Premium shall have become due and payable, shall, unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be paid to the Owner Trustee (or, if the Trust Agreement shall no longer be
in effect, to the Owner Participant) by the Indenture Trustee or such Paying
Agent and the Holder of such Certificate, as a general unsecured creditor,
shall, unless otherwise required by mandatory provisions of applicable escheat
or abandoned or unclaimed property laws, thereafter look only to the Owner
Trustee (or the Owner Participant) for any payment which such Holder may be
entitled to collect, and all liability of the Indenture Trustee, or any Paying
Agent with respect to such moneys shall thereupon cease.
ARTICLE XV
MISCELLANEOUS
Section 15.01. Capacity in Which Acting. Each of Trust Company (or its
permitted successors or assigns) and FNBM acts hereunder not in its individual
capacity but solely as trustee except as expressly provided herein and in the
other Operative Agreements, and, in the case of Trust Company (or its permitted
successors or assigns), in the Trust Agreement.
Section 15.02. No Legal Title to Trust Indenture Estate in Holders. No
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 Holder in and to the Trust Indenture Estate or
hereunder shall operate to terminate this Indenture or entitle such 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 15.03. Sale of Trust Indenture Estate by Indenture Trustee is
Binding. Any sale or other conveyance of all or any part of the Trust Indenture
Estate by the Indenture Trustee made pursuant to the terms of this Indenture or
of the Lease shall bind the Lessee, the Owner Trustee, the Holders and the Owner
Participant 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 therein and thereto. 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 15.04. Indenture Benefits Trustees, Participants, Lessee, and
Liquidity Providers Only. Nothing in this Indenture, whether express or implied,
shall be construed to give to any person other than Trust Company, the Owner
Trustee, the
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Lessee, FNBM, the Indenture Trustee, the Owner Participant, each Liquidity
Provider and the Holders any legal or equitable right, remedy or claim under or
in respect of this Indenture. Upon termination of this Indenture pursuant to
Article XIV hereof, the Indenture Trustee in connection with the satisfaction of
the Indenture shall return to the Owner Trustee all property (and related
documents and instruments) constituting or evidencing the Trust Indenture
Estate.
Section 15.05. No Action Contrary to Lessee's Rights Under the Lease.
Notwithstanding any of the provisions of this Indenture or the Trust Agreement
to the contrary, so long as no Event of Default shall have occurred and be
continuing, neither the Indenture Trustee nor the Owner Trustee will take any
action that interfere with the peaceful and quiet possession and enjoyment of
the Aircraft by the Lessee or any Permitted Sublessee.
Section 15.06. Notices. Unless otherwise expressly specified or permitted
by the terms hereof, all notices, requests, demands, authorizations, directions,
consents, waivers or documents provided or permitted by this Indenture to be
made, given, furnished or filed shall be in writing, and shall be given and
become effective in the manner set forth in Section 12.01 of the Participation
Agreement. 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 15.07. Officer's Certificates and Opinions of Counsel. Upon any
application or demand by the Lessee or the Owner Trustee to the Indenture
Trustee to take any action under any of the provisions of this Indenture, the
Lessee or the Owner Trustee, as the case may be, shall furnish to the Indenture
Trustee upon request (a) an Officer's Certificate stating that all conditions
precedent provided for in this Indenture relating to the proposed action have
been complied with and that the proposed action is in conformity with the
requirements of this Indenture, and (b) 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 demand as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or demand, no
additional certificate or opinion need be furnished.
Any certificate, statement or opinion of an officer of Trust Company may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of or representations by counsel, unless such officer knows that the certificate
or opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous. Any
certificate, statement or opinion of counsel may be based, insofar as it relates
to factual matters information with respect to which is in the possession of the
Lessee or Trust Company, upon the certificate, statement or opinion of or
representations by an officer or officers of the Lessee or Trust Company, as the
case may be, unless such counsel knows that the certificate, statement or
opinion or representations with respect to the matters upon which his
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certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Lessee or Trust
Company or of counsel thereto may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of or representations by an accountant or
firm of accountants employed by the Lessee or the Owner Trustee, as the case may
be, unless such officer or counsel, as the case may be, knows that the
certificate or opinion or representations with respect to the accounting matters
upon which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous.
Any certificate or opinion of any independent firm of public accountants
filed with the Indenture Trustee shall contain a statement that such firm is
independent.
Section 15.08. 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 15.09. 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 15.10. 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 Holder shall bind the successors and assigns of such 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.
Section 15.11. 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 15.12. Normal Commercial Relations. Anything contained in this
Indenture to the contrary notwithstanding, the Owner Participant, the Indenture
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Trustee and any Holder, or any bank or other affiliate of any such party, may
conduct any banking or other financial transactions, and have banking or other
commercial relationships, with the Lessee 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 15.13. Governing Law; Counterparts. THIS INDENTURE IS DELIVERED IN
THE STATE OF NEW YORK. THIS INDENTURE AND EACH 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.
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 15.14. Lessee's Right of Quiet Enjoyment. Notwithstanding any of
the provisions of this Indenture to the contrary, so long as no Event of Default
has occurred and is continuing unremedied, the Indenture Trustee will comply
with Section 4(b) of the Lease to the same extent as if it were the Lessor under
the Lease. Each Holder, by its acceptance thereof, consents in all respects to
the terms of the Lease and agrees to the provisions of this Section 15.14. The
Indenture Trustee acknowledges that any right it may have to possess, use,
operate, store, lease, control, manage, sell, dispose of or otherwise deal with
the Aircraft or any other property in which Lessee has any interest pursuant to
the Lease is derivative of the rights of the Owner Trustee under the Lease and
subject to the agreement of the Owner Trustee under Section 4(b) of the Lease as
referred to in the second preceding sentence herein.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture and
Security Agreement to be executed by their respective officers thereunto duly
authorized as of the date first written above.
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION,
not in its individual capacity, except as
specifically set forth herein but solely as
Owner Trustee
By: ___________________________________________
Name:
Title:
THE FIRST NATIONAL BANK OF MARYLAND, as
Indenture Trustee
By: ___________________________________________
Name:
Title:
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Annex A
Series Principal Amount Interest Rate
------ ---------------- -------------
A
B
C
D
<PAGE>
Annex B
Amortization Schedule
Payment Series A Series B Series C Series D
Date Equipment Equipment Equipment Equipment
- - -------- Notes Notes Notes Notes
----- ----- ----- -----
<PAGE>
[Leased Aircraft
Definitions]
APPENDIX A
DEFINITIONS [N______]
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (as defined below), unless otherwise
defined in an Operative Agreement or the context thereof shall otherwise
require. In the case of any conflict between the provisions of this Appendix and
the provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean such agreements as amended and supplemented from time to
time, and (ii) references to parties to agreements shall be deemed to include
the successors and permitted assigns of such parties.
"Additional Insureds" means the Owner Trustee (in its individual and trust
capacities), the Owner Participant, the Indenture Trustee (in its individual and
trust capacities) and each Liquidity Provider.
"Aeronautics Authority" means as of any time of determination, the FAA or
other governmental airworthiness authority having jurisdiction over the Aircraft
or the Airframe and Engines or engines attached thereto under the laws of the
country in which the Airframe is then registered.
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling 50% or more of any class of voting securities of such
Person or otherwise controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract or
otherwise.
"After Tax Basis" means a basis such that any payment to be received by a
Person shall be supplemented by a further payment to such Person so that the sum
of the two payments, after deduction of all Taxes (taking into account any
related credits or deductions) resulting from the receipt or accrual of such
payments, shall be equal to the payment to be received.
<PAGE>
"Aircraft" means the Airframe together with the Engines, whether or not
any of the Engines may at the time of determination be installed on the Airframe
or installed on any other airframe or on any other aircraft.
"Airframe" means (i) the Canadair Regional Jet Series 200ER aircraft
(excluding the Engines and any other engines which may from time to time be
installed thereon, but including any and all Parts which may from time to time
be incorporated in, installed on or attached to such aircraft, and including any
and all such Parts removed therefrom so long as title to such removed Parts
remains vested in the Lessor under the terms of Section 7 of the Lease)
originally delivered and leased under the Lease, identified by national
registration number and manufacturer's serial number in the Lease Supplement
executed and delivered on the Delivery Date, so long as a Replacement Airframe
shall not have been substituted therefor pursuant to Section 8 of the Lease, and
(ii) a Replacement Airframe, so long as another Replacement Airframe shall not
have been substituted therefor pursuant to Section 8 of the Lease.
"Applicable Law" means all applicable laws, treaties, judgments, decrees,
injunctions, writs and orders of any court, governmental agency or authority and
rules, regulations, orders, directives, licenses and permits of any governmental
body, instrumentality, agency or authority.
"Average Life Date" means, for any Equipment Note, the date which follows
the prepayment date by a period equal to the Remaining Weighted Average Life of
such Equipment Note.
"Bankruptcy Code" means Title 11 of the United States Code, as amended,
and any successor thereto.
"Basic Rent" means the rent payable on Basic Rent Payment Dates throughout
the Basic Term for the Aircraft pursuant to Section 3(b) of the Lease and rent
payable during any Renewal Term pursuant to Section 13(a) of the Lease.
"Basic Rent Payment Date" means each date listed under the heading "Basic
Rent Payment Date" in Exhibit C to the Lease.
"Basic Term" means the period commencing at the beginning of the day on
the Delivery Date and ending at end of the day on the Expiration Date, or such
earlier date on which the Lease shall be terminated as provided therein.
"Beneficial Interest" means the interest of the Owner Participant under
the Trust Agreement.
"Business Day" means any day other than a Saturday or Sunday on which
commercial banks are not authorized or required to close in New York City,
Charlotte, North Carolina and the city in the United States in which the office
or agency is
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maintained by the Pass-Through Trustee for the payment of the Pass-Through
Certificates, and after the Lien of the Indenture is discharged, Wilmington,
Delaware.
"Change in Tax Law" means any change or proposed change in the Code or the
Regulations or any change in the interpretation of the Code or Regulations or
any change in the interpretation of the Code or Regulations in a decision by the
United States Supreme Court, the United States Tax Court, the United States
Court of Claims or any one of the United States Courts of Appeals, or any
issuance of a revenue ruling, revenue procedure or any pronouncement by the
Internal Revenue Service or the Department of the Treasury.
"Citizen of the United States" means a citizen of the United States as
defined in ss. 40102(a)(15) of the Transportation Code, or any analogous part of
any successor or substituted legislation or regulation at the time in effect.
"Class A Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Class B Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Class C Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any similar legislation of the United States enacted to supersede,
amend, or supplement such Code (and any reference to a provision of the Code
shall refer to any successor provision(s), however designated).
"Commitment" of a Loan Participant shall have the meaning given such term
in Section 2(d) of the Participation Agreement; "Commitment" of the Owner
Participant shall have the meaning given such term in Section 2(c) of the
Participation Agreement.
"CRAF Program" has the meaning specified in Section 5(b)(vii) of the
Lease.
"DOT" means the U.S. Department of Transportation or any successor
thereto.
"Debt Rate" means the weighted average (based on Outstanding principal
amount) rate of interest on the Equipment Notes.
"Default" means any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Event of Default.
"Delivery Date" means the date on which the Aircraft is delivered and sold
to the Lessor and leased by the Lessor to the Lessee under the Lease, which date
shall be the date of the initial Lease Supplement.
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"Deposit Agreement" means each of the four Deposit Agreements between the
Depositary and the Escrow Agent, dated as of the Issuance Date, each of which
relates to one of the Pass-Through Trusts.
"Depositary" means First Union National Bank, as Depositary under each
Deposit Agreement.
"Dollars" means dollars in lawful currency of the United States.
"Downgrade Drawing" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"EBO Date" has the meaning given to such term in Exhibit B to the Lease.
"EBO Price" has the meaning given to such term in Exhibit B to the Lease.
"Engine" means (A) one of the two CF34-3B1 Series 200 engines originally
delivered and leased under the Lease, identified by manufacturer's serial number
in the Lease Supplement executed and delivered on the Delivery Date, so long as
a Replacement Engine shall not have been substituted therefor pursuant to
Section 7(e) of the Lease, and (B) a Replacement Engine, so long as another
Replacement Engine shall not have been substituted therefor pursuant to Section
7(e) of the Lease, whether or not such engine or Replacement Engine, as the case
may be, is from time to time installed on the Airframe or installed on any other
aircraft, and including in each case all Parts incorporated or installed in or
attached thereto and any and all Parts removed therefrom so long as title to
such Parts remains vested in the Lessor under the terms of Section 7 of the
Lease. The term "Engines" means, as of any date of determination, the two
engines each of which is an Engine on that date.
"Engine Manufacturer's Consent" means any consent to the Engine Warranty
Assignment delivered by the manufacturer of the Engines on the Delivery Date and
pertaining to the Aircraft.
"Engine Warranty Assignment" means any engine warranty assignment
agreement, in form and substance reasonably acceptable to the Owner Participant
entered into by the Lessor and the Lessee on the Delivery Date.
"Equipment Notes" means the Equipment Notes issued by the Owner Trustee
pursuant to the Indenture and any equipment note issued in exchange therefor or
replacement thereof pursuant to the Indenture.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means First Union Trust Company, National Association, as
Escrow Agent under each of the Escrow Agreements.
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"Escrow Agreement" means each of the four Escrow and Paying Agent
Agreements, among the Escrow Agent, the Paying Agent, certain initial purchasers
of the Pass-Through Certificates named therein and one of the Pass-Through
Trustees, dated as of the Issuance Date, each of which relates to one of the
Pass Through Trusts.
"Event of Default" has the meaning given to such term in Section 17 of the
Lease.
"Event of Loss" means any of the following events with respect to the
Aircraft, the Airframe or any Engine:
(i) theft or disappearance for a period in excess of 90 consecutive
days;
(ii) destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use for any reason whatsoever;
(iii) any event which results in an insurance settlement with
respect to such property on the basis of an actual, constructive or
compromised total loss;
(iv) condemnation, confiscation or seizure of, or requisition of
title to or use of such property by any foreign government (or in the case
of any such requisition of title, by the Government) or any agency or
instrumentality thereof, for a period in excess of 180 consecutive days
(or 30 consecutive days for the appropriation of title), or, in any of the
cases in this clause (iv), such shorter period ending on the expiration of
the Term;
(v) condemnation, confiscation or seizure of, or requisition of use
of such property by the Government for a period extending beyond the Term,
provided that no Event of Loss shall be deemed to have occurred, and the
term of the Lease shall be extended automatically for a period of six
months in the event that the Aircraft is requisitioned by the Government
pursuant to an activation under the CRAF Program; and
(vi) as a result of any law, rule, regulation, order or other action
by the Aeronautics Authority, the use of the Aircraft or Airframe in the
normal course of air transportation shall have been prohibited by virtue
of a condition affecting all Canadair Regional Jet Series 200ER aircraft
equipped with engines of the same make and model as the Engines for a
period of 180 consecutive days (or beyond the end of the Term), unless the
Lessee, prior to the expiration of such 180-day period, shall be
diligently carrying forward all necessary and desirable steps to permit
normal use of the Aircraft and shall within 12 months have conformed at
least one Canadair Regional Jet Series 200ER aircraft (but not necessarily
the Aircraft) to the requirements of any such law, rule, regulation, order
or action, and shall be diligently pursuing conformance of the Aircraft in
a non-discriminatory manner.
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The date of such Event of Loss shall be (aa) the 91st day following loss of such
property or its use due to theft or disappearance (or the end of the Term if
earlier); (bb) the date of any destruction, damage beyond economic repair or
rendition of such property permanently unfit for normal use; (cc) the date of
any insurance settlement on the basis of an actual, constructive or compromised
total loss; (dd) the 181st day following condemnation, confiscation, seizure or
requisition of title to or use of such property by a foreign government referred
to in clause (iv) above (or the 31st day in the case of appropriation of title,
or the end of the Term if earlier than such 181st or 31st day); (ee) the last
day of the Term (as automatically extended by six months in the case of an
activation under the CRAF Program) in the case of requisition of title to or use
of such property by the Government; and (if) the last day of the applicable
period referred to in clause (vi) above (or if earlier, the end of the Term
without the Lessee's having conformed at least one Canadair Regional Jet Series
200ER aircraft to the applicable requirements). An Event of Loss with respect to
the Aircraft shall be deemed to have occurred if any Event of Loss occurs with
respect to the Airframe.
"Excepted Payments" means collectively, (i) indemnity, expense,
reimbursement or other payments paid or payable by the Lessee in respect of the
Owner Participant, the Owner Trustee in its individual capacity or any of their
respective successors, permitted assigns, directors, officers, employees,
servants and agents or Affiliates, pursuant to the Participation Agreement or
any other Operative Agreement or any indemnity hereafter granted to the Owner
Participant or the Owner Trustee in its individual capacity pursuant to the
Lease or the Participation Agreement, (ii) proceeds of public liability
insurance (or government indemnities in lieu thereof) in respect of the Aircraft
payable as a result of insurance claims paid for the benefit of, or losses
suffered by, the Owner Trustee or the Indenture Trustee in their respective
individual capacities or by the Owner Participant, or their respective
successors, permitted assigns or Affiliates, (iii) proceeds of insurance
maintained with respect to the Aircraft by the Owner Participant or any
Affiliate thereof (whether directly or through the Owner Trustee) in accordance
with Section 9(f) of the Lease, (iv) payments by the Lessee in respect of any
amounts payable under the Tax Indemnity Agreement, (v) any purchase price paid
to the Owner Participant for its interest in the Trust Estate, (vi) subject to
Section 3(f) of the Lease, payments constituting increases in Basic Rent
attributable to payments arising pursuant to the Tax Indemnity Agreement, (vii)
any payments in respect of interest to the extent attributable to payments
referred to in clauses (i) through (vi) above, (viii) any right to demand,
collect or otherwise receive and enforce the payment of any amount described in
clauses (i) through (v) and (vii) above (except with respect to interest
attributable to payments referred to in clause (vi) above).
"Expenses" has the meaning given to such term in Section 7.01(a) of the
Participation Agreement.
"Expiration Date" means the date specified as such in the Lease Supplement
executed and delivered on the Delivery Date.
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"FAA Bill of Sale" means the bill of sale for the Airframe on AC Form
8050-2, or such other form as may be approved by the Aeronautics Authority,
executed in favor of the Owner Trustee and to be dated the Delivery Date.
"Fair Market Rental Value" or "Fair Market Sales Value" of the Airframe or
any Engine shall mean the value that would be obtained in an arms'-length
transaction between an informed and willing lessee-user or buyer-user (other
than a lessee currently in possession or a used equipment dealer) under no
compulsion to lease or buy, as the case may be, and an informed and willing
lessor or seller, as the case may be, under no compulsion to lease or sell, as
the same shall be specified by agreement between the Lessor and the Lessee or,
if not agreed to by the Lessor and the Lessee within a period of 15 days after
either party requests a determination, then as specified in an appraisal
prepared and delivered in New York City mutually agreed to by two recognized
independent aircraft appraisers, one of which shall be appointed by the Lessor
and the other of which shall be appointed by the Lessee, or, if such appraisers
cannot agree on such appraisal, an appraisal arrived at by a third independent
recognized appraiser chosen by the mutual consent of the two aircraft
appraisers. If either party should fail to appoint an appraiser within 15 days
of receiving notice of the appointment of an appraiser by the other party, then
such appraisal shall be made by the appraiser appointed by the first party. If
the two appraisers cannot agree on such appraisal and fail to appoint a third
independent recognized aircraft appraiser within 15 days after the appointment
of the second appraiser, then either party may apply to the American Arbitration
Association to make such appointment. The appraisal shall be completed within 30
days of the appointment of the last appraiser appointed. In determining Fair
Market Rental Value or Fair Market Sales Value by appraisal or otherwise, it
will be assumed that the Aircraft, Airframe or Engine is in the condition,
location and overhaul status in which it is required to be returned to the
Lessor pursuant to Section 12 of the Lease (except that a determination of Fair
Market Sales Value pursuant to Section 17 of the Lease shall be based on "as is,
where is" condition), that the Lessee has removed all Parts which it is entitled
to remove pursuant to Section 7 of the Lease and that the Aircraft is encumbered
by the Lease. For purposes of the preceding sentence and with respect to a
purchase of the Aircraft pursuant to Section 13(b) of the Lease, "encumbered by
the Lease" shall mean, with respect to Fair Market Sales Value, the Fair Market
Sales Value increased or decreased to reflect the benefits and burdens of the
Lease and other Operative Documents. Except as otherwise expressly provided in
the Lease, all appraisal costs will be shared equally by the Lessor and the
Lessee.
"Federal Aviation Administration" or "FAA" means the United States Federal
Aviation Administration and any successor agency or agencies thereto.
"Final Drawing" has the meaning given to such term in Section 1.01 of the
Intercreditor Agreement.
"Fixed Renewal Term" has the meaning given to such term in Section 13(a)
of the Lease.
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"FNBM" means The First National Bank of Maryland, a national banking
association.
"Government means the United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and credit
of the United States of America.
"Holder" means, as of any particular time, the Person in whose name a
Equipment Note shall be registered.
"Indemnitee" means each of Trust Company, in its individual capacity and
as Owner Trustee, the Subordination Agent, in its individual capacity and in its
capacity as Subordination Agent, each Liquidity Provider, the Owner Participant,
the Indenture Trustee, in its individual capacity and as trustee, the Escrow
Agent, the Paying Agent, the Pass Through Trustees and each Affiliate, officer,
director, employee, agent and servant of any of the foregoing Persons. No holder
of a Pass-Through Certificate shall be deemed to be an Indemnitee.
"Indenture" means the Trust Indenture and Security Agreement [N_______],
dated as of ______________ __, 199_, between the Owner Trustee and the Indenture
Trustee.
"Indenture Default" means any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
"Indenture Documents" has the meaning specified in the Granting Clause of
the Indenture.
"Indenture Event of Default" means each of the events specified in Section
7.01 of the Indenture.
"Indenture Indemnitee" means (i) the Indenture Trustee and each separate
or additional trustee appointed pursuant to the Indenture, (ii) the Escrow
Agent, (iii) the Subordination Agent, (iv) each Liquidity Provider, (v) the
Paying Agent, (vi) each Pass-Through Trustee and (vii) each of the respective
directors, officers, employees, agents and servants of each of the persons
described in clauses (i) through (vi).
"Indenture Supplement" means (a) the Trust Indenture and Security
Agreement Supplement No. 1, substantially in the form of Exhibit A to the
Indenture, which shall describe with particularity the Aircraft included in the
property of the Owner Trustee covered by the Indenture by reference to the Lease
Supplement, and which creates a first priority security interest in the Aircraft
and (b) any other supplement to the Indenture from time to time executed and
delivered.
"Indenture Trustee" means The First National Bank of Maryland, a national
banking association, as indenture trustee under the Operative Documents.
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"Indenture Trustee's Liens" means any Lien against, on or with respect to
the Aircraft, any Engine, the Lessor's Estate or the Trust Indenture Estate or
any part thereof resulting from (i) claims against the Indenture Trustee not
related to the administration of the Trust Indenture Estate or any transactions
pursuant to the Indenture or any document included in the Trust Indenture
Estate, (ii) any act or omission of the Indenture Trustee which is not related
to the transactions contemplated by the Operative Agreements or is in violation
of any of the terms of the Operative Agreements, or (iii) Taxes imposed against
the Indenture Trustee in its individual capacity in respect of which the Lessee
has not indemnified (and is not obligated to indemnify) the Indenture Trustee in
such capacity.
"Independent Investment Banker" means an independent investment banking
institution of national standing appointed by the Lessee that is independent in
fact, does not have any direct financial interests, or any material indirect
financial interest, in the Lessee or any Affiliate of the Lessee, and is not
connected with the Lessee or any Affiliate of the Lessee, as an officer,
employee, promoter, underwriter, trustee, partner, director or Person performing
similar functions; provided, that if the Indenture Trustee shall not have
received written notice of such an appointment at least 10 days prior to the
Prepayment Date, "Independent Investment Banker" shall mean such an institution
appointed by the Indenture Trustee.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of
August 13, 1998, among the Pass Through Trustees, the Class A Liquidity
Provider, the Class B Liquidity Provider, the Class C Liquidity Provider and the
Subordination Agent.
"Interest Drawing" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Issuance Date" means August 13, 1998.
"Lease" means the Lease Agreement [N______], dated as of ______ _____,
199_ between the Owner Trustee and the Lessee.
"Lease Supplement" means any Lease Supplement, substantially in the form
of Exhibit A to the Lease, entered into between the Lessor and the Lessee for
the purpose of leasing the Aircraft under and pursuant to the terms of the
Lease, including any amendment thereto entered into subsequent to the Delivery
Date.
"Lessee" means Midway Airlines Corporation, a Delaware corporation.
"Lessee Documents" means (x) the Operative Agreements to which the Lessee
is a party and (y) the Pass-Through Trust Agreements.
"Lessor" means First Union Trust Company, National Association, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement.
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"Lessor's Cost" has the meaning given to such term in Exhibit B of the
Lease.
"Lessor's Estate" means all estate, right, title and interest of the Owner
Trustee in and to the Aircraft, and Engines and the Operative Agreements (other
than the Tax Indemnity Agreement) including, without limitation, all amounts of
Rent, insurance proceeds and requisition, indemnity or other payments of any
kind, but specifically excluding any Excepted Payments.
"Lessor's Liens" means Liens against, on or with respect to the Aircraft,
any Engine, the Lessor's Estate or the Trust Indenture Estate or any part
thereof, title thereto or any interest therein arising as a result of (i) claims
against or affecting the Lessor, in its individual capacity or as Owner Trustee,
or the Owner Participant, in each case not related to the Operative Agreements
or the transactions contemplated thereby, (ii) acts or omissions of the Lessor
in its individual capacity or as Owner Trustee, or of the Owner Participant not
contemplated or permitted under the terms of the Operative Agreements, (iii)
Taxes or Expenses imposed against the Lessor, in its individual capacity or as
Owner Trustee, Owner Participant, Lessor's Estate or the trust created by the
Trust Agreement which are not required to be indemnified against by the Lessee
pursuant to Articles 6 or 7 of the Participation Agreement and which are not
required to be indemnified against by the Lessee pursuant to the Tax Indemnity
Agreement, or (iv) claims against the Lessor, in its individual capacity or as
Owner Trustee, or the Owner Participant arising from the transfer by the Lessor
or the Owner Participant of its interests in the Aircraft or any Engine other
than a transfer of the Aircraft pursuant to Section 5(b), 7(e), 13(b), 14(a) or
17 of the Lease and other than a transfer pursuant to the exercise of the
remedies set forth in Section 17 of the Lease.
"Lien" means any mortgage, pledge, lien, charge, encumbrance, lease,
security interest, claim, or other similar interest of any nature whatsoever.
"Liquidity Facility" means each of the three Irrevocable Revolving Credit
Agreements (consisting of a separate Revolving Credit Agreement with the
Liquidity Provider with respect to each Pass-Through Trust) between the
Subordination Agent, as borrower, and the Liquidity Provider, each dated as of
the Issuance Date.
"Liquidity Provider" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Loan Participant" means and includes each registered holder from time to
time of an Equipment Note issued under the Indenture including, so long as it
holds any Equipment Notes issued under the Indenture, the Pass-Through Trustee
under each Pass-Through Trust Agreement.
"Majority in Interest of Holders" means, as of a particular date of
determination, the Holders of more than 50% of the aggregate unpaid principal
amount of all Equipment Notes Outstanding as of such date.
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"Make-Whole Premium" means with respect to any Equipment Note, an amount
determined as of the day before the applicable Prepayment Date (or date of
purchase, as the case may be) which an Independent Investment Banker determines
to be equal to the excess, if any, of (i) the present value of the remaining
scheduled payments of such principal amount or portion thereof and interest
thereon to the maturity date of such Equipment Note assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield (in the case of the Series A Equipment Notes and Series B Equipment Notes)
and the Treasury Yield plus .50% (in the case of the Series C Equipment Notes
and the Series D Equipment Notes) over (ii) the outstanding principal amount of
such Equipment Note plus accrued interest (other than any overdue portion
thereof).
"Manufacturer" means Bombardier, Inc., a Canadian corporation.
"Minimum Liability Amount" has the meaning given to such term in Exhibit B
to the Lease.
"Moody's" means Moody's Investors Service, Inc.
"Non-U.S. Person" means any Person other than a U.S. Person.
"Note Purchase Agreement" means the Note Purchase Agreement, dated as of
the Issuance Date, among the Lessee, the Subordination Agent, the Escrow Agent,
the Paying Agent and the Pass-Through Trustee under each Pass-Through Trust
Agreement providing for, among other things, the issuance and sale of certain
equipment notes.
"Offering Memo" means the Lessee's August 6, 1998 Offering Memorandum
concerning the Pass-Through Certificates.
"Officer's Certificate" means, when delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Lessee or the Owner Trustee,
as the case may be, and delivered to the Indenture Trustee. Each such
certificate shall include the statements provided for in Section 15.07 of the
Indenture.
"Operative Agreements" means the Participation Agreement, the Trust
Agreement, the FAA Bill of Sale, the Warranty Bill of Sale, the Purchase
Agreement, the Purchase Agreement Assignment, the Engine Warranty Assignment,
the PAA Consent, the Lease, each Lease Supplement, any Owner Participant
Guaranty, the Equipment Notes outstanding at the time of reference, the
Indenture, each Indenture Supplement and the Tax Indemnity Agreement.
"Opinion of Counsel" means when delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the Lessee
may be (i) an attorney employed by the Lessee who is generally empowered to
deliver such written opinions, (ii) Fulbright & Jaworski L.L.P., or (iii) other
counsel designated by the
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Lessee and reasonably satisfactory to the Indenture Trustee, and (b) for the
Owner Trustee or the Indenture Trustee, an attorney selected by such Person and
reasonably satisfactory to the Lessee and, in the case of the Owner Trustee,
reasonably satisfactory to the Indenture Trustee.
"Outstanding" means, when used with respect to Equipment Notes, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Equipment Notes theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Equipment Notes theretofore canceled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Equipment Notes for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture Trustee in
trust for the Holders of such Equipment Notes pursuant to Section
14.01 of the Indenture; provided that if such Equipment Notes are to
be prepaid, notice of such prepayment has been duly given pursuant
to the Indenture or provision therefor satisfactory to the Indenture
Trustee has been made; and
(iii) Equipment Notes in exchange for or in lieu of which other
Equipment Notes have been executed and delivered pursuant to Article
II of the Indenture.
"Owner Participant" means _________________, a _________________.
"Owner Participant Guarantor" means the provider of an Owner Participant
Guaranty.
"Owner Participant Guaranty" means any guaranty delivered to support the
obligations of the Owner Participation under the Operative Agreements in
connection with the transfer by the Owner Participant of the Beneficial
Interest.
"Owner Trustee" means Trust Company, not in its individual capacity except
as otherwise expressly stated, but solely as trustee under the Trust Agreement.
"PAA Consent" means any consent to the Purchase Agreement Assignment
delivered by the Manufacturer on the Delivery Date and pertaining to the
Aircraft.
"Participants" means, collectively, the Owner Participant and the
Pass-Through Trustee with respect to each of the Pass-Through Trust Agreements;
"Participant" means, individually, one of the Participants.
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"Participation Agreement" the Participation Agreement [N________], dated
as of __________ __, 199_, among the Lessee, the Owner Trustee not in its
individual capacity except as otherwise expressly provided therein, but solely
as owner trustee, the Owner Participant, the Indenture Trustee, the Pass-Through
Trustees and the Subordination Agent.
"Parts" means any and all appliances, parts, instruments, appurtenances,
accessories, furnishings, seats, and other equipment of whatever nature (other
than Engines or engines and temporary replacement parts as provided in Section 8
of the Lease and cargo containers) which may from time to time be incorporated
or installed in or attached to any Airframe or any Engine, exclusive of any
items leased by the Lessee from third parties and not required in the navigation
of the Aircraft.
"Pass-Through Certificates" means any of the Pass-Through Certificates,
1998-1A, the Pass-Through Certificates, 1998-1B, the Pass-Through Certificates,
1998-1C or the Pass Through Certificates, 1998-1D, in each case as issued by the
related Pass-Through Trust; and "Pass-Through Certificates" means all of such
Pass-Through Certificates.
"Pass-Through Documents" means the Pass-Through Trust Agreements, the
Escrow Agreements, the Intercreditor Agreement, the Note Purchase Agreement and
the Liquidity Facilities.
"Pass-Through Trust" means the Midway Airlines 1998-1 Pass-Through Trust
Class A, Midway Airlines 1998-1 Pass-Through Trust Class B, Midway Airlines
1998-1 Pass-Through Trust Class C and Midway Airlines 1998-1 Pass-Through
Trust-Class D, in each case formed pursuant to the related Series Supplement in
accordance with the Pass-Through Trust Agreement; and "Pass-Through Trusts"
means all of such Pass-Through Trusts.
"Pass-Through Trust Agreement" means each of the four Pass-Through Trust
Agreements dated as of August 13, 1998 among the Lessee and the Pass-Through
Trustee (which shall include each Successor Pass-Through Trust Agreement entered
into pursuant to Section 11.01 of each thereof).
"Pass-Through Trustee" The First National Bank of Maryland, a national
banking association, in its capacity as Pass-Through Trustee under each
Pass-Through Trust Agreement.
"Past Due Rate" means in respect of any principal of or interest on or any
other amounts payable in respect of any Equipment Note that is not paid when due
to any Holder, a rate per annum during the period from and including the due
date to but excluding the date on which such amount is paid in full equal to 1%
plus the interest rate applicable to such Equipment Note.
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"Payment Date" means each January 2 and July 2, commencing on _________ 2,
199_.
"Permitted Air Carrier" means (a) any Section 1110 Person and (b) any
foreign air carrier that is principally based in any foreign country listed on
Exhibit E to the Lease, except those that do not maintain normal diplomatic
relations with the United States.
"Permitted Investments" means (a) direct obligations of the United States
of America or any agency or instrumentality thereof, (b) obligations fully
guaranteed by the United States of America or any agency or instrumentality
thereof, (c) any mutual fund the portfolio of which is limited to obligations of
the type described in clauses (a) and (b), including any proprietary mutual fund
of The First National Bank of Maryland for which such bank or an affiliate is
investment advisor or to which such bank provides other services and receives
reasonable compensation for such services, (d) certificates of deposit issued
by, or bankers' acceptances of, or time deposits or a deposit account with, any
bank, trust company, or national banking association incorporated or doing
business under the laws of the United States of America or one of the states
thereof, having a combined capital and surplus of at least $100,000,000 and
having a rating of "A" or better from the Keefe Bank Watch Service, (e)
commercial paper issued by companies in the United States which directly issue
their own commercial paper and which are doing business under the laws of the
United States of America or one of the states thereof and in each case having a
rating assigned to such commercial paper by a nationally recognized rating
organization in the United States of America equal to the highest rating
assigned by such organization, or (f) obligations of the type described in
clauses (a), (b), (d), or (e) above, purchased from any bank, trust company, or
banking association referred to in clause (d) above pursuant to repurchase
agreements obligating such bank, trust company, or banking association to
repurchase any such obligation not later than 30 days after the purchase of any
such obligation. Unless otherwise specified in writing by the Owner Trustee, all
such Permitted Investments shall mature not later than 30 days from the date of
purchase.
"Permitted Lien" has the meaning given to such term in Section 10 of the
Lease.
"Permitted Sublessee" means (a) any Permitted Air Carrier or (b) any
airframe or engine manufacturer, or Affiliate of such a manufacturer, who is
domiciled in the United States of America or a country listed on Exhibit E to
the Lease.
"Person" means any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
"Placement Agents" means Morgan Stanley & Co. Incorporated and Credit
Suisse First Boston.
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"Placement Agreement" means the Purchase Agreement dated August 6, 1998
among the Lessee and the Placement Agents.
"Prepayment Date" has the meaning given to such term in Section 6.02(b) of
the Indenture.
"Prepayment Price" has the meaning given to such term in Section 6.02(b)
of the Indenture.
"Purchase Agreement" means Bombardier Regional Aircraft Division Purchase
Agreement No. PA-0393 dated September 17, 1997, as amended, between the Company
and the Manufacturer (including all exhibits thereto, together with all letter
agreements entered into that by their terms constitute part of any such Purchase
Agreement).
"Purchase Agreement Assignment" means the Purchase Agreement and Engine
Warranties Assignment [N ____], dated as of even date with the Participation
Agreement, between Lessee and Owner Trustee.
"Purchase Price" means an amount equal to Lessor's Cost.
"Rating Agency" means Moody's or S&P, as the context requires.
"Record Date" means, with respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 15 for January 2
Payment Dates and June 15 for July 2 Payment Dates, whether or not such date is
a Business Day.
"Recourse Amount" has the meaning given to such term in Section 15.07 of
the Participation Agreement.
"Refinancing" means a non-recourse loan to the Lessor arranged pursuant to
Section 13.01 of the Participation Agreement.
"Register" has the meaning given to such term in Section 3.02 of the
Indenture.
"Registrar" has the meaning given to such term in Section 3.02 of the
Indenture.
"Registration Rights Agreement" means the Exchange and Registration Rights
Agreement, dated as of August 13, 1998, among the Placement Agents, FNBM, as
Pass-Through Trustee, and the Lessee.
"Registration Rights Event" has the meaning given to such term in the
Registration Rights Agreement.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and supplemented
and in effect from time to time.
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"Remaining Weighted Average Life" means on a given date with respect to
any Equipment Note the number of days equal to the quotient obtained by dividing
(i) the sum of each of the products obtained by multiplying (a) the amount of
each then remaining scheduled payment of principal of such Equipment Note by (b)
the number of days from and including such prepayment date to but excluding the
dates on which each such payment of principal is scheduled to be made; by (ii)
the then outstanding principal amount of such Equipment Note.
"Renewal Term" has the meaning given to such term in Section 13(a) of the
Lease.
"Rent" means Basic Rent and Supplemental Rent, collectively.
"Rent Payment Date" means each Payment Date during the Term.
"Replacement Aircraft" means any Aircraft of which a Replacement Airframe
is part.
"Replacement Airframe" means a Canadair Regional Jet Series 200ER series
aircraft or a comparable or improved model of such aircraft of the Manufacturer
(except Engines or engines from time to time installed thereon) which shall have
become subject to the Lease pursuant to Section 8 thereof.
"Replacement Closing Date" has the meaning given such term in Section 8(d)
of the Lease.
"Replacement Engine" means a CF34-3B1 Series 200 engine (or engine of the
same or another manufacturer of a comparable or an improved model and suitable
for installation and use on the Airframe), and which shall have become subject
to the Lease pursuant to Section 7(e) thereof.
"Responsible Officer" means, with respect to the Owner Trustee or the
Indenture Trustee, any officer in its Corporate Trust Administration, as the
case may be, designated by such Person to perform obligations under the
Operative Agreements, and with respect to any other party, any corporate officer
of a party who, in the normal performance of his or her operational
responsibilities, with respect to the subject matter of any covenant, agreement
or obligation of such party pursuant to any Operative Agreement, would have
responsibility for and knowledge of such matter and the requirements of any
Operative Agreement with respect thereto.
"S&P" means Standard & Poor's Ratings Group.
"SEC" means the Securities and Exchange Commission of the United States
and any successor agencies or authorities.
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"Section 1110 Person" means a Citizen of the United States who is an
air carrier holding a valid air carrier operating certificate issued pursuant
to 49 U.S.C. ch. 447 for aircraft capable of carrying 10 or more individuals.
"Secured Obligations" has the meaning specified in the Granting Clause of
the Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Series "A" or "Series A Equipment Notes" means the Equipment Notes issued
and designated as "Series A" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series A".
"Series "B" or "Series B Equipment Notes" means the Equipment Notes issued
and designated as "Series B" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series B".
"Series "C" or "Series C Equipment Notes" means the Equipment Notes issued
and designated as "Series C" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series C".
"Series "D" or "Series D Equipment Notes" means the Equipment Notes issued
and designated as "Series D" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series D".
"Specified Default" means (a) an event or condition described in Section
16(a), (f), (g) or (h) of the Lease that, after the giving of notice or lapse of
time, or both, would mature into an Event of Default, or (b) any Event of
Default.
"Specified Investments" means (a) direct obligations of the United States
of America or obligations fully guaranteed by the United States of America; (b)
any mutual fund the portfolio of which is limited to obligations of the type
described in clause (a), including any proprietary mutual fund of The First
National Bank of Maryland for which such bank or an affiliate is investment
advisor or to which such bank provides other services and receives reasonable
compensation for such services; (c) commercial paper rated A-1/P-1 by S&P and
Moody's, respectively or, if such ratings are unavailable, rated by any
nationally recognized rating organization in the United States equal to the
highest rating assigned by such rating organization; (d) 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
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Bankwatch, having maturities no later than 90 days following the date of such
investment; (e) overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers; or (f) overnight repurchase
agreements with respect to the securities described in clause (a) above entered
into with an office of a bank or trust company which is located in the United
States of America or any bank or trust company which is organized under the laws
of the United States or any state thereof and has capital, surplus and undivided
profits aggregating at least $500 million.
"Sublease" means any sublease agreement between the Lessee and a Permitted
Sublessee as permitted by Section 5(b) of the Lease.
"Subordination Agent" means The First National Bank of Maryland, a
national banking association, in its capacity as Subordination Agent.
"Subsequent Renewal Term" has the meaning given to such term in Section
13(a) of the Lease.
"Supplemental Rent" means (a) all amounts, liabilities and obligations
which the Lessee assumes or agrees to perform or pay under the Lease or under
the Participation Agreement or Tax Indemnity Agreement or any other Operative
Agreement to the Lessor, the Owner Participant, the Indenture Trustee, the
Subordination Agent, any Liquidity Provider or others, including payments of
Termination Value, EBO Price, and amounts calculated by reference to Termination
Value, any amounts of Make-Whole Premium payable under the Indenture to the
extent provided in Section 3(c) of the Lease, and all amounts required to be
paid by Lessee under the agreements, covenants, and indemnities contained in the
Lease or in the Participation Agreement or the Tax Indemnity Agreement or any
other Operative Agreement, but excluding Basic Rent, and (b) all amounts that
the Owner Trustee is obligated to pay in accordance with clause (b) of the last
paragraph of Section 2.04 of the Indenture.
"Tax" or "Taxes" has the meaning set forth in Section 8.01(a) of the
Participation Agreement.
"Tax Indemnitee" means each of Trust Company, individually and as Owner
Trustee, the Owner Participant and the Indenture Trustee.
"Tax Indemnity Agreement" the Tax Indemnity Agreement to be entered into
by the Lessee and the Owner Participant on the Delivery Date.
"Term" has the meaning given to such term in Section 3(a) of the Lease.
"Termination Date" means each date listed in the column entitled
"Termination Date" in Exhibit D to the Lease.
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<PAGE>
"Termination Value" means (a) as of any Termination Date during the Basic
Term, the amount determined as set forth in Exhibit C to the Lease for that
Termination Date, and (b) during any Renewal Term, the amount for the date
involved, determined in accordance with Section 13(a) of the Lease, in either
case adjusted as required by Section 3(d) of the Lease.
"Transaction Costs" means those costs and expenses set forth in Section
8.01(a) of the Participation Agreement to be borne by the Owner Participant.
"Transportation Code" means Title 49 of the United States Code, subtitle
VII, as amended and in effect on the date of the Lease or as subsequently
amended, or any successor or substituted legislation at the time in effect and
applicable, and the regulations promulgated pursuant thereto.
"Treasury 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 on 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 public securities markets, (i) one maturing as close as possible to, but
earlier than, the Average Life Date of such Certificate and (ii) 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 Premium will be the
third Business Day prior to the applicable prepayment 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 prepayment date.
"Trust Agreement" means the Trust Agreement [N____] dated as of _________
__, between the Owner Participant and Trust Company.
"Trust Company" means First Union Trust Company, National Association.
"Trust Estate" means the Lessor's Estate.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
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<PAGE>
"Trust Indenture Estate" means all estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interest, and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments and any and all other rights of the
Owner Trustee or the Owner Participant expressly reserved to the Owner Trustee
or the Owner Participant pursuant to the Indenture.
"United States", "U.S." or "US" means the United States of America.
"U.S. Person" means a Person described in ss. 7701(a)(30) of the Code.
"Warranty Bill of Sale" means the full warranty bill of sale covering the
Aircraft (and specifically referring to each Engine) executed by the owner of
the Aircraft in favor of the Owner Trustee and to be dated the Delivery Date.
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<PAGE>
Exhibit A to
Trust Indenture and
Security Agreement
Indenture Supplement No. __
This Indenture Supplement No. __ dated ____________, 199_, of First Union
Trust Company, National Association, a national banking association, not in its
individual capacity but solely as owner trustee (herein called the "Owner
Trustee") under the Trust Agreement [N_____] dated as of ________________, (the
"Trust Agreement") between First Union Trust Company, National Association, and
the Owner Participant named therein,
WITNESSETH:
WHEREAS, the Indenture provides for the execution and delivery of this
Indenture Supplement which shall particularly describe the Aircraft included in
the property covered by the Indenture.
WHEREAS, the Trust Indenture and Security Agreement [N_____] dated as of
__________ (the "Indenture") between the Owner Trustee and The First National
Bank of Maryland (herein called the "Indenture Trustee") provides for the
execution and delivery of an Indenture Supplement substantially in the form of
this Indenture Supplement No. __, which Supplement shall particularly describe
the Aircraft included in the Trust Indenture Estate, and shall specifically
mortgage such Aircraft to the Indenture Trustee.
WHEREAS, the Indenture relates to the Aircraft and the Engines described
in the following paragraph and a counterpart of the Indenture is attached to and
made a part of this Indenture Supplement No. __, and this Indenture Supplement
No. __, together with such attachment, is being filed for recordation on or
promptly after the date of this Supplement No. __ with the Federal Aviation
Administration as one document.
NOW, THEREFORE, to secure the prompt payment of the principal of and
Make-Whole Premium, if any, and interest on, and all other amounts due with
respect to, all Outstanding Equipment Notes under the Indenture and all other
amounts due hereunder and the performance and observance by the Owner Trustee of
all the agreements, covenants and provisions for the benefit of the Holders and
contained in the Indenture, the Participation Agreement and the Equipment Notes,
and the prompt payment of any and all amounts from time to time owing under the
Participation Agreement by the Owner Trustee or the Lessee to the Holders and
the Indenture
<PAGE>
Indemnitees and for the uses and purposes and subject to the terms and
provisions of the Indenture and the Equipment Notes, and in consideration of the
premises and of the covenants contained in the Indenture, and of the purchase of
the Equipment Notes by the Holders, 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 of which is hereby acknowledged, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged, granted a
security interest in, and confirmed, and does hereby grant, bargain, sell,
assign, transfer, convey, mortgage, pledge, grant a security interest in, and
confirm, unto the Indenture Trustee, its successors and assigns, in trust for
the equal and ratable security and benefit of the Holders, in the trust created
by the Indenture, and subject to all of the terms, conditions, provisions and
limitations set forth in the Indenture, a first priority security interest in
and mortgage lien on all estate, right, title and interest of the Owner Trustee
in, to and under the following described property:
AIRFRAME
One Airframe identified as follows:
FAA Manufacturer's
Registration Serial
Manufacturer Model Number Number
- - ------------ ----- ------------ --------------
Canadair CL-600-2B19 N___ ___________
together with all appliances, equipment, instruments and accessories (including,
without limitation, radio and radar) from time to time belonging thereto, owned
by the Owner Trustee and installed in or appurtenant to said aircraft.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more rated takeoff
horsepower or the equivalent thereof, identified as follows:
Manufacturer's
Serial
Manufacturer Model Number
- - ------------ ----- --------------
General Electric CF34-3B1 _____________
_____________
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<PAGE>
together with all equipment and accessories belonging thereto, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to such
aircraft engines.
Together with all substitutions, replacements and renewals of the property
described above, and all property owned by the Owner Trustee which shall
hereafter become physically attached to or incorporated in the property
described above, 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 Holders, in the trust created by the Indenture, and
subject to all of the terms, conditions, provisions and limitations set forth in
the Indenture, all of the estate, right, title and interest of the Owner Trustee
in, to and under the Lease Supplement (other than Excepted Payments, if any)
covering the property described above.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, for the benefit and security of
the Holders 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 thereof, 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.
-3-
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Indenture Supplement
No. 1 to be duly executed as of the date first written above by one of its
officers thereunto duly authorized.
First Union Trust Company, National
Association, not in its individual capacity,
except as specifically set forth herein, but
solely as Owner Trustee
By: _________________________________________
Name:
Title:
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<PAGE>
Exhibit B
to
Trust Indenture and
Security Agreement
[Form of Certificate]
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.
No. _________ $____________
EQUIPMENT TRUST EQUIPMENT NOTE [N_____]
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, not in its individual
capacity but solely as Owner Trustee under Trust Agreement [N_____] dated as of
______________
SERIES _____
Interest Rate Maturity
___% ____________, 2___
First Union Trust Company, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee (herein
in such capacity called the "Owner Trustee") under that certain Trust Agreement
[N_____] dated as of __________, between the Owner Participant named therein and
(herein as such Trust Agreement may be amended or supplemented from time to time
called the "Trust Agreement"), hereby promises to pay to The First National Bank
of Maryland, as Subordination Agent, or its registered assigns, the principal
sum of ______________________ ________________ Dollars, together with interest
on the principal outstanding from time to time, semiannually on each January 2
and July 2, on such principal sum at the rate per annum set forth above;
provided that, under certain circumstances including, in the event a
Registration Event (as defined in the Indenture referred to below) does not
occur on or prior to the date (the "Increase Date") required pursuant to the
Registration Rights Agreement (as defined in the Indenture
<PAGE>
referred to below), such interest rate shall be increased by 0.5% from and
including the Increase Date to but excluding the date such Registration Event
does occur. The principal amount of this Equipment Note shall be payable in
installments on the dates and hereto in amounts set forth in Schedule I hereto.
Notwithstanding the foregoing, the final payment made on this Equipment Note
shall be in an amount sufficient to discharge in the full the unpaid principal
amount and all accrued and unpaid interest on, and any other amounts due under,
this Equipment Note. Notwithstanding anything to the contrary contained herein,
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.
This Equipment Note shall bear interest at the Past Due Rate on any
principal hereof and on any other amount payable hereunder or under the
Indenture which shall not be paid in full when due (whether at stated maturity,
by acceleration, by mandatory prepayment or otherwise), for the period from and
including the date thereof to but excluding the date the same is paid in full,
payable from time to time on demand of the Indenture Trustee.
Principal and interest and other amounts due hereunder shall be payable at
the office or agency of The First National Bank of Maryland (the "Indenture
Trustee") maintained for such purpose in immediately available funds prior to
12:00 noon. (New York time) on the due date thereof and the Indenture Trustee
shall remit all such amounts received by it to the Holders at such account or
accounts at such financial institution or institutions as the Holders shall have
designated to the Indenture Trustee in writing, in immediately available funds,
such payment to be made if the payment was received prior to 12:00 noon, New
York time by the Indenture Trustee on any Business Day, by 1 p.m. New York time
on such Business Day; otherwise, the Indenture Trustee shall make payment
promptly, but not later than 11:00 A.M. New York time on the next succeeding
Business Day; provided that, at the option of the Indenture Trustee or its
Paying Agent, interest may be paid by mailing a check therefor payable to or
upon the written order of the registered holder entitled thereto at his last
address as it appears on the Register. If any amount payable under this
Certificate, or under the Indenture, falls due on a day that is not a Business
Day, then such sum shall be payable on the next succeeding Business Day, without
(provided that payment is made on such next succeeding Business Day) additional
interest thereon for the period of such extension.
First Union Trust Company, National Association and The First National
Bank of Maryland are not acting individually hereunder, but solely as Owner
Trustee and Indenture Trustee, respectively.
Any Person, other than the Subordination Agent and any Pass-Through
Trustee, who is acquiring the Equipment Notes will be deemed to represent and
warrant that (i) no assets of an employee benefit plan subject to Title I of
ERISA or an individual
-2-
<PAGE>
retirement account or plan subject to Section 4975 of the Code, or any trust
established under any such plan or account, have been used to acquire or hold
any of the Equipment Notes, or (ii) that one or more administrative or statutory
exemptions from the prohibited transaction rules under Section 406 of ERISA and
Section 4975 of the Code applies to its purchase and holding of the Equipment
Notes such that its purchase and holding of the Equipment Notes will not result
in a non-exempt prohibited transaction under Section 406 of ERISA and Section
4975 of the Code.
This Equipment Note is one of a duly authorized issue of Equipment Notes
issued under the Trust Indenture and Security Agreement [N______] dated as of
___________ (the "Indenture") between the Owner Trustee and the Indenture
Trustee. Capitalized terms not otherwise defined herein shall have the meanings
given to them in the Indenture. Reference is made to the Indenture and all
supplements and amendments thereto (a copy of which is on file with the
Indenture Trustee at its principal corporate trust office) for a more complete
statement of the terms and provisions thereof, including a statement of the
properties conveyed, pledged and assigned thereby, the nature and extent of the
security, the respective rights of the Owner Trustee, the Owner Participant, the
Lessee, the Indenture Trustee and the Holders, and the terms upon which the
Equipment Notes are, and are to be, executed and delivered, to all of which
terms and conditions in the Indenture each Holder hereof agrees by its
acceptance of this Equipment Note.
This Equipment Note is subject to redemption as provided in Section 6.02
of the Indenture but not otherwise. This Equipment Note is also subject to
exchange and to purchase by the Owner Participant or the Owner Trustee as
provided in Section 8.02 of the Indenture but not otherwise. In addition, this
Equipment Note may be accelerated as provided in Section 7.02 of the Indenture.
Except as expressly provided in the Indenture, all payments of principal,
Make-Whole Premium, if any, and interest and other amounts to be made to the
Holder hereof by or at the behest of the Owner Trustee hereunder or under the
Indenture shall be made only from the income and proceeds from the Lessor's
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
Lessor's Estate to the extent included in the Trust Indenture Estate to enable
the Indenture Trustee to make such distributions in accordance with the terms of
the Indenture; provided that under the Lease, the Lessee is obligated to pay or
cause to be paid, to the extent such payments are not required to be made from
the assets subject to the Lien of this Indenture or the income and proceeds
received by the Indenture Trustee therefrom, any net loss arising from the
investment of funds held by the Indenture Trustee which but for an Event of
Default would be payable to Lessee, and each Holder hereof, by its acceptance of
this Equipment Note, agrees that it will (except as aforesaid) look solely to
the income and proceeds from the Trust Indenture Estate to the extent available
for distribution to the Holder hereof as provided above and that neither the
Owner Participant, nor the Owner Trustee, nor First Union Trust Company,
National Association, nor the Indenture Trustee is personally liable to the
Holder hereof for any amounts payable or
-3-
<PAGE>
any liability under this Equipment Note or under the Indenture, except as
expressly provided in the Indenture, in the case of First Union Trust Company,
National Association, the Owner Trustee and the Indenture Trustee.
If, in accordance with and subject to the satisfaction of the conditions
set forth in Section 5.10 of the Participation Agreement, the Lessee shall
assume all of the obligations of the Owner Trustee hereunder, under the
Equipment Notes and all other Operative Agreements, the Owner Participant and
the Owner Trustee shall (except for prior acts) be released and discharged from
any further obligations hereunder and under the Equipment Notes and all other
Operative Agreements (except any obligations that have accrued prior to such
assumption).
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 A and Series
B Equipment Notes](2) [Series A, Series B, and Series C Equipment Notes](3) and
this Equipment Note is issued subject to such provisions. The Holder of this
Certificate, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Indenture Trustee on such Holder's
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 such Holder's attorney-in-fact for such purpose.*
This Equipment Notes shall be construed in accordance with and governed by
the laws of the State of New York.
This Equipment Note shall not be secured by or be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose unless
authenticated by the Indenture Trustee as evidenced by the manual signature of
one of its authorized officers on the certificate below.
- - ----------
(1) To be inserted in the case of a Series B Equipment Note.
(2) To be inserted in the case of a Series C Equipment Note.
(3) To be inserted in the case of a Series D Equipment Note.
* To be inserted for each Equipment Note other than any Series A Equipment
Note.
-4-
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note to be
duly executed in its corporate name by its officer thereunto duly authorized.
Dated: _________________ FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION,
not in its individual capacity, but
solely as Owner Trustee
By: ___________________________________
Name:
Title:
-5-
<PAGE>
[FORM OF INDENTURE TRUSTEE'S EQUIPMENT NOTE
OF AUTHENTICATION]
This is one of the Equipment Notes referred to in the within mentioned
Indenture.
Dated: _______________ THE FIRST NATIONAL BANK OF MARYLAND, as
Indenture Trustee
By: ___________________________________
Name:
Title:
<PAGE>
Schedule I to Certificate
Principal Amortization
Payment Date Principal Amount
- - ------------ ----------------
<PAGE>
Exhibit A-4
Form of Trust Agreement
================================================================================
TRUST AGREEMENT [N___ML]
Dated as of ______________, 199__
between
_________________________,
as Owner Participant
and
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
_________________________,
One Canadair Regional Jet Series 200ER Aircraft
N___ML
================================================================================
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND TERMS...................................1
Section 1.01. Definitions.............................................1
ARTICLE II AUTHORITY TO EXECUTE CERTAIN OPERATIVE AGREEMENTS;
DECLARATION OF TRUST....................................2
Section 2.01. Authority to Execute Documents..........................2
Section 2.02. Declaration of Trust....................................2
[Section 2.03. Limitations on Control, Exceptions, Purpose.............3
(a) Limitations on Control............................3
(b) Certain Exceptions................................3
(c) Purpose...........................................4
ARTICLE III ACCEPTANCE AND DELIVERY OF AIRCRAFT; ISSUANCE OF LOAN
CERTIFICATES; LEASE OF AIRCRAFT; REPLACEMENT............4
Section 3.01. Authorization...........................................4
Section 3.02. Conditions Precedent....................................5
Section 3.03. Postponement of Delivery Date...........................5
Section 3.04. Authorization in Respect of a Replacement Airframe
or Replacement Engines..................................6
Section 3.05. Trust Agreement Remaining in Full Force and Effect......7
Section 3.06. Authorization in Respect of Return of an Engine.........7
ARTICLE IV RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME
FROM THE TRUST ESTATE...................................7
Section 4.01. Distribution of Payments................................7
Section 4.02. Method of Payments......................................8
ARTICLE V DUTIES OF THE OWNER TRUSTEE.............................9
Section 5.01. Notice of Event of Default..............................9
Section 5.02. Action Upon Instructions................................9
Section 5.03. Indemnification.........................................9
Section 5.04. No Duties Except as Specified in Trust Agreement
or Instructions........................................10
Section 5.05. No Action Except Under Specified Documents
or Instructions........................................10
ARTICLE VI THE OWNER TRUSTEE......................................11
Section 6.01. Acceptance of Trusts and Duties........................11
Section 6.02. Absence of Certain Duties..............................11
Section 6.03. No Representations or Warranties as to Certain Matters.12
Section 6.04. No Segregation of Monies Required; Investment Thereof..12
Section 6.05. Reliance Upon Certificates, Counsel and Agents.........13
Section 6.06. Not Acting in Individual Capacity......................13
Section 6.07. Fees; Compensation.....................................13
Section 6.08. Tax Returns............................................14
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<PAGE>
PAGE
----
ARTICLE VII INDEMNIFICATION OF THE OWNER TRUSTEE BY THE OWNER
PARTICIPANT............................................14
Section 7.01. The Owner Participant to Indemnify the Owner Trustee...14
ARTICLE VIII [RESERVED]........................................15
ARTICLE IX SUCCESSOR OWNER TRUSTEES; CO-TRUSTEES..................15
Section 9.01. Resignation of the Owner Trustee; Appointment of
Successor..............................................15
Section 9.02. Co-Trustees and Separate Trustees......................16
ARTICLE X SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT AND
OTHER DOCUMENTS........................................18
Section 10.01. Supplements and Amendments.............................18
Section 10.02. Discretion as to Execution of Documents................18
Section 10.03. Absence of Requirements as to Form.....................18
Section 10.04. Distribution of Documents..............................19
ARTICLE XI MISCELLANEOUS..........................................19
Section 11.01. Termination of Trust Agreement.........................19
Section 11.02. The Owner Participant Has No Legal Title in Trust
Estate.................................................19
Section 11.03. Assignment, Sale, etc..................................19
Section 11.04. Trust Agreement for Benefit of Certain Parties Only....20
Section 11.05. Notices................................................20
Section 11.06. Severability...........................................20
Section 11.07. Waivers, etc...........................................20
Section 11.08. Counterparts...........................................20
Section 11.09. Binding Effect, etc....................................20
Section 11.10. Headings; References...................................20
Section 11.11. Governing Law..........................................21
Section 11.12. Administration of Trust................................21
-ii-
<PAGE>
TRUST AGREEMENT [N___ML]
This TRUST AGREEMENT [N___ML], dated as of ________________, 199_
between _________________________, a ________________________ (together with its
successors and permitted assigns, the "Owner Participant"), and FIRST UNION
TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, in its
individual capacity only as expressly stated herein and otherwise not in its
individual capacity but solely as trustee hereunder (herein in such capacity
with its permitted successors and assigns called the "Owner Trustee").
W I T N E S S E T H :
ARTICLE I
DEFINITIONS AND TERMS
Section 1.01. Definitions. Unless the context shall otherwise
require and except as contained in this Section 1.01, the capitalized terms used
herein shall have the respective meanings assigned thereto in the Lease (as
hereinafter defined) for all purposes hereof. All definitions contained in this
Section 1.01 shall be equally applicable to both the singular and plural forms
of the terms defined. For all purposes of this Trust Agreement the following
terms shall have the following meanings:
"Excepted Property" has the meaning given to such term in the Trust
Indenture.
"First Union" means First Union Trust Company, National Association,
a national banking association.
"Lease" means Lease Agreement [N___ML] dated as of _____________,
199_, between the Lessor and the Lessee, as the same may be modified, amended or
supplemented from time to time. The term "Lease" shall also include each Lease
Supplement entered into pursuant to the terms of the Lease.
"Lessee" means Midway Airlines Corporation, a Delaware corporation,
and its successors and permitted assigns, as the lessee under the Lease.
"Owner Participant" means the Person identified as such in the
introduction hereto.
"Owner Trustee" means the Person identified as such in the
introduction hereto.
<PAGE>
"Participation Agreement" means Participation Agreement [N___ML],
dated as of _______________, 199_, among the Lessee, the Owner Participant, the
Lessor, the Indenture Trustee, the Pass Through Trustee and the Subordination
Agent, as the same may be amended, modified or supplemented from time to time.
"Trust Agreement" means this Trust Agreement [N___ML] dated as of
________________, 199_ between First Union and the Owner Participant, as the
same may be amended, modified or supplemented from time to time.
"Trust Estate" means all right, title and interest of the Owner
Trustee in and to the Aircraft, any Engines and the Operative Agreements (except
the Tax Indemnity Agreement) including, without limitation, all amounts of Rent,
insurance proceeds and requisition, indemnity or other payments of any kind
payable pursuant to the terms of such agreements for or with respect to the
Aircraft, including, without limitation, any and all payments and proceeds
received by the Owner Trustee after the termination of the Lease with respect to
the Aircraft resulting from the sale, lease or other disposition thereof and all
other property identified in the Granting Clauses of the Trust Indenture;
subject, however, to the provisions of and the Lien created by the Trust
Indenture. Notwithstanding the foregoing, "Trust Estate" shall not include any
Excepted Property.
"Trust Indenture" means Trust Indenture and Security Agreement
[N___ML], dated as of ____________, 199_, between the Owner Trustee and the
Indenture Trustee, as the same may be amended, modified, or supplemented from
time to time. The term "Trust Indenture" shall also include each Indenture
Supplement entered into pursuant to the terms of the Trust Indenture.
ARTICLE II
AUTHORITY TO EXECUTE CERTAIN OPERATIVE AGREEMENTS;
DECLARATION OF TRUST
Section 2.01. Authority to Execute Documents. The Owner Participant
hereby authorizes and directs the Owner Trustee (i) to execute and deliver the
Participation Agreement, the Lease, the Lease Supplement covering the Aircraft,
the Trust Indenture, the Indenture Supplement covering the Aircraft, the Loan
Certificates and any other agreements, instruments or documents, to which the
Owner Trustee is a party in the respective forms thereof in which delivered from
time to time by the Owner Participant to the Owner Trustee for execution and
delivery and (ii) subject to the terms hereof, to exercise its rights (upon
instructions received from the Owner Participant) and perform its duties under
the documents referred to in this Section in accordance with the terms thereof.
Section 2.02. Declaration of Trust. The Owner Trustee hereby
declares that it will hold the Trust Estate upon the trusts hereinafter set
forth for the use and
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<PAGE>
benefit of the Owner Participant, subject, however, to the provisions of and the
Lien created under the Trust Indenture.
[Section 2.03. Limitations on Control, Exceptions, Purpose.
So long as the Owner Participant is not a "citizen of the United States"
(a "United States Citizen") as defined in Section 40102(a)(15) of the Act, the
Owner Participant and Owner Trustee agree to comply with the following terms and
conditions:
(a) Limitations on Control. Notwithstanding any other provision of
this Trust Agreement, but subject to paragraph (b) of this Section 2.03,
the Owner Participant will have no rights or powers to direct, influence
or control the Owner Trustee in the performance of the Owner Trustee's
duties under this Trust Agreement in connection with matters involving the
ownership and operation of the Aircraft by the Owner Trustee. In all
matters involving the ownership and operation of the Aircraft by the Owner
Trustee, the Owner Trustee shall have absolute and complete discretion in
connection therewith and shall be free of any kind of influence or control
whatsoever by the Owner Participant, and the Owner Trustee shall exercise
its duties under this Trust Agreement in connection with matters involving
the ownership and operation of the Aircraft by the Owner Trustee as it, in
its discretion, shall deem necessary to protect the interests of the
United States, notwithstanding any countervailing interest of any foreign
power which, or whose citizens, may have a direct or indirect interest in
the Owner Participant and any such action by the Owner Trustee shall not
be considered malfeasance or in breach of any obligation which the Owner
Trustee might otherwise have to the Owner Participant; provided, however,
that subject to the foregoing limitations, the Owner Trustee shall
exercise its discretion in all matters involving the ownership and
operation of the Aircraft by the Owner Trustee with due regard for the
interests of the Owner Participant. In exercising any of its rights and
duties under this Trust Agreement in connection with matters which may
arise not relating to the ownership and operation of the Aircraft, the
Owner Trustee shall be permitted to seek the advice of the Owner
Participant before taking, or refraining from taking, any action with
respect thereto. The Owner Trustee shall notify the Owner Participant of
its exercise of rights and duties under this Trust Agreement in connection
with matters involving the ownership and operation of the Aircraft by the
Owner Trustee.
(b) Certain Exceptions. Subject to the requirements of the preceding
paragraph (a), the Owner Trustee agrees that it will not, without the
prior written consent of the Owner Participant, (i) sell, mortgage, pledge
or otherwise dispose of the Aircraft or other assets held in the Trust
Estate relating thereto except as otherwise expressly provided for herein,
or (ii) amend the Lease, any
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Permitted Sublease or other Operative Agreements or give any consents
thereunder.
(c) Purpose. The purpose of this Section 2.03 is to give the Owner
Trustee the power to manage and control the Aircraft with respect to
matters involving the ownership and operation of the Aircraft by the Owner
Trustee in the event that the Owner Trustee becomes the owner of the
Aircraft or is deemed to be the owner of the Aircraft pursuant to
Applicable Law so as to assure that (i) the Aircraft shall be controlled
with respect to such matters by a United States Citizen, (ii) the Owner
Participant shall have no power to influence or control the exercise of
the Owner Trustee's authority with respect to such matters and (iii) the
Owner Trustee shall be able to give the affidavit required by Section
47.7(c)(2)(iii) of the Federal Aviation Regulations, 14 C.F.R.
47.7(c)(2)(iii). Section 2.03 shall be construed in furtherance of the
foregoing purpose.]*
ARTICLE III
ACCEPTANCE AND DELIVERY OF AIRCRAFT; ISSUANCE OF
LOAN CERTIFICATES; LEASE OF AIRCRAFT; REPLACEMENT
Section 3.01. Authorization. (a) The Owner Participant hereby
authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for
the benefit of the Owner Participant that, on the Delivery Date it will, subject
to due compliance with the terms of Section 3.02 hereof:
(i) authorize a representative or representatives of the Owner
Trustee to accept delivery of the Aircraft pursuant to the
Participation Agreement;
(ii) execute and deliver each of the Operative Agreements to
which the Owner Trustee is to be a party;
(iii) purchase the Aircraft pursuant to the Participation
Agreement;
(iv) pay an amount equal to Lessor's Cost to, or at the
direction of, the Lessee pursuant to the Participation Agreement in
consideration of the sale of the Aircraft to the Owner Trustee
thereunder;
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* Section 2.03 to be included only if Owner Participant is not a U.S.
citizen.
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(v) issue to the Loan Participants one or more Loan
Certificates in respect of the Aircraft in the amounts and otherwise
as provided in the Participation Agreement and the Trust Indenture;
(vi) execute and deliver the financing statements contemplated
by Sections 3.01(m) and (n) of the Participation Agreement;
(vii) make application to the FAA for registration of the
Aircraft in the name of the Owner Trustee;
(viii) take such other action as may reasonably be required of
the Owner Trustee hereunder or under the Participation Agreement,
the Trust Indenture or the Lease to effectuate the transactions
contemplated thereby; and
(ix) execute and deliver all such other instruments, documents
or certificates and take all such other actions in accordance with
the directions of the Owner Participant, as the Owner Participant
may reasonably deem necessary or advisable in connection with the
transactions contemplated hereby and by the other Operative
Agreements.
(b) The Owner Participant hereby authorizes and directs the Owner
Trustee to, and the Owner Trustee agrees for the benefit of the Owner
Participant that it will:
(i) immediately after the delivery of the Aircraft to the
Owner Trustee, cause the Aircraft to be leased to Lessee under the
Lease; and
(ii) execute and deliver a Lease Supplement and an Indenture
Supplement, in each case covering the Aircraft.
Section 3.02. Conditions Precedent. The right and obligation of the
Owner Trustee to take the action required by Section 3.01 hereof shall be
subject to the following conditions precedent:
(a) the Owner Participant shall have made the full amount of its
Commitment with respect to the Aircraft available to the Owner Trustee, in
immediately available funds, in accordance with Section 2.01(c) of the
Participation Agreement; and
(b) the terms and conditions of Section 3.01 of the Participation
Agreement shall have been waived by the Owner Participant or complied with
in a manner satisfactory to the Owner Participant.
Section 3.03. Postponement of Delivery Date. The Owner Trustee,
without necessity of further instructions from the Owner Participant, is hereby
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authorized and directed by the Owner Participant to take all action specified in
Section 2.01(a) of the Participation Agreement as action to be taken by the
Owner Trustee.
Section 3.04. Authorization in Respect of a Replacement Airframe or
Replacement Engines. The Owner Trustee agrees for the benefit of the Owner
Participant that, upon the receipt by a Responsible Officer of Owner Trustee of
an authorization and direction from the Owner Participant, it will, in the event
of a Replacement Airframe or Replacement Engines, if any, being substituted
pursuant to Section 8(a)(i) of the Lease, or a Replacement Engine being
substituted pursuant to Section 7(e) of the Lease, subject to due compliance
with the terms of Sections 8(d) and 7(e) of the Lease, as the case may be:
(a) to the extent not previously accomplished by a prior
authorization, authorize a representative or representatives of the Owner
Trustee to accept delivery of the Replacement Airframe or Replacement
Engines, if any, or the Replacement Engine;
(b) accept from Lessee or other vendor of the Replacement Airframe
or Replacement Engines, if any, or the Replacement Engine, a bill of sale
or bills of sale (if tendered) and the invoice, if any, with respect to
the Replacement Airframe and Replacement Engines, if any, or the
Replacement Engine being furnished pursuant to Section 8(a)(ii) or 7(e) of
the Lease;
(c) in the case of a Replacement Airframe, make application to the
FAA (or the Aeronautical Authority of any jurisdiction other than the
United States of America in which the Replacement Airframe is then
registered in accordance with the terms of the Lease) for registration in
the name of the Owner Trustee of the Aircraft of which such Replacement
Airframe is a part;
(d) execute and deliver a Lease Supplement and an Indenture
Supplement covering (i) the Aircraft of which such Replacement Airframe is
part of and, (ii) such Replacement Engine, as the case may be;
(e) transfer its interest in (without recourse except as to
obligations in respect of Lessor's Liens) and to the Airframe and Engines
(if any) or the Engine being replaced to or at the direction of Lessee;
(f) request in writing that the Indenture Trustee execute and
deliver to Lessee appropriate instruments to release the Airframe or
Engines (or engines) being replaced from the Lien created under the Trust
Indenture and release the Assignment of Warranties (solely with respect to
such replaced Airframe or Engines, if any) from the assignment and pledge
under the Trust Indenture; and
(g) take such further action as may be contemplated by Sections 8(d)
or 7(e) of the Lease, as the case may be.
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Section 3.05. Trust Agreement Remaining in Full Force and Effect. In
the event of the substitution of a Replacement Airframe for the Airframe or the
substitution of a Replacement Engine for any Engine or engine all provisions of
this Trust Agreement relating to such replaced Airframe or Engine or engine
shall be applicable to such Replacement Airframe or Replacement Engine, with the
same force and effect as if such Replacement Airframe or Replacement Engine were
the same airframe, engine or propeller as the Airframe or Engine being replaced
but for the Event of Loss with respect to such Airframe or Engine.
Section 3.06. Authorization in Respect of Return of an Engine. The
Owner Trustee agrees for the benefit of the Owner Participant that, upon the
receipt of an authorization and direction from the Owner Participant, it will,
in the event of an engine being transferred to the Owner Trustee pursuant to
Section 12(b) of the Lease, subject to due compliance with the terms of such
Section 12(b):
(a) accept from Lessee or other vendor the bill of sale contemplated
by such Section 12(b) with respect to such engine being transferred to the
Owner Trustee;
(b) transfer its right, title and interest in (without recourse or
warranty except a warranty against Lessor's Liens) and to an Engine to or
at the direction of Lessee as contemplated by such Section 12(b); and
(c) request in writing that the Indenture Trustee execute and
deliver to Lessee appropriate instruments to release the Engine being
transferred to Lessee pursuant to such Section 12(b) from the Lien of the
Trust Indenture and to release Assignment of Warranties (solely with
respect to such Engine) from the assignment and pledge under the Trust
Indenture.
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE TRUST ESTATE
Section 4.01. Distribution of Payments. (a) Payments to the
Indenture Trustee. Until the Trust Indenture shall have been terminated pursuant
to Section 14.01 thereof or until the Aircraft shall have been released from the
Lien created under the Trust Indenture pursuant to the terms thereof, all Basic
Rent, Supplemental Rent, insurance proceeds and requisition, indemnity or other
payments of any kind included in the Trust Estate (it being understood that
Excepted Property is not part of the Trust Estate) shall be payable directly to
the Indenture Trustee (and if any of the same are received by the Owner Trustee
shall upon receipt be paid over to the Indenture Trustee without deduction,
set-off or adjustment of any kind) for distribution in accordance with the
provisions of Article V of the Trust Indenture.
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(b) Payments to the Owner Trustee; Other Parties. Any payment of the
type required to be paid to the Indenture Trustee referred to in paragraph (a)
of this Section 4.01 received by the Owner Trustee pursuant to the provisions of
Article V of the Trust Indenture and any other amounts received as part of the
Trust Estate and for the application or distribution of which no provision is
made herein, shall be distributed forthwith upon receipt by the Owner Trustee in
the following order of priority: first, so much of such payment as shall be
required to pay or reimburse the Owner Trustee for any fees or expenses not
otherwise paid or reimbursed as to which the Owner Trustee is entitled to be so
paid or reimbursed pursuant to the provisions hereof or of the Trust Indenture
shall be retained by the Owner Trustee; and second, the balance, if any, shall
be paid to the Owner Participant.
(c) Excepted Property. Any Excepted Property received by the Owner
Trustee shall be paid by the Owner Trustee to the Person to whom such Excepted
Property is payable under the provisions of the Tax Indemnity Agreement, the
Participation Agreement or the Lease.
Section 4.02. Method of Payments. The Owner Trustee shall make
distributions or cause distributions to be made to (i) the Owner Participant
pursuant to this Article IV by transferring by wire transfer in immediately
available funds the amount to be distributed to such account or accounts of the
Owner Participant as it may designate from time to time by written notice to the
Owner Trustee (and the Owner Trustee shall use reasonable efforts to cause such
funds to be transferred by wire transfer on the same day as received, but in any
case not later than the next succeeding Business Day), and (ii) the Indenture
Trustee pursuant to this Article IV by paying the amount to be distributed to
the Indenture Trustee in the manner specified in the Trust Indenture; provided,
however, that the Owner Trustee shall use its best efforts to invest overnight,
for the benefit of the Owner Participant, in investments that would be permitted
by Section 15 of the Lease (but only to the extent such investments are
available and, if such investments are not available, then in such other
investments available to the Owner Trustee which, after consultation with the
Owner Participant, the Owner Participant shall direct), all funds not
transferred by the Owner Trustee by wire transfer on the same day as they were
received. Notwithstanding the foregoing but subject always to the provisions of
and Lien created by the Trust Indenture, the Owner Trustee will, if so requested
by the Owner Participant by written notice, pay any and all amounts payable by
the Owner Trustee hereunder to the Owner Participant either (i) by crediting, or
causing the Indenture Trustee to credit, such amount or amounts to an account or
accounts maintained by the Owner Participant with the Owner Trustee or the
Indenture Trustee, as the case may be, in immediately available funds, or (ii)
by mailing, or causing the Indenture Trustee to mail, an official bank check or
checks in such amount or amounts payable to the Owner Participant at such
address as the Owner Participant shall have designated in writing to the Owner
Trustee.
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<PAGE>
ARTICLE V
DUTIES OF THE OWNER TRUSTEE
Section 5.01. Notice of Event of Default. If the Owner Trustee shall
have knowledge of an Event of Default or an Indenture Event of Default, the
Owner Trustee shall give to the Owner Participant and the Lessee prompt
telephonic or telecopied notice thereof followed by prompt confirmation thereof
by certified mail, postage prepaid. Subject to the terms of Section 5.03, the
Owner Trustee shall take such action or shall refrain from taking such action,
not inconsistent with the provisions of the Operative Agreements, with respect
to such Event of Default or Indenture Event of Default as the Owner Trustee
shall be directed in writing by the Owner Participant. For all purposes of this
Trust Agreement and the Lease, the Owner Trustee shall not be deemed to have
knowledge of an Event of Default or an Indenture Event of Default unless
notified in writing thereof in the manner and at the address set forth in
Section 11.05 or unless an officer in the Corporate Trust Administration
Department who has responsibility for, or familiarity with, the transactions
contemplated hereunder, under the Participation Agreement and under the Trust
Indenture or any Vice President in the Corporate Trust Administration Department
of the Owner Trustee has actual knowledge thereof.
Section 5.02. Action Upon Instructions. Subject in all respects to
the terms of Sections 5.01 and 5.03 and to the terms of the other Operative
Agreements, upon the written instructions at any time and from time to time of
the Owner Participant, the Owner Trustee will take such of the following actions
as may be specified in such instructions: (i) give such notice or direction or
exercise such right, remedy or power hereunder or under any of the Operative
Agreements to which the Owner Trustee is a party, or in respect of all or any
part of the Trust Estate, as shall be specified in such instructions; (ii) take
such action to preserve or protect the Trust Estate (including the discharge of
any Liens or encumbrances) as may be specified in such instructions; (iii)
approve as satisfactory to it all matters required by the terms of the Lease to
be satisfactory to the Owner Trustee, it being understood that without written
instructions of the Owner Participant, the Owner Trustee shall not approve any
such matter as satisfactory to it; (iv) after the expiration or earlier
termination of the Lease, convey all of the Owner Trustee's right, title and
interest in and to the Aircraft for such amount, on such terms and to such
purchaser or purchasers as shall be designated in such instructions, or lease
the Aircraft on such terms as shall be set forth in such instructions or deliver
the Aircraft to the Owner Participant in accordance with such instructions; and
(v) take or refrain from taking such other action or actions as may be specified
in such instructions. In the event that the Owner Trustee is unsure of the
application of any provision of this Trust Agreement or any other agreement
relating to the transactions contemplated hereby, the Owner Trustee may request
and rely upon instructions of the Owner Participant.
Section 5.03. Indemnification. The Owner Trustee shall not be
required to take or refrain from taking any action under Section 5.01 or 5.02
unless the Owner
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Trustee shall have been indemnified by the Owner Participant, in manner and form
satisfactory to the Owner Trustee, against any liability, cost or expense
(including reasonable counsel fees and disbursements) which may be incurred in
connection therewith; and, if the Owner Participant shall have directed the
Owner Trustee to take or refrain from taking any such action, the Owner
Participant agrees to furnish such indemnity as shall be required and in
addition to pay the reasonable fees and charges of the Owner Trustee for the
services performed or to be performed by it pursuant to such direction. The
Owner Trustee shall not be required to take any action under Section 5.01 or
5.02 if the Owner Trustee shall reasonably determine, or shall have been advised
by counsel, that such action is contrary to the terms of any of the Operative
Agreements to which the Owner Trustee is a party, or is otherwise contrary to
Applicable Law.
Section 5.04. No Duties Except as Specified in Trust Agreement or
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
control, use, sell, dispose of or otherwise deal with the Aircraft or any other
part of the Trust Estate, or otherwise to take or refrain from taking any action
under, or in connection with any of the Operative Agreements to which the Owner
Trustee is a party, except as expressly required by the terms of any of the
Operative Agreements to which the Owner Trustee is a party, or (to the extent
not inconsistent with the provisions of the Trust Indenture) as expressly
provided by the terms hereof or in written instructions from the Owner
Participant received pursuant to the terms of Section 5.01 or 5.02, and no
implied duties or obligations shall be read into this Trust Agreement or any of
the Operative Agreements to which the Owner Trustee is a party against the Owner
Trustee. The Owner Trustee nevertheless agrees that it will, in its individual
capacity and at its own cost and expense (but without any right of indemnity in
respect of any such cost or expense under Section 7.01) promptly take such
action as may be necessary duly to discharge and satisfy in full (i) all
Lessor's Liens attributable to the Owner Trustee in its individual capacity,
(ii) any Liens (other than Lessor's Liens attributable to it in its individual
capacity) created as a result of its breach of any of its obligations under this
Trust Agreement (subject to the limitations on the liability of the Owner
Trustee in its individual capacity set forth in Section 6.01) on any part of the
Trust Estate, or on any properties of the Owner Trustee assigned, pledged or
mortgaged as part of the Trust Estate, which arise from acts of the Owner
Trustee in its individual capacity, except the Lien created under the Trust
Indenture, the rights of Lessee under the Lease and the rights of the Owner
Participant hereunder, and (iii) any other Liens or encumbrances attributable to
the Owner Trustee in its individual capacity on any part of the Trust Estate
which result from claims against the Owner Trustee in its individual capacity
unrelated to the ownership of the Aircraft, the administration of the Trust
Estate or the transactions contemplated by the Operative Agreements.
Section 5.05. No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall have no power or authority to, and the
Owner Trustee agrees that it will not, manage, control, use, sell, dispose of or
otherwise deal with the Aircraft or any other part of the Trust Estate except
(i) as expressly required
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by the terms of any of the Operative Agreements to which the Owner Trustee is a
party, (ii) as expressly provided by the terms hereof, or (iii) as expressly
provided in written instructions from the Owner Participant pursuant to Section
5.01 or 5.02, but subject always to the provisions of the Lien created by the
Trust Indenture.
ARTICLE VI
THE OWNER TRUSTEE
Section 6.01. Acceptance of Trusts and Duties. The Owner Trustee in
its individual capacity accepts the trusts hereby created and agrees to perform
the same but only upon the terms hereof applicable to it. The Owner Trustee in
its individual capacity also agrees to receive and disburse all monies received
by it constituting part of the Trust Estate upon the terms hereof. The Owner
Trustee, in its individual capacity, shall not be answerable or accountable
under any circumstances, except for (i) its own willful misconduct or gross
negligence, (ii) its performance of the terms of the last sentence of Section
5.04, (iii) its failure to use ordinary care in receiving or disbursing funds,
(iv) liabilities that may result from the inaccuracy of any representation or
warranty of the Owner Trustee in its individual capacity (or from the failure by
the Owner Trustee in its individual capacity to perform any covenant made in its
individual capacity) in Section 6.03 or in any of the Operative Agreements to
which the Owner Trustee is a party, and (v) taxes, fees or other charges on,
based on or measured by any fees, commissions or other compensation received by
the Owner Trustee as compensation for its services rendered as the Owner
Trustee; provided, however, that the failure to act or perform in the absence of
instructions after the Owner Trustee has requested instructions from the Owner
Participant pursuant to the last sentence of Section 5.02 shall not constitute
willful misconduct or gross negligence for purposes of clause (i) of this
Section 6.01.
Section 6.02. Absence of Certain Duties. Except in accordance with
written instructions furnished pursuant to Sections 5.01 and 5.02 and except as
provided in, and without limiting the generality of, Sections 5.04 and 5.05 and
the last sentence of Section 9.01(b), the Owner Trustee shall have no duty (i)
to see to any registration of the Aircraft or any recording or filing of the
Lease, this Trust Agreement, the Trust Indenture, any financing or continuation
statement or of any supplement to any thereof or to see to the maintenance of
any such registration, rerecording or refiling, except that the Owner Trustee
shall upon written request furnished by Lessee take such action as may be
required of the Owner Trustee to maintain the registration of the Aircraft in
the name of the Owner Trustee under the Act or, to the extent the Aircraft is
registered in a country other than the United States of America pursuant to
Section 4.02 of the Participation Agreement, other Applicable Law, and to the
extent that information for that purpose is supplied by Lessee pursuant to any
of the Operative Agreements, complete and timely submit any and all reports
relating to the Aircraft which may from time to time be required by the FAA or
any government or governmental authority having jurisdiction, (ii) to see to any
insurance
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on the Aircraft or to effect or maintain any such insurance, whether or not
Lessee shall be in default with respect thereto, (iii) to see to the payment or
discharge of any tax, assessment or other governmental charge or any Lien or
encumbrance of any kind owing with respect to, assessed or levied against any
part of the Trust Estate except as provided by Section 5.04 hereof or Section
5.03(b) of the Participation Agreement, (iv) to confirm or verify any financial
statements of Lessee or (v) to inspect the Aircraft or the books and records of
Lessee with respect to the Aircraft.
Section 6.03. No Representations or Warranties as to Certain
Matters. THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS THE OWNER TRUSTEE
DOES NOT MAKE AND SHALL NOT BE DEEMED TO HAVE MADE (a) ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE
AIRCRAFT, ANY ENGINE THEREOF, ABSENCE OF LATENT OR OTHER DEFECTS (WHETHER OR NOT
DISCOVERABLE) OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE
AIRCRAFT OR ANY ENGINE WHATSOEVER, except that the Owner Trustee in its
individual capacity warrants that on the Delivery Date the Owner Trustee shall
have received and shall hold whatever title to the Aircraft was conveyed to it
by Lessee free and clear of Lessor's Liens attributable to the Owner Trustee in
its individual capacity, shall be in compliance with the last sentence of
Section 5.04 hereof and that the Aircraft shall during the Lease Term be free of
Lessor's Liens attributable to it in its individual capacity, or (b) any
representation or warranty as to the validity, legality or enforceability of
this Trust Agreement or any other Operative Agreement to which the Owner Trustee
is a party, or any other document or instrument, or as to the correctness of any
statement contained in any thereof except to the extent that any such statement
is expressly made herein or therein as a representation by the Owner Trustee in
its individual capacity and except that the Owner Trustee in its individual
capacity hereby represents and warrants that this Trust Agreement has been, and
(assuming the due authorization, execution and delivery of the Trust Agreement
by the Owner Participant) the other Operative Agreements to which the Owner
Trustee is a party have been (or at the time of execution and delivery of any
such instrument by the Owner Trustee hereunder or pursuant to the terms of the
Participation Agreement that such an instrument will be) duly executed and
delivered by one of its officers who is or will be, as the case may be, duly
authorized to execute and deliver such instruments on behalf of the Owner
Trustee and that this Trust Agreement has been duly authorized, executed and
delivered by the institution acting as the Owner Trustee and constitutes the
legal, valid and binding obligation of such institution enforceable against it
in accordance with its terms, except as such terms may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
rights of creditors generally and by general principles of equity, regardless of
whether considered in a proceeding in equity or at law.
Section 6.04. No Segregation of Monies Required; Investment Thereof.
Monies received by the Owner Trustee hereunder need not be segregated in any
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manner except to the extent required by Applicable Law, and may be deposited
under such general conditions as may be prescribed by Applicable Law, and shall
be invested as provided in Section 4.02 hereof or Section 15 of the Lease.
Section 6.05. Reliance Upon Certificates, Counsel and Agents. The
Owner Trustee shall incur no liability to anyone in acting in reliance upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper reasonably believed by it to be
genuine and reasonably believed by it to be signed by the proper party or
parties. Unless other evidence in respect thereof is specifically prescribed
herein, any request, direction, order or demand of the Owner Participant, Lessee
or the Indenture Trustee mentioned herein or in any of the other Operative
Agreements to which the Owner Trustee is a party shall be sufficiently evidenced
by written instruments signed by a person purporting to be an officer of the
Owner Participant, Lessee or the Indenture Trustee, as the case may be. The
Owner Trustee may accept a copy of a resolution of the Board of Directors of
Lessee, the Owner Participant or the Indenture Trustee, as the case may be,
certified by the Secretary or an Assistant Secretary of Lessee, the Owner
Participant or the Indenture Trustee, as the case may be, as duly adopted and in
full force and effect, as conclusive evidence that such resolution has been duly
adopted by said Board and that the same is in full force and effect. As to any
fact or matter the manner of ascertainment of which is not specifically
described herein, the Owner Trustee may for all purposes hereof rely on a
certificate signed by an officer of Lessee, the Owner Participant or the
Indenture Trustee, as the case may be, as to such fact or matter, and such
certificate shall constitute full protection to the Owner Trustee for any action
taken or omitted to be taken by it in good faith in reliance thereon.
In the administration of the trusts hereunder, the Owner Trustee may
exercise its powers and perform its duties hereunder directly or through agents
or attorneys and the Owner Trustee shall not be liable for the default or
misconduct of any agents or attorneys selected by it with reasonable care. In
the administration of the trusts hereunder, the Owner Trustee may consult with
counsel, accountants and other skilled persons and the Owner Trustee shall not
be liable for anything done, suffered or omitted in good faith by it in
accordance with the advice or opinion of any such counsel, accountants or other
skilled persons selected by it with reasonable care.
Section 6.06. Not Acting in Individual Capacity. In acting
hereunder, the Owner Trustee acts solely as trustee and not in its individual
capacity except as otherwise expressly provided herein; and, except as may be
otherwise expressly provided in this Trust Agreement, the Lease, the
Participation Agreement or the Trust Indenture, all Persons having any claim
against the Owner Trustee by reason of the transactions contemplated hereby
shall look only to the Trust Estate for payment or satisfaction thereof.
Section 6.07. Fees; Compensation. Except as provided in Section
5.03, 6.08 or 7.01, the Owner Trustee agrees that it shall have no right against
the Owner Participant or the Trust Estate for any fee as compensation for its
services hereunder.
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Section 6.08. Tax Returns. The Owner Trustee shall be responsible
for the keeping of all appropriate books and records relating to the receipt and
disbursement by it of all monies under this Trust Agreement or any agreement
contemplated hereby. The Owner Trustee shall be responsible for causing to be
prepared and filed, at Lessee's expense, all income tax returns requested to be
filed by the Owner Participant and for causing to be prepared all income tax
returns required to be filed with respect to the trust created hereby as
requested by the Owner Participant and shall execute and file such returns.
ARTICLE VII
INDEMNIFICATION OF THE OWNER TRUSTEE
BY THE OWNER PARTICIPANT
Section 7.01. The Owner Participant to Indemnify the Owner Trustee.
The Owner Participant hereby agrees, whether or not any of the transactions
contemplated hereby shall be consummated, to assume liability for, and does
hereby indemnify, protect, save, defend and hold harmless the Owner Trustee in
its individual capacity, and its successors, assigns (but not security assigns),
directors, officers, representatives, agents, employees and servants, from and
against any and all liabilities, obligations, losses, damages, penalties, taxes
(excluding any taxes payable by the Owner Trustee on or measured by any
compensation received by the Owner Trustee for its services hereunder), claims,
actions, suits, costs, expenses or disbursements (including, without limitation,
reasonable legal fees) and expenses of any kind and nature whatsoever which may
be imposed on, incurred by or asserted against the Owner Trustee in its
individual capacity (whether or not also indemnified against by Lessee under the
Lease or under the Participation Agreement or also indemnified against by any
other Person) in any way relating to or arising out of this Trust Agreement or
any of the other Operative Agreements 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,
possession, use, operation, condition, sale, return or other disposition of the
Airframe, any Engine, any Propeller or any Part of the foregoing (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 Estate or the
action or inaction of the Owner Trustee hereunder, except (a) in the case of
willful misconduct or gross negligence on the part of the Owner Trustee either
as trustee or in its individual capacity in the performance or nonperformance of
its duties hereunder or (b) those resulting from the inaccuracy of any
representation or warranty of the Owner Trustee in its individual capacity (or
from the failure of the Owner Trustee in its individual capacity to perform any
covenant) in Section 6.03, or in any of the Operative Agreements, or (c) those
arising or resulting from any of the matters described in the last sentence of
Section 6.01, or (d) those resulting from its failure to perform the terms of
the last sentence of Section 5.04 hereof or from its failure to use ordinary
care in the receipt and disbursement of funds. The indemnities
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contained in this Section 7.01 extend to the Owner Trustee only in its
individual capacity and shall not be construed as indemnities of the Indenture
Estate or the Trust Estate. The indemnities contained in this Section 7.01 shall
survive the termination of this Trust Agreement and the resignation or removal
of the Owner Trustee. In addition, if necessary, the Owner Trustee shall be
entitled to indemnification from the Trust Estate, subject however to the
provisions of Section 4.01 hereof and the Lien created under the Trust
Indenture, for any liability, obligation, loss, damage, penalty, tax, claim,
action, suit, cost, expense or disbursement indemnified against pursuant to this
Section 7.01 to the extent not reimbursed by Lessee, the Owner Participant or
others, but without releasing any of them from their respective agreements of
reimbursement.
ARTICLE VIII
[RESERVED]
ARTICLE IX
SUCCESSOR OWNER TRUSTEES; CO-TRUSTEES
Section 9.01. Resignation of the Owner Trustee; Appointment of
Successor. (a) Resignation or Removal. The Owner Trustee or any successor Owner
Trustee may resign at any time without cause by giving at least 60 days prior
written notice to the Owner Participant, the Indenture Trustee and Lessee, such
resignation to be effective upon the acceptance of appointment by the successor
Owner Trustee under Section 9.01(b). In addition, the Owner Participant may at
any time remove the Owner Trustee, or revoke the trusts created by this Trust
Agreement, in either case with or without cause by a notice in writing delivered
to the Owner Trustee, the Indenture Trustee and Lessee. Any such removal shall
be effective upon the acceptance of appointment by the successor Owner Trustee
under Section 9.01(b). In the case of the resignation or removal of the Owner
Trustee, the Owner Participant may appoint a successor Owner Trustee by an
instrument in writing. If a successor Owner Trustee shall not have been
appointed within 30 days after such notice of resignation or removal, the Owner
Trustee or the Indenture Trustee may apply to any court of competent
jurisdiction to appoint a successor Owner Trustee to act until such time, if
any, as a successor shall have been appointed as above provided. Any successor
Owner Trustee so appointed by such court shall immediately and without further
act be superseded by any successor Owner Trustee appointed as above provided
within one year from the date of the appointment by such court.
(b) Execution and Delivery of Documents, etc. Any successor Owner
Trustee, however appointed, shall execute and deliver to the predecessor Owner
Trustee an instrument accepting such appointment, and thereupon such successor
Owner Trustee, without further act, shall become vested with all the estates,
properties, rights,
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<PAGE>
powers, duties and trusts of the predecessor Owner Trustee in the trust
hereunder with like effect as if originally named the Owner Trustee herein; but
nevertheless, upon the written request of such successor Owner Trustee, such
predecessor Owner Trustee shall execute and deliver an instrument transferring
to such successor Owner Trustee upon the trusts herein expressed, all the
estates, properties, rights, powers and trusts of such predecessor Owner
Trustee, and such predecessor Owner Trustee shall duly assign, transfer, deliver
and pay over to such successor Owner Trustee all monies or other property then
held by such predecessor Owner Trustee upon the trusts herein expressed. Upon
the appointment of any successor Owner Trustee hereunder, the predecessor Owner
Trustee will complete, execute and deliver to the successor Owner Trustee such
documents as are necessary to cause registration of the Aircraft included in the
Trust Estate to be transferred upon the records of the FAA or other governmental
authority having jurisdiction, into the name of the successor Owner Trustee.
(c) Qualification. Any successor Owner Trustee, however appointed,
shall be a United States Citizen, shall be qualified to act as a trustee in
Delaware (if the trust created hereby is to remain in such state) and shall also
be a bank or trust company organized under the laws of the United States of
America or any state thereof having a combined capital and surplus of at least
$100,000,000, if there be such an institution willing, able and legally
qualified to perform the duties of the Owner Trustee hereunder upon reasonable
and customary terms.
(d) Merger, etc. Any corporation into which the Owner 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 Owner
Trustee shall be a party, or any corporation to which substantially all the
corporate trust business of the Owner Trustee may be transferred, shall, subject
to the terms of Section 9.01(c), be the Owner Trustee hereunder without further
act.
Section 9.02. Co-Trustees and Separate Trustees. If at any time or
times it shall be necessary or prudent in order to conform to any Applicable Law
of any jurisdiction in which all or any part of the Trust Estate is located, or
the Owner Trustee shall be advised by counsel that it is so necessary or prudent
in the interest of the Owner Participant or the Owner Trustee, or the Owner
Trustee shall have been directed to do so by the Owner Participant, the Owner
Trustee and the Owner Participant shall execute and deliver an agreement
supplemental hereto and all other instruments and agreements necessary or proper
to constitute another bank or trust company or one or more Persons (any and all
of which shall be a United States Citizen) approved by the Owner Trustee and the
Owner Participant, either to act as co-trustee or co-trustees, jointly with the
Owner Trustee, or to act as separate trustee or trustees hereunder (any such
co-trustee or separate trustee being herein sometimes referred to as an
"additional trustee"). In the event (i) the Owner Participant shall not have
joined in the execution of such agreements supplemental hereto within ten days
after the receipt of a written request from the Owner Trustee so to do, or (ii)
an Event of Default or an Indenture Event of Default shall occur and be
continuing, the Owner
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<PAGE>
Trustee may act under the foregoing provisions of this Section 9.02 without the
concurrence of the Owner Participant; and the Owner Participant hereby appoints
the Owner Trustee its agent and attorney-in-fact to act for it under the
foregoing provisions of this Section 9.02 in either of such contingencies.
Every additional trustee hereunder shall, to the extent permitted by
Applicable Law, be appointed and act, and the Owner Trustee and its successors
shall act, subject to the following provisions and conditions:
(a) all powers, duties, obligations and rights conferred upon the
Owner Trustee in respect of the custody, control and management of monies,
the Aircraft or documents authorized to be delivered hereunder or under
the Participation Agreement shall be exercised solely by the corporation
designated as the Owner Trustee in the first paragraph of this Trust
Agreement, or its successors as the Owner Trustee hereunder;
(b) all other rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee and any limitations thereon shall be
conferred or imposed upon and exercised or performed by the corporation
designated as the Owner Trustee in the first paragraph of this Trust
Agreement or its successors as the Owner Trustee, and such additional
trustee or trustees jointly, except to the extent that under any
Applicable Law of any jurisdiction in which any particular act or acts are
to be performed (including the holding of title to the Trust Estate), the
Owner Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations shall be
exercised and performed by such additional trustee or trustees;
(c) no power given to, or which it is provided hereby may be
exercised by, any such additional trustee or trustees shall be exercised
hereunder by such additional trustee or trustees, except jointly with, or
with the consent in writing of, the corporation designed as the Owner
Trustee in this Trust Agreement or its successor as the Owner Trustee,
anything herein contained to the contrary notwithstanding;
(d) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder;
(e) the Owner Participant, at any time, by an instrument in writing
may remove any such additional trustee. In the event that the Owner
Participant shall not have joined in the execution of any such instrument
within ten days after the receipt of a written request from the Owner
Trustee so to do, the Owner Trustee shall have the power to remove any
such additional trustee without the concurrence of the Owner Participant;
and the Owner Participant hereby appoints the Owner Trustee its agent and
attorney-in-fact to act for it in such connection in such contingency; and
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<PAGE>
(f) no appointing of, or action by, any additional trustee will
relieve the Owner Trustee of any of its obligations under, or otherwise
affect any of the terms of the Trust Indenture or affect the interests of
the Indenture Trustee or the holders of the Loan Certificates in the Trust
Estate.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT
AND OTHER DOCUMENTS
Section 10.01. Supplements and Amendments. (a) Supplements and
Amendments. At any time and from time to time, upon the written request of the
Owner Participant, (i) the Owner Trustee, together with the Owner Participant,
shall execute a supplement to this Trust Agreement for the purpose of adding
provisions to, or changing or eliminating provisions of, this Trust Agreement
(except Section 11.11) as specified in such request, and (ii) the Owner Trustee
shall, subject to compliance with the applicable provisions of Section 13.02 of
the Trust Indenture, enter into such written amendment of or supplement to any
other Operative Agreement to which the Owner Trustee is a party as the Indenture
Trustee and Lessee may agree to and as may be specified in such request, or
execute and deliver such written waiver or modification of or consent under the
terms of any such Operative Agreement as Lessee and the Indenture Trustee may
agree to and as may be specified in such request. Notwithstanding the foregoing,
except to the extent permitted by Section 14.01 of the Participation Agreement,
no supplement to this Trust Agreement or waiver or modification to the terms
hereof shall be permitted.
(b) Delivery of Amendments and Supplements to Certain Parties. Until
the Trust Indenture shall have been terminated pursuant to Section 10(a) thereof
or the Aircraft shall have been released from the Indenture Estate, a signed
copy of each amendment or supplement to the Trust Agreement shall be delivered
by the Owner Trustee to the Indenture Trustee without in any way affecting the
Trust Indenture or the Loan Certificates and without imposing any duty on the
Indenture Trustee with respect to such amendment or supplement.
Section 10.02. Discretion as to Execution of Documents. If in the
opinion of the Owner Trustee any document required to be executed pursuant to
the terms of Section 10.01 adversely affects any right, duty, immunity or
indemnity in favor of the Owner Trustee hereunder or under any other Operative
Agreement to which the Owner Trustee is a party, the Owner Trustee may in its
discretion decline to execute such document.
Section 10.03. Absence of Requirements as to Form. It shall not be
necessary for any written request furnished pursuant to Section 10.01 to specify
the particular form of the proposed documents to be executed pursuant to such
Section, but it shall be sufficient if such request shall indicate the substance
thereof.
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<PAGE>
Section 10.04. Distribution of Documents. Promptly after the
execution by the Owner Trustee of any document entered into pursuant to Section
10.01, the Owner Trustee shall mail, by certified mail, postage prepaid, a
conformed copy thereof to the Owner Participant, but the failure of the Owner
Trustee to mail such conformed copy shall not impair or affect the validity of
such document.
ARTICLE XI
MISCELLANEOUS
Section 11.01. Termination of Trust Agreement. This Trust Agreement
and the trusts created hereby shall terminate and this Trust Agreement shall be
of no further force or effect upon the earliest of (a) the later of (x) the
termination of the Trust Indenture pursuant to Section 14.01 thereof and the
sale or other final disposition by the Owner Trustee of all property
constituting part of the Trust Estate and the final distribution by the Owner
Trustee of all monies or other property or proceeds constituting part of the
Trust Estate in accordance with Article IV hereof, provided that at such time
Lessee shall have fully complied with all of the terms of the Participation
Agreement and the Lease, and (y) the expiration or termination of the Lease in
accordance with its terms or (b) 110 years after the earlier execution of this
Trust Agreement by either party hereto (or without limiting the generality of
the foregoing, if legislation shall become effective providing for the validity
or permitting the effective grant of such rights, privileges and options for a
period in gross, exceeding the period for which such rights, privileges and
options are hereinabove stated to extend and be valid), then such rights,
privileges or options shall not terminate as aforesaid but shall extend to and
continue in effect, but only if such non-termination and extension shall then be
valid under Applicable Law until such time as the same shall under Applicable
Law cease to be valid, whereupon all monies or other property or proceeds
constituting part of the Trust Estate shall be distributed in accordance with
the terms of Article IV hereof, otherwise this Trust Agreement and the trusts
created hereby shall continue in full force and effect in accordance with the
terms hereof.
Section 11.02. The Owner Participant Has No Legal Title in Trust
Estate. The Owner Participant does not have legal title to any part of the Trust
Estate. No transfer, by operation of law or otherwise, of any right, title and
interest of the Owner Participant in and to the Trust Estate hereunder shall
operate to terminate this Trust Agreement or the trusts hereunder or entitle any
successors or transferees of the Owner Participant to an accounting or to the
transfer of legal title to any part of the Trust Estate.
Section 11.03. Assignment, Sale, etc., of Aircraft. Any assignment,
sale, transfer or other conveyance of the Aircraft, any Engine, any Propeller or
any interest therein by the Owner Trustee made pursuant to the terms hereof or
of the Lease or the Participation Agreement shall bind the Owner Participant and
shall be effective to transfer or convey all right, title and interest of the
Owner Trustee and the Owner
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<PAGE>
Participant in and to the Aircraft, such Engine or interest therein. No
purchaser or other grantee shall be required to inquire as to the authorization,
necessity, expediency or regularity of such assignment, sale, transfer or
conveyance or as to the application of any sale or other proceeds with respect
thereto by the Owner Trustee.
Section 11.04. Trust Agreement for Benefit of Certain Parties Only.
Except for the terms of Section 4.01, Articles V and IX, Sections 10.01, 11.01
and 11.03 hereof, nothing herein, whether express or implied, shall be construed
to give any Person other than the Owner Trustee and the Owner Participant any
legal or equitable right, remedy or claim under or in respect of this Trust
Agreement; but this Trust Agreement shall be held to be for the sole and
exclusive benefit of the Owner Trustee and the Owner Participant.
Section 11.05. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be given in the manner set
forth in Section 24(a) of the Participation Agreement.
Section 11.06. Severability. Any provision hereof 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 11.07. Waivers, etc. No term or provision hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing entered into in compliance with the terms of Article X hereof; and any
waiver of the terms hereof shall be effective only in the specified instance and
for the specific purpose given.
Section 11.08. Counterparts. This Trust 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 instrument.
Section 11.09. Binding Effect, etc. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Owner
Trustee and its successors and permitted assigns, and the Owner Participant, its
successors and, to the extent permitted by Article VIII, its permitted assigns.
Any request, notice, direction, consent, waiver or other instrument or action by
the Owner Participant shall bind its successors and permitted assigns.
Section 11.10. Headings; References. The headings of the various
Articles and Sections herein are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
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<PAGE>
Section 11.11. Governing Law. This Trust Agreement shall in all
respects be governed by, and construed in accordance with, the laws of the State
of Delaware, including all matters of construction, validity and performance.
Section 11.12. Administration of Trust. The principal place of
administration of the trust created by this Agreement shall be in the State of
Delaware.
* * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
[OWNER PARTICIPANT]
By __________________________
Name:
Title:
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
By __________________________
Name:
Title:
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<PAGE>
Exhibit B
DELIVERY NOTICE
Dated as of [________________]
To each of the addresses listed
in Schedule A hereto
Re: Delivery Notice in accordance with Note Purchase Agreement
referred to below
Gentlemen:
Reference is made to the Note Purchase Agreement, dated as of August __,
1998 among Midway Airlines Corporation (the "Company"), The First National Bank
of Maryland, as Pass Through Trustee under each of the Pass Through Trust
Agreements (as defined therein) (the "Pass Through Trustee"), The First National
Bank of Maryland, as Subordination Agent (the "Subordination Agent"), First
Union Trust Company, National Association, as Escrow Agent (the "Escrow Agent")
and The First National Bank of Maryland, as Paying Agent (the "Paying Agent")
(as in effect from time to time, the "Note Purchase Agreement"). Unless
otherwise defined herein, capitalized terms used herein shall have the meanings
set forth in the Note Purchase Agreement or, to the extent not defined therein,
the Intercreditor Agreement.
Pursuant to Sections 1(b) of the Note Purchase Agreement, the undersigned
hereby notifies you, in respect of the Bombardier Regional Jet Series 200ER
aircraft with manufacturer's serial number [ ] (the "Aircraft"), of the
following:
(1) The Company has elected to treat the Aircraft as [a Leased Aircraft] [an
Owned Aircraft];
(2) The Scheduled Delivery Date of the Aircraft is [ ];
(3) The Funding Date for the Aircraft shall be [ ]; and
(4) The aggregate amount of each series of Equipment Notes to be issued, and
purchased by the respective Pass Through Trustees, on the Funding Date, in
connection with the financing of such Aircraft is as follows:
<PAGE>
(a) the Class A Trustee shall purchase Series A Equipment Notes in the
amount of $[ ];
(b) the Class B Trustee shall purchase Series B Equipment Notes in the
amount of $[ ];
(c) the Class C Trustee shall purchase Series C Equipment Notes in the
amount of $[ ]; and
(d) the Class D Trustee shall purchase Series D Equipment Notes in the
amount of $[ ].
The Company hereby instructs the Class A Trustee to (i) execute a
Withdrawal Certificate in the form of Annex A hereto dated as of [ ] and
attach thereto a Notice of Purchase Withdrawal dated such date completed as set
forth on Exhibit A hereto and (ii) deliver such Withdrawal Certificate and
Notice of Purchase Withdrawal to the applicable Escrow Agent.
The Company hereby instructs the Class B Trustee to (i) execute a
Withdrawal Certificate in the form of Annex A hereto dated as of [ ] and
attached thereto a Notice of Purchase Withdrawal dated such date completed as
set forth on Exhibit B hereto and (ii) deliver such Withdrawal Certificate and
Notice of Purchase Withdrawal to the applicable Escrow Agent.
The Company hereby instructs the Class C Trustee to (i) execute a
Withdrawal Certificate in the form of Annex A hereto dated as of [ ] and
attach thereto a Notice of Purchase Withdrawal dated such date completed as set
forth on Exhibit C hereto and (ii) deliver such Withdrawal Certificate and
Notice of Purchase Withdrawal to the applicable Escrow Agent.
The Company hereby instructs the Class D Trustee to (i) execute a
Withdrawal Certificate in the form of Annex A hereto dated as of [ ] and
attach thereto a Notice of Purchase Withdrawal dated such date completed as set
forth on Exhibit D hereto and (ii) deliver such Withdrawal Certificate and
Notice of Purchase Withdrawal to the applicable Escrow Agent.
The Company hereby instructs each Pass Through Trustee to (i) purchase
Equipment Notes of a series and in an amount set forth opposite such Pass
Through Trustee in clause (4) above with a portion of the proceeds of the
withdrawals of Deposits referred to in the applicable Notice of Purchase
Withdrawal referred to above and (ii) re-deposit with the Depositary the excess,
if any, of the amount so withdrawn over the purchase price of such Equipment
Notes.
<PAGE>
The Company hereby instructs each Pass Through Trustee to (a) enter into
the Participation Agreement [N ML] dated as of [ ] among the Company, [as
Lessee,]* the Subordination Agent, the Pass Through Trustee, The First National
Bank of Maryland, as Indenture Trustee, [First Union Trust Company, National
Association, as Owner Trustee and [ ], as Owner Participant,]* (b) perform
its obligations thereunder and (c) deliver such certificates, documents and
legal opinions relating to such Pass Through Trustee as required thereby.
[The Company hereby certifies that the Owner Participant with respect to
the Aircraft (A) is not an Affiliate of the Company and (B) based on the
representations of such Owner Participant, is either a Qualified Owner
Participant or a person whose obligations under the Operative Agreements (as
defined in the Participation Agreement) to which the Owner Participant is a
party are guaranteed by a Qualified Owner Participant.]*
Very truly yours,
Midway Airlines Corporation
By:__________________________________
Name:
Title:
- - ----------
* Only to be included for Leased Aircraft
<PAGE>
SCHEDULE A
The First National Bank of Maryland, as
Pass Through Trustee, Subordination
Agent and Paying Agent
25 South Charles Street
Mail Code 101-591
Baltimore, Maryland
Attention: Corporate Trust Department
Facsimile: (410) 244-4236
First Union Trust Company, National Association
One Rodney Square
920 King Street
Suite 102
Wilmington, Administration 19801
Attention: Corporate Trust Administration
Facsimile: (302) 888-7544
Standard & Poor's Ratings Service
25 Broadway, 16th Floor
New York, New York 10004
Attention:
Facsimile: (212) 208-0300
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention:
Facsimile: (212) 553-4600
<PAGE>
Annex A
WITHDRAWAL CERTIFICATE
(Class ____)
First Union Trust Company, National Association
as Escrow Agent
Ladies and Gentlemen:
Reference is made to the Escrow and Paying Agent Agreement, dated as
of August 13, 1998 (the "Agreement"). We hereby certify to you that the
conditions to the obligations of the undersigned to execute a Participation
Agreement pursuant to the Note Purchase Agreement have been satisfied. Pursuant
to Section 1.02(c) of the Agreement, please execute the attached Notice of
Withdrawal and immediately transmit by facsimile to the Depositary, at First
Union National Bank, Attention Peter J. Lancos, (facsimile no. 704-383-9139).
Capitalized terms used herein but not defined herein shall have the
meanings set forth in the Agreement.
Very truly yours,
THE FIRST NATIONAL BANK OF MARYLAND
not in its individual capacity by solely as
Pass Through Trustee
By _________________________________________
Name:
Title:
Dated: As of [ ]
<PAGE>
Exhibit A
NOTICE OF PURCHASE WITHDRAWAL
First Union National Bank
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Peter J. Lancos
Telecopier: (704) 383-9193
Gentlemen:
Reference is made to the Deposit Agreement (Class A) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary") and to Account No. ________ (the "Account").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of $_________ from the Account.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to The First Maryland National Bank, ABA No. 052000113, Account No.
090-02-764, Attention: Credit Trust Receipts, Reference Midway EETC on _______,
199_, upon the telephonic request of a representative of the Pass Through
Trustee.
First Union Trust Company,
National Association
as Escrow Agent
By __________________________________
Name:
Title:
Dated: As of [ ]
<PAGE>
Exhibit B
NOTICE OF PURCHASE WITHDRAWAL
First Union National Bank
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Peter J. Lancos
Telecopier: (704) 383-9193
Gentlemen:
Reference is made to the Deposit Agreement (Class B) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary") and to Account No. ________ (the "Account").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of $_________ from the Account.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to The First Maryland National Bank, ABA No. 052000113, Account No.
090-02-764, Attention: Credit Trust Receipts, Reference Midway EETC on _______,
199_, upon the telephonic request of a representative of the Pass Through
Trustee.
First Union Trust Company,
National Association
as Escrow Agent
By _______________________________
Name:
Title:
Dated: As of [ ]
<PAGE>
Exhibit C
NOTICE OF PURCHASE WITHDRAWAL
First Union National Bank
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Peter J. Lancos
Telecopier: (704) 383-9193
Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary") and to Account No. ________ (the "Account").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of $_________ from the Account.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to The First Maryland National Bank, ABA No. 052000113, Account No.
090-02-764, Attention: Credit Trust Receipts, Reference Midway EETC on _______,
199_, upon the telephonic request of a representative of the Pass Through
Trustee.
First Union Trust Company,
National Association
as Escrow Agent
By ________________________________
Name:
Title:
Dated: As of [ ]
<PAGE>
Exhibit D
NOTICE OF PURCHASE WITHDRAWAL
First Union National Bank
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Peter J. Lancos
Telecopier: (704) 383-9193
Gentlemen:
Reference is made to the Deposit Agreement (Class D) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary") and to Account No. ________ (the "Account").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of $_________ from the Account.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to The First Maryland National Bank, ABA No. 052000113, Account No.
090-02-764, Attention: Credit Trust Receipts, Reference Midway EETC on _______,
199_, upon the telephonic request of a representative of the Pass Through
Trustee.
First Union Trust Company,
National Association
as Escrow Agent
By __________________________________
Name:
Title:
Dated: As of [ ]
<PAGE>
[Exhibit A-1 to
Note Purchase Agreement -
Form of Leased Aircraft
Participation Agreement]
[Exhibit C-1 to Note Purchase
Agreement - Form of Owned
Aircraft Participation Agreement]
================================================================================
PARTICIPATION AGREEMENT [N ___]
Dated as of __________ __, 199_
among
MIDWAY AIRLINES CORPORATION,
THE FIRST NATIONAL BANK OF MARYLAND,
Indenture Trustee
THE FIRST NATIONAL BANK OF MARYLAND,
Pass-Through Trustee
and
THE FIRST NATIONAL BANK OF MARYLAND
Subordination Agent
================================================================================
COVERING ONE CANADAIR REGIONAL JET SERIES 200ER
AIRCRAFT BEARING U.S. REGISTRATION NO. N___
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1. INTERPRETATION.................................................... 1
Section 1.01. Definitions............................................. 1
Section 1.02. References.............................................. 2
Section 1.03. Headings................................................ 2
Section 1.04. Appendices Schedules and Exhibits....................... 2
ARTICLE 2. SALE, LEASING AND SECURED LOAN TRANSACTIONS....................... 2
Section 2.01. Participation........................................... 2
(a) Secured Loan............................................ 2
(b) Delivery Date........................................... 2
Section 2.02. Closing Procedure....................................... 3
ARTICLE 3. CONDITIONS PRECEDENT.............................................. 3
Section 3.01. Conditions Precedent to Obligations of Participants..... 3
(a) Notice.................................................. 3
(b) Delivery of Documents................................... 3
(c) Airworthiness........................................... 5
(d) [Reserved].............................................. 5
(e) Violation of Law........................................ 5
(f) No Event of Default..................................... 5
(g) No Event of Loss........................................ 5
(h) Title................................................... 5
(i) Certification........................................... 5
(j) Section 1110............................................ 5
(k) Filings................................................. 6
(l) Financing Statements.................................... 6
(m) No Proceedings.......................................... 6
(n) Governmental Action..................................... 6
(o) Note Purchase Agreement................................. 6
(p) Perfected Security Interest............................. 6
Section 3.02. Conditions Precedent to Obligations of Company.......... 6
(a) Documents............................................... 7
(b) Other Conditions Precedent.............................. 7
Section 3.03. Post-Registration Opinion............................... 7
ARTICLE 4. COMPANY'S REPRESENTATIONS, WARRANTIES AND COVENANTS............... 7
Section 4.01. Company Representations and Warranties.................. 7
Section 4.02. Certain Covenants of Company............................ 10
(a) Filings and Recordings.................................. 10
(b) Registration............................................ 10
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(c) [Reserved].............................................. 12
(d) Corporate Existence..................................... 12
(e) Merger and Consolidation................................ 12
(f) Change of Location...................................... 13
(g) Notice of Lease......................................... 13
Section 4.03. Survival of Representations and Warranties.............. 13
ARTICLE 5. OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS.......... 14
Section 5.01. Representations, Warranties and Covenants of the
Indenture Trustee....................................... 14
(a) Representations and Warranties.......................... 14
(b) Indenture Trustee's Liens............................... 15
(c) Indemnity for Indenture Trustee's Liens................. 15
Section 5.02. Indenture Trustee's Notice of Default Trustee's Notice
of Default.............................................. 15
Section 5.03. Releases from Indenture................................. 15
Section 5.04. The Company's Right of Quiet Enjoyment.................. 15
Section 5.05. Pass-Through Trustee's Representations and Warranties... 15
Section 5.06. Survival of Representations, Warranties and Covenants... 16
Section 5.07. Subordination Agent's Representations, Warranties and
Covenants............................................... 17
(a) Representations and Warranties.......................... 17
(b) Covenants............................................... 18
ARTICLE 6. [RESERVED]........................................................ 19
ARTICLE 7. GENERAL INDEMNITY ................................................ 19
Section 7.01. Generally............................................... 19
(a) Indemnity............................................... 19
(b) Exceptions.............................................. 20
Section 7.02. Notice and Payment...................................... 21
Section 7.03. Defense of Claims....................................... 21
Section 7.04. Insured Claims.......................................... 22
Section 7.05. Subrogation............................................. 22
Section 7.06. Survival of Obligations................................. 22
Section 7.07. Effect of Other Indemnities............................. 22
Section 7.08. Waiver of Certain Claims................................ 22
ARTICLE 8. TRANSACTION COSTS................................................. 23
Section 8.01. Transaction Costs and Other Costs....................... 23
(a) Transaction Costs....................................... 23
(b) Continuing Expenses..................................... 23
(c) Amendments and Supplements.............................. 23
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ARTICLE 9. [RESERVED] ....................................................... 24
ARTICLE 10. LIABILITIES AND INTERESTS OF HOLDERS............................. 24
Section 10.01. Interest of Holders of Equipment Notes.................. 24
ARTICLE 11. OTHER DOCUMENTS.................................................. 24
Section 11.01. Consent of Company to Other Documents................... 24
Section 11.02. Pass-Through Trustee's and Subordination Agent's
Acknowledgment.......................................... 24
ARTICLE 12. NOTICES.......................................................... 24
Section 12.01. Notices................................................. 24
ARTICLE 13. [RESERVED]....................................................... 25
ARTICLE 14. [RESERVED]....................................................... 25
ARTICLE 15. MISCELLANEOUS ................................................... 25
Section 15.01. Counterparts............................................ 25
Section 15.02. No Oral Modifications................................... 25
Section 15.03. Captions................................................ 26
Section 15.04. Successors and Assigns.................................. 26
Section 15.05. Concerning the Indenture Trustee and the Pass-Through
Trustee................................................. 26
Section 15.06. Severability............................................ 26
Section 15.07. GOVERNING LAW........................................... 26
Section 15.08. Section 1110 Compliance................................. 27
Section 15.09. Reliance of Liquidity Providers......................... 27
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Schedule I Loan Amounts
Schedule II Debt Portion
Appendix A Definitions
Exhibit A-1(a) Form of Opinion of General Counsel of Company
Exhibit A-1(b) Form of Opinion of Special North Carolina counsel
Exhibit A-2 Form of Opinion of Fulbright & Jaworski L.L.P.
Exhibit A-3 Form of Opinion of Ober, Kaler, Grimes & Shriver, as
counsel to Indenture Trustee, Subornation Agent and
Pass-Through Trustee
Exhibit A-4 Form of Opinion of Special Aviation Counsel
Exhibit B Certain Economic Information
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PARTICIPATION AGREEMENT [N____] dated as of __________, 199_ (this
"Agreement") among MIDWAY AIRLINES CORPORATION, a Delaware corporation (herein,
together with its successors and permitted assigns, the "Company"), THE FIRST
NATIONAL BANK OF MARYLAND, a national banking association, as indenture trustee
under the Indenture referred to below (together with its successors and
permitted assigns, the "Indenture Trustee"), THE FIRST NATIONAL BANK OF
MARYLAND, a national banking association, as pass-through trustee of four
separate Pass-Through Trusts (together with its successors and permitted
assigns, the "Pass-Through Trustee"), and THE FIRST NATIONAL BANK OF MARYLAND, a
national banking association, as subordination agent (together with its
successors and permitted assigns, the "Subordination Agent").
W I T N E S S E T H:
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article 1 hereof.
WHEREAS, pursuant to the Purchase Agreement the Manufacturer agreed
to manufacture and sell to the Company and the Company agreed to purchase from
the Manufacturer the Aircraft; and
WHEREAS, subject to the terms and conditions of this Agreement the
Loan Participants are willing to make loans to the Company to finance a portion
of the acquisition cost of such Aircraft; and
WHEREAS, the Company and the Indenture Trustee are concurrently
entering into the Indenture for the benefit of the holders of the Equipment
Notes, pursuant to which Indenture the Company shall, subject to the terms and
conditions set forth therein, issue to the Pass-Through Trustee under each of
the Pass-Through Trust Agreements, as a Loan Participant, Equipment Notes
substantially in the form set forth in the Indenture as evidence of the loan to
be made by each such Loan Participant to the Company to finance a portion of the
acquisition cost of such Aircraft, all as more particularly described herein and
in the Indenture;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration and receipt and adequacy of
which is hereby acknowledged, and intending to be legally bound, the parties do
hereby agree as follows:
ARTICLE 1.
INTERPRETATION
Section 1.01. Definitions. Capitalized terms used herein and defined
in Appendix A shall, except as such definitions may be specifically modified in
the body
<PAGE>
of this Agreement for the purposes of a particular section, paragraph or clause,
have the meanings given such terms in Appendix A.
Section 1.02. References. References in this Agreement to sections,
paragraphs, clauses, appendices, schedules and exhibits are to sections,
paragraphs, clauses, appendices, schedules and exhibits in and to this Agreement
unless otherwise specified.
Section 1.03. Headings. The headings of the various sections,
paragraphs and clauses of this Agreement and the table of contents are for
convenience of reference only and shall not modify, define, expand or limit any
of the terms or provisions hereof.
Section 1.04. Appendices Schedules and Exhibits. The appendices,
schedules and exhibits are part of this Agreement.
ARTICLE 2.
SALE, LEASING AND SECURED LOAN TRANSACTIONS
Section 2.01. Participation. Subject to all of the terms and
conditions of this Agreement, the parties agree to participate in the secured
loan transactions with respect to the Aircraft provided for in this Section 2.
(a) Secured Loan. Each Loan Participant agrees to provide
immediately available funds in the amount set forth opposite its name on
Schedule I (each such commitment being referred to as a Loan Participant's
"Commitment") to or on behalf of the Company by paying or causing to be paid
such amount to the Company, at the account specified by the Company on or prior
to the Delivery Date. Such funds shall constitute a loan to the Company to be
evidenced by the Equipment Notes and secured as provided in the Indenture.
(b) Delivery Date. The "Delivery Date" shall be the date fixed by
the Company in accordance with this Section 2(e) for the closing of the loan
transactions with respect to the Aircraft contemplated hereby, except that
following such closing the "Delivery Date" shall mean the date on which such
transactions actually closed. The Company shall give at least two Business Days'
notice to each other party hereto of the Delivery Date, which notice shall also
specify the amount of each Loan Participant's Commitment. The Company may
postpone a scheduled Delivery Date from time to time, for any reason by notice
given to the other parties hereto not later than 3:00 p.m. on the date last
scheduled as the Delivery Date, such notice to specify a new Delivery Date. The
making available by the Loan Participants of their Commitment at the closing
shall be deemed a waiver of notice of the Delivery Date by such Loan
Participants respectively and the Indenture Trustee.
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Section 2.02. Closing Procedure.
The closing shall take place at 11:00 a.m. New York City local time
on the Delivery Date at the offices of Fulbright & Jaworski L.L.P., 666 Fifth
Avenue, New York, New York or at such other time and place as the parties may
agree. The closing shall be preceded by a pre-closing at the same place, the
time for which shall be fixed by the Company, at which the forms of the
Operative Documents to be executed, the certificates and other documents to be
delivered and the forms of the legal opinions to be delivered at the closing by
each party or its counsel pursuant to this Agreement shall be available for
inspection by the parties and their respective counsel.
ARTICLE 3.
CONDITIONS PRECEDENT
Section 3.01. Conditions Precedent to Obligations of Participants.
The obligation of each Participant to make the Dollar amount of its respective
Commitment available for payment to the Company on the Delivery Date is subject
to satisfaction or waiver by each such Participant, on or prior to the Delivery
Date, of the conditions precedent set forth below in this Section 3.01;
provided, that it shall not be a condition precedent to the obligation of any
Participant that any document be produced or action taken that is to be produced
or taken by such Participant or by a Person within such Participant's control:
(a) Notice. Such Participant shall have received the notice of the
Delivery Date as provided in Section 2(b), or shall have waived such notice.
(b) Delivery of Documents. Such Participant shall, except as noted
below, have received executed counterparts of the following agreements,
instruments, certificates or documents, and such counterparts (a) shall have
been duly authorized, executed and delivered by the respective party or parties
thereto, (b) shall be reasonably satisfactory in form and substance to such
Participant and (c) shall be in full force and effect:
(i) the Indenture;
(ii) Indenture Supplement No. 1;
(iii) the Equipment Notes dated the Delivery Date; provided that,
only the Subordination Agent shall receive the authenticated Equipment
Notes;
(iv) the broker's report and insurance certificates required by
Section 11 of the Lease;
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(v) (A) a copy of the Certificate of Incorporation and By-Laws of
Company and resolutions of the board of directors of Company and/or the
executive committee thereof, in each case certified as of the Delivery
Date, by the Secretary or an Assistant Secretary of Company, duly
authorizing the execution, delivery and performance by Company of the
Operative Agreements required to be executed and delivered by Company on
or prior to the Delivery Date in accordance with the provisions hereof and
thereof; (B) an incumbency certificate of Company and FNBM as to the
person or persons authorized to execute and deliver the relevant Operative
Agreements on behalf of such party; and (C) a copy of the Certificate of
Incorporation or Articles of Incorporation and By-Laws and general
authorizing resolutions of the boards of directors (or executive
committees) or other satisfactory evidence of authorization of FNBM,
certified as of the Delivery Date by the Secretary or an Assistant or
Assistant Secretary of FNBM, which authorize the execution, delivery and
performance by FNBM, of each of the Operative Agreements to which it is a
party, together with such other documents and evidence with respect to it
as Company or any Participant may reasonably request in order to establish
the consummation of the transactions contemplated by this Agreement and
the taking of all corporate proceedings in connection therewith;
(vi) an Officer's Certificate of Company, dated as of the Delivery
Date, stating that its representations and warranties set forth in this
Agreement are true and correct as of the Delivery Date (or, to the extent
that any such representation and warranty expressly relates to an earlier
date, true and correct as of such earlier date);
(vii) an Officer's Certificate of FNBM, dated as of the Delivery
Date, stating that its representations and warranties, in its individual
capacity or as Indenture Trustee, a Pass-Through Trustee or Subordination
Agent, as the case may be, set forth in this Agreement are true and
correct as of the Delivery Date (or, to the extent that any such
representation and warranty expressly relates to an earlier date, true and
correct as of such earlier date);
(viii) the following opinions of counsel, in each case dated the
Delivery Date:
(A) (I) Jonathan Waller, Senior Vice President and General
Counsel of the Company substantially in the form of Exhibit A-1(a) hereto
and (II) Kennedy Covington, Lobdell & Hickman, special North Carolina
counsel to the Company, substantially in the form of Exhibit A-1(b)
hereto, in each case addressed to the Pass-Through Trustee, each Liquidity
Provider and the Indenture Trustee.
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(B) Fulbright & Jaworski, L.L.P. special counsel for the
Company substantially in the form of Exhibit A-2 hereto addressed to the
Owner Participant, the Indenture Trustee, the Owner Trustee, the
Pass-Through Trustee, each Liquidity Provider and the Company;
(C) Ober, Kaler, Grimes & Shriver, special counsel for the
Indenture Trustee, Pass-Through Trustee and Subordination Agent in the
form of Exhibit A-3 hereto and addressed to the Indenture Trustee, the
Pass-Through Trustee, each Liquidity Provider and the Company; and
(D) Crowe & Dunlevy P.C., special aviation counsel,
substantially in the form of Exhibit A-4 hereto and addressed to the
Indenture Trustee, the Pass-Through Trustee, each Liquidity Provider and
the Company.
(c) Airworthiness. Each Participant shall receive a copy of a
current, valid Standard Certificate of Airworthiness for the Aircraft duly
issued by the FAA.
(d) [Reserved]
(e) Violation of Law. No change shall have occurred after the date
of this Agreement in any Applicable Law that makes it a violation of Law for (a)
Company, any Participant, Subordination Agent, or the Indenture Trustee to
execute, deliver and perform the Operative Agreements to which any of them is a
party or (b) any Participant to make the Dollar amount of its Commitment
available or, to acquire an Equipment Note or to realize the benefits of the
security afforded by the Indenture.
(f) No Event of Default. On the Delivery Date, no event shall have
occurred and be continuing, or would result from the sale or mortgage of the
Aircraft, which constitutes an Indenture Default or Indenture Event of Default.
(g) No Event of Loss. No Event of Loss with respect to the Airframe
or any Engine shall have occurred and no circumstance, condition, act or even
that, with the giving of notice or lapse of time or both, would give rise to or
constitute an Event of Loss with respect to the Airframe or any Engine shall
have occurred.
(h) Title. The Company shall have good title (subject to filing and
recordation of the FAA Bill of Sale with the FAA) to the Aircraft, free and
clear of Liens, except Permitted Liens.
(i) Certification. The Aircraft shall have been duly certificated by
the FAA as to type and airworthiness as required by the terms of the Indenture.
(j) Section 1110. The Indenture Trustee shall be entitled to the
benefits of Section 1110 (as currently in effect) with respect to the right to
take
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possession of the Airframe and Engines as provided in the Indenture in the event
of a case under Chapter 11 of the Bankruptcy Code in which Company is a debtor.
(k) Filings. On the Delivery Date (i) application for registration
of the Aircraft in the name of the Company shall have been duly made with the
FAA in compliance with the provisions of the Transportation Code; and (ii) the
Indenture, Indenture Supplement No. 1 and the FAA Bill of Sale shall have been
duly filed for recordation (or shall be in the process of being so duly filed
for recordation) with the FAA in accordance with the Transportation Code.
(l) Financing Statements. A Uniform Commercial Code financing
statement or statements covering the security interest contemplated by the
Indenture shall have been executed and delivered by the Company as debtor and by
the Indenture Trustee as secured party, and such financing statement or
statements shall have been duly filed in all places necessary or desirable
within the State of North Carolina.
(m) No Proceedings. No action or proceeding shall have been
instituted, nor shall any action be threatened in writing, before any
governmental authority, nor shall any order, judgment or decree have been issued
or proposed to be issued by any Governmental authority, to set aside, restrain,
enjoin or prevent the completion and consummation of this Agreement or any other
Operative Agreement or the transactions contemplated hereby or thereby.
(n) Governmental Action. All appropriate action required to have
been taken prior to the Delivery Date by the FAA, or any governmental or
political agency, subdivision or instrumentality of the United States, in
connection with the transactions contemplated by this Agreement shall have been
taken, and all orders, permits, waivers, authorizations, exemptions and
approvals of such entities required to be in effect on the Delivery Date in
connection with the transactions contemplated by this Agreement shall have been
issued.
(o) Note Purchase Agreement. The conditions precedent to the
obligations of the Loan Participants and the other requirements relating to the
Aircraft and the Equipment Notes set forth in the Note Purchase Agreement shall
have been satisfied.
(p) Perfected Security Interest. On the Delivery Date, after giving
effect to the filing of the documents referenced in Section 3.01(k)(ii) and the
financing statements referenced in Section 3.01(l), the Indenture Trustee shall
have received a duly perfected first priority security interest in all of
Company's right, title and interest in the Aircraft, subject only to Permitted
Liens.
Section 3.02. Conditions Precedent to Obligations of Company. The
obligation of Company to participate in the loan transaction on the Delivery
Date is subject to the satisfaction or waiver by Company, on or prior to the
Delivery Date, of the conditions precedent set forth below in this Section 3.02.
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<PAGE>
(a) Documents. Executed originals of the agreements, instruments,
certificates, documents and opinions described in Section 3.01(b) shall have
been received by Company, except as specifically provided therein, and shall be
satisfactory to Company, unless the failure to receive any such agreement,
instrument, certificate or document is the result of any action or inaction by
Company.
(b) Other Conditions Precedent. Each of the conditions set forth in
Sections 3.01(c), (d) (as to all Participants), (e), (f), (h), (i), (j), (k),
(l), and (m) shall have been satisfied or waived by Company, unless the failure
of any such condition to be satisfied is the result of any action or inaction by
Company.
Section 3.03. Post-Registration Opinion. Promptly upon the
registration of the Aircraft and the recordation of the Documents referenced in
Section 3.01(l)(ii), Company will direct Crowe & Dunlevy P.C., special counsel
in Oklahoma City, Oklahoma, to deliver to Company, each Participant and the
Indenture Trustee a favorable opinion or opinions addressed to each of them with
respect to such registration and recordation.
ARTICLE 4.
COMPANY'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 4.01. Company Representations and Warranties. The Company
represents and warrants that, as of the Delivery Date (unless any such
representation and warranty is specifically made as of an earlier date, in which
case the Company represents and warrants as of such earlier date):
(a) the Company is a corporation duly organized and validly existing
and is in good standing under the laws of Delaware, has its principal place of
business and chief executive office (as such terms are used in Article 9 of the
Uniform Commercial Code) in Durham, North Carolina, and is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the failure to be so qualified or in good standing would have a materially
adverse effect on its business or would impair its ability to perform its
obligations under the Company Documents;
(b) the Company has full power, authority and legal right to conduct
its business and operations as currently conducted and to own or hold under
lease its properties and to enter into and perform its obligations under the
Company Documents;
(c) the Company is an "air carrier" within the meaning of the
Transportation Code and a holder of a certificate under Section 41102(a) of the
Transportation Code and a "citizen of the United States" within the meaning of
Section 40102(a)(15) of the Transportation Code holding an "air carrier
operating certificate" issued under Chapter 447 of the Transportation Code for
aircraft capable of carrying
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<PAGE>
ten or more individuals or 6,000 pounds or more of cargo, and each such
certificate is in full force and effect;
(d) the Company possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents (collectively "permits")
which are necessary to the operation of the routes flown by it and the conduct
of its business and operations as currently conducted and each such permit is in
full force and effect, except for any such permits the failure to have or
maintain which would not have a material adverse effect on the Company or its
ability to perform its obligations under the Company Documents;
(e) the execution, delivery and performance of the Company Documents
by the Company have been duly authorized by all necessary corporate action on
the part of the Company and do not require any stockholder approval, or approval
or consent of any trustee or holder of any indebtedness or obligations of the
Company, and each such Company Documents has been duly executed and delivered
and constitutes the legal, valid and binding obligations of the Company
enforceable against it in accordance with the terms thereof except as such
enforceability may be limited by bankruptcy, insolvency, or other similar laws
or by general equitable principles;
(f) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state governmental
authority or regulatory body is required for the execution, delivery or
performance by the Company of the Company Documents except for such
registrations, applications and recordings referred to in the opinion of Crowe
and Dunlevy P.C. delivered pursuant to Sections 3.01(b)(viii)(D) and the filings
referred to in Section 3.01(k)(ii);
(g) neither the execution, delivery or performance by the Company of
the Company Documents nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a breach
or violation of any of the terms, conditions or provisions of, or will require
any consent or approval under, any law, governmental rule or regulation or the
charter documents, as amended, or bylaws, as amended, of the Company or any
order, writ, injunction or decree of any court or governmental authority against
the Company or by which it or any of its properties is bound or any indenture,
mortgage or contract or other agreement or instrument to which the Company is a
party or by which it or any of its properties is bound, or constitutes or will
constitute a default thereunder or results or will result in the imposition of
any Lien upon any of its properties (other than Permitted Liens), except for any
such conflict, breach or default which would not have a material adverse effect
on the Company or its ability to perform its obligations under the Company
Documents;
(h) except as disclosed in the Offering Memo, there are no pending
or, to the knowledge of the Company, threatened actions, suits, investigations
or proceedings against or affecting the Company or any of its properties before
or by any court or administrative agency which, (A) may reasonably be expected
to have a
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<PAGE>
materially adverse effect on the Company's consolidated financial condition,
business, or operations, or (B) would materially adversely affect the ability of
the Company to consummate the transactions contemplated by the Operative
Documents or to perform its obligations under the Company Documents;
(i) the Company shall not be in default (after any applicable grace
periods) in the performance of any material term or condition of the Purchase
Agreement;
(j) except for (A) the registration in the Company's name of the
Aircraft pursuant to the Transportation Code, (B) the filing with and, where
appropriate, recordation by the FAA pursuant to the Transportation Code of the
Indenture (including Indenture Supplement No. 1), and (C) the filing of the
financing statements referred to in Sections 3.01(l), no further action,
including any filing or recording of any document, is necessary or advisable in
order to perfect the first security interest in and Lien on the Collateral in
favor of the Indenture Trustee;
(k) the Company has received good and marketable title to the
Aircraft, free and clear of all Liens, except Permitted Liens;
(l) assuming the truth of the representations contained in Section
3.12 of the Pass-Through Trust Agreements and compliance with Section 10.06 of
the Indenture, the execution and delivery of this Agreement and the other
Operative Agreements and the consummation of the transactions contemplated
hereby and thereby will not involve any prohibited transaction within the
meaning of Section 406(a) of ERISA, or Section 4975(c)(1)(A) through (D) of the
Code;
(m) all premiums which have become due with respect to the insurance
required to be provided by the Company on or prior to the Delivery Date under
Section 9 of the Lease have been paid by the Company;
(n) no Default exists and no Event of Loss, or event which with the
passage of time would constitute an Event of Loss, exists;
(o) the Aircraft is in such condition so as to enable the
airworthiness certificate of such Aircraft to be in good standing under the
Transportation Code; the Aircraft has been duly certificated by the FAA as to
type and airworthiness; there is in effect with respect to the Aircraft a
current and valid airworthiness certificate issued by the FAA pursuant to the
Transportation Code;
(p) neither the Company nor any subsidiary of the Company is an
"investment company" or a company "controlled by an investment company" within
the meaning of the Investment Company Act of 1940, as amended;
(q) there are no broker's or underwriter's fees payable on behalf of
the Company in connection with the transactions contemplated in the Operative
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Agreements, other than those of the Placement Agents and the Company Advisor
referred to in Article 8 hereof; and
(r) the Company represents and warrants that it has authorized no
one to act on its behalf in connection with the offer or sale of any interest in
the Equipment Notes or the Pass-Through Certificates other than the Placement
Agents.
Section 4.02. Certain Covenants of Company. The Company covenants
and agrees as follows:
(a) Filings and Recordings. The Company will cause to be done,
executed, acknowledged and delivered at the Company's cost and expense all such
further acts, conveyances and assurances as the Indenture Trustee or the
Pass-Through Trustee shall reasonably require for accomplishing the purposes of
the Operative Agreements. Without limiting the generality of this Section
4.02(a), the Company will promptly take, or cause to be taken, at the Company's
cost and expense, such action with respect to the recording, filing,
re-recording and re-filing of the Indenture (including each supplement thereto),
the Lease (including each supplement thereto), and any financing statements or
other instruments as may be reasonably requested by the Indenture Trustee and
appropriate, to maintain the perfection of the first security interest and the
Lien created by the Indenture, as against the Company and any third parties, or
if the Company cannot take, or cause to be taken, such action, will furnish to
the Indenture Trustee timely notice of the necessity of such action, together
with such instruments, in execution form, and such other information as may be
required to enable either of them to take such action at the Company's cost and
expense in a timely manner.
(b) Registration. From and after the Delivery Date, the Company
shall cause the Aircraft to be duly registered, and at all times to remain duly
registered, in the name of the Company under the Transportation Code, provided,
however, that the Company may, at any time cause the Aircraft to be
appropriately re-registered under the laws of a country with which at the time
of such registration the United States maintains normal diplomatic relations and
is listed on Exhibit C to the Indenture; provided that:
(i) at the time of re-registration, no Specified Default exists or
would occur as a result of such re-registration;
(ii) the Company shall pay all fees and expenses (including the
reasonable fees and expenses of local counsel in such country) relating to
such re-registration;
(iii) the Company shall, at its cost, cause the interest of the
Company as owner of the Aircraft and the Indenture Trustee as mortgagee
thereof to be duly registered or recorded under the laws of such country
and at all times thereafter to remain so duly registered or recorded
unless and until the
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registration of the Aircraft is changed as provided herein, and shall
cause to be done at all times all other acts including the filing,
recording and delivery of any document or instrument and the payment of
any sum necessary or, by reference to prudent industry practice in such
country, advisable in order to create, preserve and protect such interest
in the Aircraft (including the first priority duly perfected Lien under
the Indenture) as against the Company or any third parties in such
jurisdiction, and the laws of such country would give effect to the
Indenture Trustee's Lien thereon;
(iv) the obligations of the Company and each other party under the
Operative Documents (and of the Permitted Lessee, if any, under a Lease)
shall remain or be, as the case may be, legal, valid, binding and
enforceable in such country;
(v) The Company shall ensure that all insurance provided for herein
shall be in full force and effect prior to, at the time of, and after such
change in registration and the Indenture Trustee shall receive a
certificate of Company's insurance broker to such effect;
(vi) the country of such re-registration imposes aircraft
maintenance standards approved by, or at least as stringent as those
approved by, the FAA or the central civil aviation authority of the United
Kingdom, France, Germany, Japan, the Netherlands or Canada;
(vii) it shall not be necessary by reason of such re-registration or
for purposes of enforcing remedies contained in the Indenture or the
related Lease for the Indenture Trustee to register or qualify to do
business in such country;
(viii) no Liens (except Permitted Liens) shall arise by reason of
such reregistration, and the Indenture shall continue as a first priority
Lien on the collateral thereunder;
(ix) the Indenture Trustee shall not be subjected to any adverse tax
consequences for which the Company is not required to and does not then
indemnify such Person in a manner reasonably satisfactory to such Person
as a result of such re-registration:
(x) any export licenses and certificate of deregistration required
in connection with any repossession or return of the Aircraft will be
readily obtain able in the normal course without material delay or
material burden on the Indenture Trustee, it being agreed that the Company
shall be responsible be responsible for the cost thereof; and
(xi) the Indenture Trustee shall have received opinions in scope,
form and substance reasonably satisfactory to them, of counsel, expert in
the laws of such
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country, to the effect set forth in clauses (iii), (iv) (with respect to
the obligations of the Company under the Indenture), (vii) and (x).
The Company agrees to pay on an After-Tax Basis all reasonable
out-of-pocket costs and expenses (including, without limitation, reasonable
counsel fees and disbursements) of the Indenture Trustee in connection with any
re-registration pursuant to this Section.
(c) [Reserved]
(d) Corporate Existence. The Company shall at all times maintain its
corporate existence except as permitted by Section 4.02(e) hereof and all of its
rights, privileges and franchises necessary in the normal conduct of its
business, except for any corporate right, privilege or franchise that it
determines, is no longer necessary or desirable in the conduct of its business.
(e) Merger and Consolidation. So long as the Lien of the Indenture
has not been discharged, the Company shall not enter into any merger with or
into or consolidation with, or sell, convey, transfer, lease or otherwise
dispose of in one or a series of transactions all or substantially all of its
assets as an entirety to any Person, unless the surviving corporation or Person
which acquires by purchase, conveyance, transfer or lease all or substantially
all of the assets of the Company as an entirety (i) is a domestic corporation
organized and existing under the laws of the United States or any State of the
United States (ii) is a Citizen of the United States, (iii) is a Section 1110
Person, so long as such status is a condition to the availability of Section
1110 of the Bankruptcy Code, (iv) if not the Company, executes a duly
authorized, legal, valid, binding, and enforceable agreement containing an
effective assumption of all of the Company's, as applicable, obligations
hereunder and under the other Operative Agreements, and each other document
contemplated hereby or thereby and delivers such instrument to the Indenture
Trustee, (v) provides an opinion from counsel (which counsel may be in the
Company's General Counsel) delivered to the Indenture Trustee, which opinion
shall be reasonably satisfactory to the Indenture Trustee, and an officer's
certificate (which may rely, as to legal matters, on such legal opinion), each
stating that such merger, consolidation, conveyance, transfer, lease or other
disposition and the instrument noted in clause (iv) above comply with this
Section 4.02(e), that such instrument is a legal, valid and binding obligation
of, and is enforceable against, such survivor or Person, and that all conditions
precedent herein provided for relating to such transaction have been complied
with, and (vi) such survivor or Person makes such filings and recordings with
the FAA as may be required pursuant to part A of subtitle VII or Title 49,
United States Code to evidence such merger or consolidation; provided that, no
such merger, consolidation or conveyance, transfer or lease shall be permitted
if, immediately after giving effect such consolidation, merger, purchase,
conveyance, transfer, lease or other disposition, an Event of Default shall have
occurred and be continuing.
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Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Company and the
satisfaction of the conditions specified in this Section 4.02(e), the successor
corporation formed by such consolidation or into which the Company is merged or
the Person 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 and the Lease and each other Operative Agreement and any
other document contemplated hereby and thereby to which the Company is a party
with the same effect as if such successor corporation had been named as the
Company herein and therein. No such conveyance, transfer or lease of all or
substantially all of the assets of the Company as an entirety shall have the
effect of releasing the Company or any successor corporation which shall
theretofore have become the Company hereunder in the manner prescribed in this
Section 4.02(e) from its liability hereunder or under the other Operative
Agreements. Nothing contained herein shall permit any lease, sublease, or other
arrangement for the use, operation or possession of the Aircraft except in
compliance with the applicable provisions of the Lease.
(f) Change of Location. The Company agrees to give prompt written
notice to the Indenture Trustee of any change in the address of its chief
executive office (as such term is used in Section 9-103(3) of the North Carolina
Uniform Commercial Code) or of any change in its corporate name, provided that,
notice is hereby given that the Company plans to so change such address on or
about January 1, 1999 to 2801 Slater Road, Morrisville, NC 27560.
(g) Notice of Lease. In the event that the Company leases the
Aircraft pursuant to Section 4.01(b)(x) of the Indenture, it shall give notice
of such lease (promptly thereafter) to each of (i) Moody's Investor Service, 99
Church Street, New York, New York 10007, Attention: Corporate Rating Division
(facsimile no.: (212) 533-1607) and (ii) Standard and Poor's Rating Agency, 26
Broadway, 14th Floor, New york, New York 10004 (facsimile no.: (212) 412-0540).
Section 4.03. Survival of Representations and Warranties. The
representations and warranties of the Company provided in Section 4.01 and in
any other Operative Agreement shall survive the delivery of the Aircraft and the
expiration or other termination of this Agreement and the other Operative
Agreements.
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ARTICLE 5.
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.01. Representations, Warranties and Covenants of the
Indenture Trustee.
(a) Representations and Warranties. The Indenture Trustee in its
individual capacity represents on the Delivery Date as follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
and has the power and authority to enter into and perform its obligations
under the Indenture, this Agreement and the other Operative Agreements to
which it is a party and to authenticate the Equipment Notes to be
delivered on the Delivery Date;
(ii) the Indenture and this Agreement and the other Operative
Agreements to which it is or is to be a party, and the authentication of
the Certificates, have been duly authorized by all necessary corporate
action on its part, and neither the execution and delivery thereof nor its
performance of any of the terms and provisions thereof will violate any
federal or Maryland law or regulation relating to its banking or trust
powers or contravene or result in any breach of, or constitute any default
under, its articles of association or by-laws;
(iii) each of the Indenture and this Agreement, and the other
Operative Agreements to which it is a party, has been duly executed and
delivered by it and, assuming that each such agreement is the legal, valid
and binding obligation of each other party thereto, is (or will be, as the
case may be), the legal, valid and binding obligation of the Indenture
Trustee, enforceable against the Indenture Trustee in accordance with its
terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws or equitable principles
of general application to or affecting the enforcement of creditors'
rights (regardless of whether enforceability is considered in a proceeding
in equity or at law);
(iv) neither the execution and delivery by it of the Indenture and
this Agreement and the other Operative Agreements to which it is or is to
be a party, nor the performance by it 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 in respect of, any Federal or state governmental authority or
agency governing its banking and trust powers; and
(v) it has made a filing with the New York State Banking Department
under Section 131(3) of the New York Banking Law in respect of the
performance of its duties relating to the Trust Indenture.
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(b) Indenture Trustee's Liens. The Indenture Trustee, in its
individual capacity, represents, warrants and covenants that there are no
Indenture Trustee's Liens. The Indenture Trustee, in its individual capacity,
covenants and agrees that it will at its own expense take such action as may be
necessary to duly discharge and satisfy in full, promptly, and in any event
within 30 days, after the same shall first become known to it, any Indenture
Trustee's Liens.
(c) Indemnity for Indenture Trustee's Liens. The Indenture Trustee,
in its individual capacity, agrees to indemnify and hold harmless the Company
and the Pass-Through Trustee from and against any actual out-of-pocket loss,
cost, expense or damage which may be suffered by the Company or the Pass-Through
Trustee as a result of the failure of the Indenture Trustee to discharge and
satisfy any Indenture Trustee's Liens attributable to it in its individual
capacity, as described in Section 5.01(b) hereof.
Section 5.02. Indenture Trustee's Notice of Default Trustee's Notice
of Default. The Indenture Trustee agrees to give the Company notice of any
Indenture Default or Indenture Event of Default promptly upon a Responsible
Officer of the Indenture Trustee having actual knowledge thereof.
Section 5.03. Releases from Indenture. The Indenture Trustee
covenants and agrees, for the benefit of the Company to execute and deliver the
instruments of release from the Lien of the Indenture which it is required to
execute and deliver in accordance with the provisions of Article XIV of the
Indenture.
Section 5.04. The Company's Right of Quiet Enjoyment.
Notwithstanding any other provision of any of the Operative Agreements, each
other party to this Agreement agrees, severally and as to its own actions only,
that it will not, so long as no Indenture Event of Default shall have occurred
and be continuing, take or cause to be taken any action contrary to the
Company's rights under the Indenture, including, without limitation, its rights
to possession, use and quiet enjoyment of the Aircraft during the Term.
Section 5.05. Pass-Through Trustee's Representations and Warranties.
The Pass-Through Trustee, in its individual capacity, represents and warrants as
of the Delivery Date that:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
and has full the power and authority to enter into and perform its
obligations under the Pass-Through Trust Agreements, the Intercreditor
Agreement and this Agreement and to execute and authenticate the
Pass-Through Certificates to be delivered on the Pass-Through Closing
Date;
(ii) the execution, delivery and performance of this Agreement, and
the Pass-Through Trust Agreement and the performance of its obligations
hereunder
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and thereunder have been fully authorized by all necessary corporate
action on its part, and neither the execution and delivery thereof nor its
performance of any of the terms and provisions thereof will violate any
federal or Maryland law or regulation relating to its banking or trust
powers or contravene or result in any breach of, or constitute any default
under its articles of association, or bylaws or the provisions of any
indenture, mortgage, contract or other agreement to which it is a party or
by which it or its properties may be bound or affected; and
(iii) each of this Agreement and the Pass-Through Trust Agreement
has been duly executed and delivered by it (in its individual and trust
capacities) and, assuming that each such agreement is the legal, valid and
binding obligation of each other party thereto, is or will be, as the case
may be, the legal, valid and binding obligation of the Pass-Through
Trustee (in its individual and trust capacities), enforceable in
accordance with its respective terms except as limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights generally (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(iv) there are no Taxes payable by the Pass-Through Trustee imposed
by the State of Maryland 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 (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 the
Pass-Through Trust Agreements), and there are no Taxes payable by the
Pass-Through Trustee imposed by the State of Maryland or any political
subdivision thereof in connection with the acquisition, possession or
ownership by the Pass-Through Trustee of any of the Certificates 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 the Pass-Through Trust
Agreements;
Section 5.06. Survival of Representations, Warranties and Covenants.
Representations, warranties and covenants of the Pass-Through Trustee (in its
individual or trust capacity), the Indenture Trustee (in its individual or trust
capacity) and the Subordination Agent (in its individual or trust capacity)
provided for in this Article 5, and their respective obligations under any and
all of them, shall survive the delivery of the Aircraft and the expiration or
other termination of this Agreement and the other Operative Agreements.
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Section 5.07. Subordination Agent's Representations, Warranties and
Covenants.
(a) Representations and Warranties. The Subordination Agent
represents and warrants as of the Delivery Date that:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
and has the corporate power and authority to enter into and perform its
obligations under this Agreement, the Liquidity Facilities and the
Intercreditor Agreement;
(ii) the execution, delivery and performance of this Agreement, each
of the Liquidity Facilities and the Intercreditor Agreement and the
performance of its obligations hereunder and thereunder have been fully
authorized by all necessary, corporate action on its part, and, neither
the execution and delivery thereof nor its performance of any of the terms
and provisions thereof will violate any federal or Maryland law or
regulation relating to its banking or trust powers or contravene or result
in any breach of, or constitute any default under its articles of
association, or bylaws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it or its
properties may be bound or affected;
(iii) each of this Agreement, the Liquidity Facilities and the
Intercreditor Agreement has been duly executed and delivered by it and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is or will be, as the case may be,
the legal, valid and binding obligation of the Subordination Agent,
enforceable in accordance with its respective terms except as limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) there are no Taxes payable by the Subordination Agent imposed
by the State of Maryland 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), and there are no Taxes payable by the Subordination Agent
imposed by the State of Maryland or any political subdivision thereof in
connection with the acquisition, possession or ownership by the
Subordination Agent of any of the Certificates 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);
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(v) to the best of the Subordination Agent's knowledge, 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;
(vi) the Subordination Agent has not directly or indirectly offered
any Certificate for sale to any Person or solicited any offer to acquire
any Certificates from any Person, nor has the Subordination Agent
authorized anyone to act on its behalf to offer directly or indirectly any
Certificate for sale to any Person, or to solicit any offer to acquire any
Certificate from any Person; and the Subordination Agent is not in default
under any Liquidity Facility; and
(vii) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Underwriter or the Company.
(b) Covenants.
(i) The Subordination Agent agrees not to amend any Liquidity
Facility or the Intercreditor Agreement without the consent of the
Company.
(ii) At any time when directed by the Company, the Subordination
Agent shall replace any Liquidity Provider pursuant to Section 3.6(e) of
the Intercreditor Agreement. Except as otherwise expressly provided in the
Intercreditor Agreement, the Subordination Agent shall not in any other
instance replace any Liquidity Provider in respect of any Liquidity
Facility.
(iii) In connection with the deposit in the applicable Cash Account
of amounts drawn pursuant to any Downgrade Drawing or Non-Extension
Drawing (as defined in the Liquidity Facility) under a Liquidity Facility,
the Subordination Agent agrees, so long as no Event of Default shall have
occurred and be continuing, to pay to the Company promptly following each
Regular Distribution Date any Investment Earnings on the amount so
deposited which remain after application of such Investment Earnings
pursuant to Section 2.06 of such Liquidity Facility to the interest
payable on such Downgrade Drawing under Section 3.07 of such Liquidity
Facility. Capitalized terms used in this Section 7.01(b) shall have the
meanings specified in the Intercreditor Agreement.
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ARTICLE 6.
[RESERVED]
ARTICLE 7.
GENERAL INDEMNITY
Section 7.01. Generally.
(a) Indemnity. The Company agrees to indemnify each Indemnitee
against and agrees to protect, defend, save and keep harmless each Indemnitee
against and in respect of, and will pay on an After-Tax Basis, from any and all
liabilities, obligations, losses, damages, penalties, claims, actions, suits,
costs, disbursements and expenses, demands or judgments (including reasonable
legal fees and expenses) of every kind and nature, whether or not any of the
transactions contemplated by this Agreement are consummated (individually, an
"Expense," collectively, "Expenses"), which may be imposed on, incurred or
suffered by or asserted against any Indemnitee, in any way relating to, arising
out of or in connection with, any one or more of the following:
(i) any Operative Agreement or Pass-Through Document or any
transaction contemplated hereby or thereby;
(ii) the operation, possession, use, non-use, maintenance, storage,
overhaul, delivery, non-delivery, control, repair or testing of the
Aircraft, Airframe, or any Engine or any engine used in connection with
the Airframe, or any Part thereof by the Company, any sublessee or any
other Person whatsoever, whether or not such operation, possession, use,
non-use, maintenance, storage, overhaul, delivery, non-delivery, control,
repair or testing is in compliance with the terms of the Lease, including,
without limitation, claims for death, personal injury or property damage
or other loss or harm to any Person whatsoever, including, without
limitation, any passengers, shippers or other Persons wherever located,
and claims or penalty relating to any laws, rules or regulations,
including, without limitation, environmental control, noise and pollution
laws, rules or regulation;
(iii) the manufacture, design, sale, return, purchase, acceptance,
rejection, delivery, non-delivery, condition, repair, modification,
servicing, rebuilding, airworthiness, registration, reregistration,
deregistration, ownership, financing, import, export, performance,
non-performance, lease, sublease, transfer, merchantability, fitness for
use, alteration, substitution or replacement of any Airframe, Engine, or
Part or other transfer of use or possession, or other disposition of the
Aircraft, the Airframe, any Engine or any Part including, without
limitation, latent and other defects, whether or not discoverable, strict
tort liability, and any claims for patent, trademark or copyright
infringement;
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(iv) any breach of or failure to perform or observe, or any other
non-compliance with, any condition, covenant or agreement to be performed,
or other obligations of the Company under any of the Operative Agreements
or any Pass-Through Trust Agreement, or the falsity or inaccuracy of any
representation or warranty of the Company in any of the Operative
Agreements or any Pass-Through Trust Agreement (other than representations
and warranties in the Tax Indemnity Agreement);
(v) the enforcement of the terms of the Operative Agreements; and
(vi) the offer, issuance, sale or delivery of any Equipment Note or
any Pass-Through Certificate.
(b) Exceptions. The indemnity provided for in Section 7.01(a) shall
not extend to any Expense of any Indemnitee to the extent it:
(i) is attributable to the willful misconduct or gross negligence of
such Indemnitee (other than gross negligence or willful misconduct imputed
to such person by reason of its interest in the Aircraft or any
transaction documents);
(ii) is a Tax or loss of a Tax benefit;
(iii) is a cost or expense required to be paid by such Indemnitee or
its permitted transferees (and not by the Company) pursuant to this
Agreement or any other Operative Agreement and for which the Company is
not otherwise obligated to reimburse such Indemnitee, directly or
indirectly pursuant to the terms of this Agreement or such other Operative
Agreement;
(iv) is attributable to the incorrectness or breach such by any
Indemnitee of its representations or warranties, under any of the
Operative Agreements;
(v) is attributable to the failure by any Indemnitee to perform any
of its obligations under any of the Operative Agreements;
(vi) is an Expense arising under or in connection with any
"prohibited transaction", within the meaning of Section 406 of ERISA or
Section 4975(c)(1) of the Code or any similar provision of state law;
(vii) except during the continuation of an Event on Default, is
attributable to any amendment to any of the Operative Agreements which is
not requested by the Company or is not required or made pursuant to the
terms of any of the Operative Agreements;
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(viii) is attributable to the exercise by any Indemnitee of any
right to inspect the Aircraft except with respect to any such inspection
conducted while an Event of Default is continuing; and
(ix) constitutes the loss of future profits or losses attributable
to such Indemnitee's overhead.
Section 7.02. Notice and Payment. Each Indemnitee shall give prompt
written notice to the Company of any liability for which the Company is, or may
be, liable under this Article 7; provided, however, that failure to give such
notice shall not terminate any of the rights of an Indemnitee under this Article
7, except to the extent that such failure adversely affects any applicable
defense or counterclaim, otherwise increases the amount the Company would have
been liable for in the absence of such failure to provide such notice or
adversely affects the ability of Company's insurers to defend such claim.
Section 7.03. Defense of Claims. The Company or its insurers shall
have the right (in each such case at the Company's sole expense) to investigate,
defend (and control the defense of) any such claim for which indemnification is
sought pursuant to this Article 7 and each Indemnitee shall cooperate with the
Company or its insurers with respect thereto, provided that, without limiting
the right of the Company's insurers to assume and control the defense of, or to
compromise, any such claim, the Company shall not be entitled to assume and
control the defense of or compromise any such claim (A) during the continuance
of any Event of Default arising under Section 14(a) of the Lease, (B) if an
actual or potential material conflict of interest exists making it advisable (on
the basis of prevailing standards of professional responsibility) for such
Indemnitee to be represented by separate counsel or on the grounds that such
proceeding involves the potential imposition of criminal liability on such
Indemnitee or (C) such proceeding will involve any material risk of the sale,
forfeiture or loss of, or the creation of any Lien (other than Permitted Liens)
on the Aircraft or the Trust Estate (unless the Company posts a bond or other
security reasonably acceptable in form and substance to such Indemnitee) or
involve any material risk of criminal liability to such Indemnitee for which it
is not indemnified hereunder and, in any such case, the relevant Indemnitee
will, in good faith, undertake the defense of such claim at the expense of the
Company. Subject to the immediately foregoing sentence, where the Company or the
insurers under a policy of insurance maintained by the Company undertake the
defense of an Indemnitee with respect to such a claim, no additional legal fees
or expenses of such Indemnitee in connection with the defense of such claim
shall be indemnified hereunder unless the fees or expenses were incurred at the
written request of the Company or such insurers. Subject to the requirement of
any policy of insurance applicable to a claim, an Indemnitee may participate at
its own expense at any judicial proceeding controlled by the Company or its
insurers pursuant to the preceding provisions, to the extent that such party's
participation does not, in the opinion of the independent counsel appointed by
the Company or its insurers to conduct such proceedings, interfere with such
control; and such participation shall not constitute a waiver of the
indemnification provided in this Section 7.03. No Indemnitee
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shall enter into any settlement or other compromise with respect to any claim
described in this Section 7.03 without the prior written consent of the Company,
unless such Indemnitee waives its right to be indemnified under this Article 7
with respect to such claim. The Company shall not enter into any settlement or
compromise with respect to which the Company has not agreed to indemnify such
Indemnitee to such Indemnitee's satisfaction or which admits any criminal
violation, gross negligence or willful misconduct on the part of any Indemnitee
without the prior written consent of such Indemnitee.
Section 7.04. Insured Claims. Notwithstanding any other provision of
this Article 7 to the contrary, in the case of any claim indemnified by the
Company hereunder which is covered by a policy of insurance maintained by the
Company pursuant to Section 9 of the Lease or otherwise, it shall be a condition
of such indemnity with respect to any particular Indemnitee that such Indemnitee
shall cooperate with the insurers in the exercise of their rights to
investigate, defend or compromise such claim as may be required to retain the
benefits of such insurance with respect to such claim.
Section 7.05. Subrogation. To the extent that an Expense indemnified
by the Company under this Article 7 is in fact paid by the Company and/or an
insurer under a policy of insurance maintained by the Company, the Company
and/or such insurer as the case may be shall be subrogated to the extent of such
payment to the rights and remedies of the Indemnitee on whose behalf such
Expense was paid with respect to the transaction or event giving rise to such
Expense. Should an Indemnitee receive any refund, in whole or in part, with
respect to any Expense paid by the Company hereunder, it shall promptly pay over
the amount refunded, together with any interest received with respect to such
amount for the period between the indemnification payment and the receipt of
such refund, to the Company.
Section 7.06. Survival of Obligations. The indemnities and
agreements of the Company provided for in this Article 7 shall survive the
expiration or other termination of this Agreement.
Section 7.07. Effect of Other Indemnities. The Company's obligations
under this Article 7 shall be those of a primary obligor whether or not the
Person indemnified shall also be indemnified with respect to the same matter
under the terms of this Agreement, or any other document or instrument, and the
Person seeking indemnification from the Company pursuant to any provision of
this Agreement may proceed directly against the Company without first seeking to
enforce any other right of indemnification.
Section 7.08. Waiver of Certain Claims. The Company hereby waives
and releases any Claim now or hereafter existing against any Indemnified Person
arising out of death or personal injury to personnel of the Company, loss or
damage to property of the Company, or the loss of use of any property of the
Company, which results from or arises out of the condition, use or operation of
the Aircraft during the
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Term, including, without limitation, any latent or patent defect whether or not
discoverable.
ARTICLE 8.
TRANSACTION COSTS
Section 8.01. Transaction Costs and Other Costs.
(a) Transaction Costs. The Company shall pay all fees and expenses
of the following persons relating to the offering of the Pass-Through
Certificates contemplated by the Placement Agreement and related to the
transactions contemplated hereby: (i) the reasonable fees and expenses of the
respective counsel for the Company, the Indenture Trustee, the Subordination
Agents, the Pass-Through Trustee, each Liquidity Provider and the Placement
Agents (other than those fees, expenses and disbursements payable by the
Placement Agent pursuant to the Placement Agreement); (iii) the reasonable fees
and expenses of special aviation counsel; (iv) any initial fees and expenses of
the Pass-Through Trustee and each Liquidity Provider and the fees and expenses
of the Subordination Agent and the Indenture Trustee; (v) any compensation,
commissions and discounts payable to the Placement Agents pursuant to the
Placement Agreement; (vi) the fees and expenses incurred in connection with
printing any offering memorandum for the offering of the Pass-Through
Certificates and; (vii) the fees and expenses of Moody's and S&P; (viii) the
fees and expenses of The Seabury Group LLC;
(b) Continuing Expenses. The Company agrees to pay (i) the
continuing fees, expenses and disbursements (including reasonable counsel fees
and expenses) of the Indenture Trustee, with respect to the administration of
the Trust Indenture Estate; (ii) the continuing fees, expenses and disbursements
(including reasonable counsel fees and expenses) of the Pass-Through Trustee and
the Subordination Agent; and (iv) the continuing fees, expenses and
disbursements (including reasonable counsel fees and expenses) of the Liquidity
Providers as expressly provided in each Liquidity Facility.
(c) Amendments and Supplements. Without limitation of the foregoing,
the Company agrees to pay, to the Indenture Trustee, the Subordination Agent,
the Liquidity Providers and the Pass-Through Trustee all costs and expenses
(including reasonable legal fees and expenses) incurred by any of them in
connection with any amendment, supplement, waiver or consent (whether or not
entered into) under this Agreement or any other Operative Agreement or document
or instrument delivered pursuant to any of them, which amendment, supplement,
waiver or consent is required by any provision of any Operative Agreement or is
requested by the Company or necessitated by the action or inaction of the
Company.
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ARTICLE 9.
[RESERVED]
ARTICLE 10.
LIABILITIES AND INTERESTS OF HOLDERS
Section 10.01. Interest of Holders of Equipment Notes. Each Holder
of an Equipment Note shall have no further interest in, or other right with
respect to, the Trust Indenture Estate when and if the principal and interest on
all Certificates held by such Holder and all other sums payable to such Holder
under this Agreement, under the Indenture and under such Certificates shall have
been paid in full.
ARTICLE 11.
OTHER DOCUMENTS
Section 11.01. Consent of Company to Other Documents. The Company
hereby consents in all respects to the execution and delivery of the
Intercreditor Agreement and the Liquidity Facilities.
Section 11.02. Pass-Through Trustee's and Subordination Agent's
Acknowledgment. The Pass-Through Trustee and the Subordination Agent hereby
acknowledge and agree to be bound by all of the terms and conditions of the
Indenture.
ARTICLE 12.
NOTICES
Section 12.01. Notices. All notices, demands, declarations and other
communications required by this Agreement shall be in writing and shall be
deemed received (a) if given by telecopier, when transmitted and the appropriate
telephonic confirmation received if transmitted on a Business Day and during
normal business hours of the recipient, and otherwise on the next Business Day
following transmission, or (b) if given by certified mail, return receipt
requested, by courier service, or by any other commercially customary means,
when received or personally delivered, addressed:
(a) if to the Company, to its office at 300 W. Morgan Street, Suite
1200, Durham, North Carolina, Attention: General Counsel, telephone (919)
956-4810, facsimile (919) 956-7568; or to such other address as the
Company shall from time to time designate in writing to the Indenture
Trustee;
(b) if to the Indenture Trustee, the Subordination Agent or the
Pass-Through Trustee, to its office at 25 South Charles Street, Mail Code
101-591, Baltimore, Maryland 21201 Attention: Corporate Trust Department,
telephone (410) 244-4626 facsimile (410) 244-4236; or to such other
address as the
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Indenture Trustee or the Pass-Through Trustee, as the case may be, shall
from time to time designate in writing to the Company; and
(c) if to the Liquidity Provider, to its office at _______________,
or to such other address as a Liquidity Provider shall from time to time
designate in writing to the Company and the Indenture Trustee.
ARTICLE 13.
[RESERVED]
ARTICLE 14.
[RESERVED]
ARTICLE 15.
MISCELLANEOUS
Section 15.01. Counterparts. This Agreement may be executed by the
parties 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 15.02. No Oral Modifications. Neither this Agreement nor any
of its terms may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification is sought. No such written termination, amendment, supplement,
waiver or modification shall be effective unless a signed copy shall have been
delivered to and executed by the Company and the Indenture Trustee. A copy of
each such termination, amendment, supplement, waiver or modification shall also
be delivered to each other party to this Agreement.
The consent of each of the Pass-Through Trustee and the
Subordination Agent, in its capacity as a party to this Agreement and not as a
Holder, shall not be required to modify, amend or supplement this Agreement or
to give any consent, waiver, authorization or approval with respect to this
Agreement under the circumstances in which the consent of the Indenture Trustee
would not be required for such modification, amendment, supplement, consent,
waiver or approval in accordance with Section 6.01(b) of the Indenture, provided
that the Pass-Through Trustee shall be entitled to receive an Opinion of Counsel
(as defined in the Pass-Through Trust Agreement) necessary, in its sole
discretion, to establish that the Indenture Trustee's consent would not be
required under such circumstances.
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Section 15.03. Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
Section 15.04. Successors and Assigns. The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the Company and its
successors and permitted assigns, the Subordination Agent and its successors and
permitted assigns, including without limitation each Holder of a Certificate,
the Indenture Trustee and its successors as Indenture Trustee (and any
additional indenture trustee appointed) under the Indenture and the Pass-Through
Trustee and its successors as Pass-Through Trustee (and any additional
Pass-Through trustee appointed).
Section 15.05. Concerning the Indenture Trustee and the Pass-Through
Trustee. FNBM is entering into this Agreement solely in its capacity (except to
the extent otherwise expressly indicated), as Indenture Trustee under the
Indenture and as Pass-Through Trustee under the Pass-Through Trust Agreement and
as Subordination Agent under the Subordination Agreement, and except as
otherwise expressly provided in this Agreement or in the Indenture or the
Pass-Through Trust Agreement FNBM shall not be personally liable for or on
account of its statements, representations, warranties, covenants or obligations
under this Agreement; provided, however, that FNBM accepts the benefits running
to it under this Agreement, and each agrees that (except as otherwise expressly
provided in this Agreement or any other Operative Agreement to which it is a
party) it shall be liable in its individual capacity for (a) its own gross
negligence or willful misconduct (whether in its capacity as trustee or in its
individual capacity), (b) any breach of representations and warranties or any
breach of covenants made in its individual capacity pursuant to or in connection
with this Agreement or the other Operative Agreements to which it is a party,
(c) the failure to use ordinary care in receiving, handling and disbursing
funds, (d) in the case of the Indenture Trustee, Indenture Trustee's Liens, and
(e) taxes, fees or other charges on, or based on, or measured by, any fees,
commissions or compensation received by it in connection with the transactions
contemplated by the Operative Agreements.
Section 15.06. Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 15.07. GOVERNING LAW. THIS AGREEMENT IS BEING DELIVERED IN
THE SATE OF NEW YORK, AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAWS.
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Section 15.08. Section 1110 Compliance. The parties hereto agree
that the transactions contemplated by the Operative Agreements are expressly
intended to be, shall be, and should be construed so as to be entitled to the
benefits and protection of Section 1110 of the Bankruptcy Code.
Section 15.09. Reliance of Liquidity Providers. Each of the parties
hereto agrees and acknowledges that each Liquidity Provider shall be a third
party beneficiary of each of the representations and warranties made herein by
such party (and of each covenant herein made by such party to each Liquidity
Provider), and that each Liquidity Provider may rely on such representations,
warranties and covenants to the same extent as if such representations,
warranties and covenants were made to such Liquidity Provider directly. The
terms of this Agreement shall inure to the benefit of each Liquidity Provider,
their respective successors and permitted assigns.
* * *
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IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers as of the
day and year first written above.
MIDWAY AIRLINES CORPORATION
By: ___________________________
Name:
Title:
THE FIRST NATIONAL BANK OF
MARYLAND, as Indenture Trustee,
Pass-Through Trustee and
Subordination Agent
By: ___________________________
Name:
Title:
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Schedule I
Loan Amounts
Loan Participant Amount
---------------- ------
1998-A1 Pass-Through Trust $______________
1998-B Pass-Through Trust $______________
1998-C Pass-Through Trust $______________
1998-D Pass-Through Trust $______________
<PAGE>
[Owned Aircraft
Definitions]
APPENDIX A
DEFINITIONS [N_______]
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (as defined below), unless otherwise
defined in an Operative Agreement or the context thereof shall otherwise
require. In the case of any conflict between the provisions of this Appendix and
the provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean such agreements as amended and supplemented from time to
time, and (ii) references to parties to agreements shall be deemed to include
the successors and permitted assigns of such parties.
"Additional Insureds" means the Indenture Trustee (in its individual and
trust capacities) and each Liquidity Provider.
"Aeronautics Authority" means as of any time of determination, the FAA or
other governmental airworthiness authority having jurisdiction over the Aircraft
or the Airframe and Engines or engines attached thereto under the laws of the
country in which the Airframe is then registered.
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling 50% or more of any class of voting securities of such
Person or otherwise controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract or
otherwise.
"After Tax Basis" means a basis such that any payment to be received by a
Person shall be supplemented by a further payment to such Person so that the sum
of the two payments, after deduction of all Taxes (taking into account any
related credits or deductions) resulting from the receipt or accrual of such
payments, shall be equal to the payment to be received.
<PAGE>
"Aircraft" means the Airframe together with the Engines, whether or not
any of the Engines may at the time of determination be installed on the Airframe
or installed on any other airframe or on any other aircraft.
"Airframe" means (i) the Canadair Regional Jet Series 200ER aircraft
(excluding the Engines and any other engines which may from time to time be
installed thereon, but including any and all Parts which may from time to time
be incorporated in, installed on or attached to such aircraft, and including any
and all such Parts removed therefrom so long as such removed Parts remain
subject to the Lien of the Indenture) identified by national registration number
and manufacturer's serial number in the Indenture Supplement executed and
delivered on the Delivery Date, so long as a Replacement Airframe shall not have
been substituted therefor pursuant to Section 4.04 of the Indenture, and (ii) a
Replacement Airframe, so long as another Replacement Airframe shall not have
been substituted therefor pursuant to Section 4.04 of the Indenture.
"Applicable Law" means all applicable laws, treaties, judgments, decrees,
injunctions, writs and orders of any court, governmental agency or authority and
rules, regulations, orders, directives, licenses and permits of any governmental
body, instrumentality, agency or authority.
"Average Life Date" means, for any Equipment Note, the date which follows
the prepayment date by a period equal to the Remaining Weighted Average Life of
such Equipment Note.
"Bankruptcy Code" means Title 11 of the United States Code, as amended,
and any successor thereto.
"Business Day" means any day other than a Saturday or Sunday on which
commercial banks are not authorized or required to close in New York City,
Charlotte, North Carolina and the city in the United States in which the office
or agency is maintained by the Pass-Through Trustee for the payment of the
Pass-Through Certificates.
"Citizen of the United States" means a citizen of the United States as
defined in ss. 40102(a)(15) of the Transportation Code, or any analogous part of
any successor or substituted legislation or regulation at the time in effect.
"Class A Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Class B Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Class C Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
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"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any similar legislation of the United States enacted to supersede,
amend, or supplement such Code (and any reference to a provision of the Code
shall refer to any successor provision(s), however designated).
"Commitment" of a Loan Participant shall have the meaning given such term
in Section 2(a) of the Participation Agreement.
"Company" means Midway Airlines Corporation, a Delaware corporation.
"Company Documents" means (x) the Operative Agreements to which the
Company is a party and (y) the Pass-Through Trust Agreements.
"DOT" means the U.S. Department of Transportation or any successor
thereto.
"Debt Rate" means the weighted average (based on Outstanding principal
amount) rate of interest on the Equipment Notes.
"Default" means any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Indenture Event of Default.
"Delivery Date" means the date of the initial Indenture Supplement.
"Deposit Agreement" means each of the four Deposit Agreements between the
Depositary and the Escrow Agent, dated as of the Issuance Date, each of which
relates to one of the Pass-Through Trusts.
"Depositary" means First Union National Bank, as Depositary under each
Deposit Agreement.
"Dollars" means dollars in lawful currency of the United States.
"Downgrade Drawing" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Engine" means (A) one of the two CF34-3B1 Series 200 engines identified
by manufacturer's serial number in the Indenture Supplement executed and
delivered on the Delivery Date, so long as a Replacement Engine shall not have
been substituted therefor pursuant to Section 4.03(e) of the Indenture, and (B)
a Replacement Engine, so long as another Replacement Engine shall not have been
substituted therefor pursuant to Section 4.03(e) of the Indenture, whether or
not such engine or Replacement Engine, as the case may be, is from time to time
installed on the Airframe or installed on any other aircraft, and including in
each case all Parts incorporated or installed in or attached thereto and any and
all Parts removed therefrom so long as such Parts remain subject to the Lien of
the Indenture. The term "Engines" means, as of any date of determination, the
two engines each of which is an Engine on that date.
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"Equipment Notes" means the Equipment Notes issued by the Company
pursuant to the Indenture and any equipment note issued in exchange therefor or
replacement thereof pursuant to the Indenture.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means First Union Trust Company, National Association, as
Escrow Agent under each of the Escrow Agreements.
"Escrow Agreement" means each of the four Escrow and Paying Agent
Agreements, among the Escrow Agent, the Paying Agent, certain initial purchasers
of the Pass-Through Certificates named therein and one of the Pass-Through
Trustees, dated as of the Issuance Date, each of which relates to one of the
Pass-Through Trusts.
"Event of Loss" means any of the following events with respect to the
Aircraft, the Airframe or any Engine:
(i) theft or disappearance for a period in excess of 90 consecutive
days;
(ii) destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use for any reason whatsoever;
(iii) any event which results in an insurance settlement with
respect to such property on the basis of an actual, constructive or
compromised total loss;
(iv) condemnation, confiscation or seizure of, or requisition of
title to or use of such property by any foreign government (or in the case
of any such requisition of title, by the Government) or any agency or
instrumentality thereof, for a period in excess of 180 consecutive days
(or 30 consecutive days for the appropriation of title);
(v) condemnation, confiscation or seizure of, or requisition of use
of such property by the Government; and
(vi) as a result of any law, rule, regulation, order or other action
by the Aeronautics Authority, the use of the Aircraft or Airframe in the
normal course of air transportation shall have been prohibited by virtue
of a condition affecting all Canadair Regional Jet Series 200ER aircraft
equipped with engines of the same make and model as the Engines for a
period of 180 consecutive days, unless the Company, prior to the
expiration of such 180-day period, shall be diligently carrying forward
all necessary and desirable steps to permit normal use of the Aircraft and
shall within 12 months have conformed at least one Canadair Regional Jet
Series 200ER aircraft (but not necessarily the Aircraft) to the
requirements of any such law, rule, regulation, order or action, and shall
be diligently pursuing conformance of the Aircraft in a non-discriminatory
manner.
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The date of such Event of Loss shall be (aa) the 91st day following loss of such
property or its use due to theft or disappearance; (bb) the date of any
destruction, damage beyond economic repair or rendition of such property
permanently unfit for normal use; (cc) the date of any insurance settlement on
the basis of an actual, constructive or compromised total loss; (dd) the 181st
day following condemnation, confiscation, seizure or requisition of title to or
use of such property by a foreign government referred to in clause (iv) above
(or the 31st day in the case of appropriation of title; (ee) the 181st day
following requisition of title to or use of such property by the Government; and
(ff) the last day of the applicable period referred to in clause (vi) above. An
Event of Loss with respect to the Aircraft shall be deemed to have occurred if
any Event of Loss occurs with respect to the Airframe.
"Expenses" has the meaning given to such term in Section 7.01(a) of the
Participation Agreement.
"Federal Aviation Administration" or "FAA" means the United States Federal
Aviation Administration and any successor agency or agencies thereto.
"Final Drawing" has the meaning given to such term in Section 1.01 of the
Intercreditor Agreement.
"FNBM" means The First National Bank of Maryland, a national banking
association.
"Government" means the United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and credit
of the United States of America.
"Holder" means, as of any particular time, the Person in whose name a
Equipment Note shall be registered.
"Indemnitee" means each of the Subordination Agent, in its individual
capacity and in its capacity as Subordination Agent, each Liquidity Provider,
the Indenture Trustee, in its individual capacity and as trustee, the Escrow
Agent, the Paying Agent, the Pass-Through Trustees and each Affiliate, officer,
director, employee, agent and servant of any of the foregoing Persons. No holder
of a Pass-Through Certificate shall be deemed to be an Indemnitee.
"Indenture" means the Trust Indenture and Security Agreement [N_____],
dated as of ______________ __, 199_, between the Company and the Indenture
Trustee.
"Indenture Default" means any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
"Indenture Event of Default" means each of the events specified in Section
7.01 of the Indenture.
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"Indenture Indemnitee" means (i) the Indenture Trustee and each separate
or additional trustee appointed pursuant to the Indenture, (ii) the Escrow
Agent, (iii) the Subordination Agent, (iv) each Liquidity Provider, (v) the
Paying Agent, (vi) each Pass-Through Trustee and (vii) each of the respective
directors, officers, employees, agents and servants of each of the persons
described in clauses (i) through (vi).
"Indenture Supplement" means (a) the Trust Indenture and Security
Agreement Supplement No. 1, substantially in the form of Exhibit A to the
Indenture, which shall describe with particularity the Aircraft covered by the
Indenture, and which creates a first priority security interest in the Aircraft
and (b) any other supplement to the Indenture from time to time executed and
delivered.
"Indenture Trustee" means The First National Bank of Maryland, a national
banking association, as indenture trustee under the Operative Documents.
"Indenture Trustee's Liens" means any Lien against, on or with respect to
the Aircraft, any Engine, or the Trust Indenture Estate or any part thereof
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to the
Indenture or any document included in the Trust Indenture Estate, (ii) any act
or omission of the Indenture Trustee which is not related to the transactions
contemplated by the Operative Agreements or is in violation of any of the terms
of the Operative Agreements, or (iii) Taxes imposed against the Indenture
Trustee in its individual capacity in respect of which the Company has not
indemnified (and is not obligated to indemnify) the Indenture Trustee in such
capacity.
"Independent Investment Banker" means an independent investment banking
institution of national standing appointed by the Indenture Trustee that is
independent in fact, does not have any direct financial interests, or any
material indirect financial interest, in the Indenture Trustee or any Affiliate
of the Indenture Trustee, and is not connected with the Indenture Trustee or any
Affiliate of the Indenture Trustee, as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions;
provided, that if the Indenture Trustee shall not have received written notice
of such an appointment at least 10 days prior to the Prepayment Date,
"Independent Investment Banker" shall mean such an institution appointed by the
Indenture Trustee.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of
August 13, 1998, among the Pass-Through Trustees, the Class A Liquidity
Provider, the Class B Liquidity Provider, the Class C Liquidity Provider and the
Subordination Agent.
"Interest Drawing" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Issuance Date" means August 13, 1998.
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"Lien" means any mortgage, pledge, lien, charge, encumbrance, lease,
security interest, claim, or other similar interest of any nature whatsoever.
"Liquidity Facility" means each of the three Irrevocable Revolving Credit
Agreements (consisting of a separate Revolving Credit Agreement with the
Liquidity Provider with respect to each Pass-Through Trust) between the
Subordination Agent, as borrower, and the Liquidity Provider, each dated as of
the Issuance Date.
"Liquidity Provider" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Loan Participant" means and includes each registered holder from time to
time of an Equipment Note issued under the Indenture including, so long as it
holds any Equipment Notes issued under the Indenture, the Pass-Through Trustee
under each Pass-Through Trust Agreement.
"Majority in Interest of Holders" means, as of a particular date of
determination, the Holders of more than 50% of the aggregate unpaid principal
amount of all Equipment Notes Outstanding as of such date.
"Make-Whole Premium" means with respect to any Equipment Note, an amount
determined as of the day before the applicable Prepayment Date (or date of
purchase, as the case may be) which an Independent Investment Banker determines
to be equal to the excess, if any, of (i) the present value of the remaining
scheduled payments of such principal amount or portion thereof and interest
thereon to the maturity date of such Equipment Note assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield (in the case of the Series A Equipment Notes and Series B Equipment Notes)
and the Treasury Yield plus .50% (in the case of the Series C Equipment Notes
and the Series D Equipment Notes) over (ii) the outstanding principal amount of
such Equipment Note plus accrued interest (other than any overdue portion
thereof).
"Manufacturer" means Bombardier, Inc., a Canadian corporation.
"Minimum Liability Amount" has the meaning given to such term in Exhibit B
to the Participation Agreement.
"Moody's" means Moody's Investors Service, Inc.
"Note Purchase Agreement" means the Note Purchase Agreement, dated as of
the Issuance Date, among the Company, the Subordination Agent, the Escrow Agent,
the Paying Agent and the Pass-Through Trustee under each Pass-Through Trust
Agreement providing for, among other things, the issuance and sale of certain
equipment notes.
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"Offering Memo" means the Company's August 6, 1998 Offering Memorandum
concerning the Pass-Through Certificates.
"Officer's Certificate" means, when delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Company and delivered to the
Indenture Trustee. Each such certificate shall include the statements provided
for in Section 15.07 of the Indenture.
"Operative Agreements" means the Participation Agreement, the Equipment
Notes outstanding at the time of reference, the Indenture and each Indenture
Supplement.
"Opinion of Counsel" means when delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the Company
may be (i) an attorney employed by the Company who is generally empowered to
deliver such written opinions, (ii) Fulbright & Jaworski L.L.P., or (iii) other
counsel designated by the Company and reasonably satisfactory to the Indenture
Trustee, and (b) for the Indenture Trustee, an attorney selected by such Person
and reasonably satisfactory to the Company.
"Outstanding" means, when used with respect to Equipment Notes, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Equipment Notes theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Equipment Notes theretofore canceled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Equipment Notes for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture Trustee in
trust for the Holders of such Equipment Notes pursuant to Section
14.01 of the Indenture; provided that if such Equipment Notes are to
be prepaid, notice of such prepayment has been duly given pursuant
to the Indenture or provision therefor satisfactory to the Indenture
Trustee has been made; and
(iii) Equipment Notes in exchange for or in lieu of which other
Equipment Notes have been executed and delivered pursuant to Article
II of the Indenture.
"Participants" means, collectively, the Pass-Through Trustee with respect
to each of the Pass-Through Trust Agreements; "Participant" means, individually,
one of the Participants.
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"Participation Agreement" the Participation Agreement [N _____], dated as
of__________ __,199__, among the Company, the Indenture Trustee, the
Pass-Through Trustees and the Subordination Agent.
"Parts" means any and all appliances, parts, instruments, appurtenances,
accessories, furnishings, seats, and other equipment of whatever nature (other
than Engines or engines and temporary replacement parts as provided in Section
4.04 of the Indenture and cargo containers) which may from time to time be
incorporated or installed in or attached to any Airframe or any Engine,
exclusive of any items leased by the Company from third parties and not required
in the navigation of the Aircraft.
"Pass-Through Certificates" means any of the Pass-Through Certificates,
1998-1A, the Pass-Through Certificates, 1998-1B, the Pass-Through Certificates,
1998-1C or the Pass-Through Certificates, 1998-1D, in each case as issued by the
related Pass-Through Trust; and "Pass-Through Certificates" means all of such
Pass-Through Certificates.
"Pass-Through Documents" means the Pass-Through Trust Agreements, the
Escrow Agreements, the Intercreditor Agreement, the Note Purchase Agreement and
the Liquidity Facilities.
"Pass-Through Trust" means the Midway Airlines 1998-1 Pass-Through Trust
Class A, Midway Airlines 1998-1 Pass-Through Trust Class B, Midway Airlines
1998-1 Pass-Through Trust Class C and Midway Airlines 1998-1 Pass-Through
Trust-Class D, in each case formed pursuant to the related Series Supplement in
accordance with the Pass-Through Trust Agreement; and "Pass-Through Trusts"
means all of such Pass-Through Trusts.
"Pass-Through Trust Agreement" means each of the four Pass-Through Trust
Agreements dated as of August 13, 1998 among the Company and the Pass-Through
Trustee (which shall include each Successor Pass-Through Trust Agreement entered
into pursuant to Section 11.01 of each thereof).
"Pass-Through Trustee" The First National Bank of Maryland, a national
banking association, in its capacity as Pass-Through Trustee under each
Pass-Through Trust Agreement.
"Past Due Rate" means in respect of any principal of or interest on or any
other amounts payable in respect of any Equipment Note that is not paid when due
to any Holder, a rate per annum during the period from and including the due
date to but excluding the date on which such amount is paid in full equal to 1%
plus the interest rate applicable to such Equipment Note.
"Payment Date" means each January 2 and July 2, commencing on _________ 2,
199__.
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"Permitted Air Carrier" means (a) any Section 1110 Person and (b) any
foreign air carrier that is principally based in any foreign country listed on
Exhibit C to the Indenture, except those that do not maintain normal diplomatic
relations with the United States.
"Permitted Investments" means (a) direct obligations of the United States
of America or any agency or instrumentality thereof, (b) obligations fully
guaranteed by the United States of America or any agency or instrumentality
thereof, (c) any mutual fund the portfolio of which is limited to obligations of
the type described in clauses (a) and (b), including any proprietary mutual fund
of The First National Bank of Maryland for which such bank or an affiliate is
investment advisor or to which such bank provides other services and receives
reasonable compensation for such services, (d) certificates of deposit issued
by, or bankers' acceptances of, or time deposits or a deposit account with, any
bank, trust company, or national banking association incorporated or doing
business under the laws of the United States of America or one of the states
thereof, having a combined capital and surplus of at least $100,000,000 and
having a rating of "A" or better from the Keefe Bank Watch Service, (e)
commercial paper issued by companies in the United States which directly issue
their own commercial paper and which are doing business under the laws of the
United States of America or one of the states thereof and in each case having a
rating assigned to such commercial paper by a nationally recognized rating
organization in the United States of America equal to the highest rating
assigned by such organization, or (f) obligations of the type described in
clauses (a), (b), (d), or (e) above, purchased from any bank, trust company, or
banking association referred to in clause (d) above pursuant to repurchase
agreements obligating such bank, trust company, or banking association to
repurchase any such obligation not later than 30 days after the purchase of any
such obligation. Unless otherwise specified in writing by the Company, all such
Permitted Investments shall mature not later than 30 days from the date of
purchase.
"Permitted Lien" has the meaning given to such term in Section 4.06 of the
Indenture.
"Permitted Lessee" means (a) any Permitted Air Carrier or (b) any airframe
or engine manufacturer, or Affiliate of such a manufacturer, who is domiciled in
the United States of America or a country listed on Exhibit C to the Indenture.
"Person" means any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
"Placement Agents" means Morgan Stanley & Co. Incorporated and Credit
Suisse First Boston.
"Placement Agreement" means the Purchase Agreement dated August 6, 1998
among the Company and the Placement Agents.
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<PAGE>
"Prepayment Date" has the meaning given to such term in Section 6.02(b) of
the Indenture.
"Prepayment Price" has the meaning given to such term in Section 6.02(b)
of the Indenture.
"Purchase Agreement" means Bombardier Regional Aircraft Division Purchase
Agreement No. PA-0393 dated September 17, 1997, as amended, between the Company
and the Manufacturer (including all exhibits thereto, together with all letter
agreements entered into that by their terms constitute part of any such Purchase
Agreement).
"Rating Agency" means Moody's or S&P, as the context requires.
"Record Date" means, with respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 15 for January 2
Payment Dates and June 15 for July 2 Payment Dates, whether or not such date is
a Business Day.
"Register" has the meaning given to such term in Section 3.02 of the
Indenture.
"Registrar" has the meaning given to such term in Section 3.02 of the
Indenture.
"Registration Rights Agreement" means the Exchange and Registration Rights
Agreement, dated as of August 13, 1998, among the Placement Agents, FNBM, as
Pass-Through Trustee, and the Company.
"Registration Rights Event" has the meaning given to such term in the
Registration Rights Agreement.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and supplemented
and in effect from time to time.
"Remaining Weighted Average Life" means on a given date with respect to
any Equipment Note the number of days equal to the quotient obtained by dividing
(i) the sum of each of the products obtained by multiplying (a) the amount of
each then remaining scheduled payment of principal of such Equipment Note by (b)
the number of days from and including such prepayment date to but excluding the
dates on which each such payment of principal is scheduled to be made; by (ii)
the then outstanding principal amount of such Equipment Note.
"Replacement Aircraft" means any Aircraft of which a Replacement Airframe
is part.
"Replacement Airframe" means a Canadair Regional Jet Series 200ER series
aircraft or a comparable or improved model of such aircraft of the Manufacturer
(except
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<PAGE>
Engines or engines from time to time installed thereon) which shall have become
subject to the Indenture pursuant to Section 4.04 thereof.
"Replacement Engine" means a CF34-3B1 Series 200 engine (or engine of the
same or another manufacturer of a comparable or an improved model and suitable
for installation and use on the Airframe), and which shall have become subject
to the Indenture pursuant to Section 4.03(e) thereof.
"Responsible Officer" means, with respect to the Indenture Trustee, any
officer in its Corporate Trust Administration, as the case may be, designated by
such Person to perform obligations under the Operative Agreements, and with
respect to any other party, any corporate officer of a party who, in the normal
performance of his or her operational responsibilities, with respect to the
subject matter of any covenant, agreement or obligation of such party pursuant
to any Operative Agreement, would have responsibility for and knowledge of such
matter and the requirements of any Operative Agreement with respect thereto.
"S&P" means Standard & Poor's Ratings Group.
"SEC" means the Securities and Exchange Commission of the United States
and any successor agencies or authorities.
"Section 1110 Person" means a Citizen of the United States who is an air
carrier holding a valid air carrier operating certificate issued pursuant to 49
U.S.C. ch. 447 for aircraft capable of carrying 10 or more individuals.
"Secured Obligations" has the meaning specified in the Granting Clause of
the Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Series "A" or "Series A Equipment Notes" means the Equipment Notes issued
and designated as "Series A" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series A".
"Series "B" or "Series B Equipment Notes" means the Equipment Notes issued
and designated as "Series B" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series B".
"Series "C" or "Series C Equipment Notes" means the Equipment Notes issued
and designated as "Series C" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series C".
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<PAGE>
"Series "D" or "Series D Equipment Notes" means the Equipment Notes issued
and designated as "Series D" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series D".
"Specified Default" means (a) an event or condition described in Section
7.01(i), (iv), (v) and (vi) of the Indenture that, after the giving of notice or
lapse of time, or both, would mature into an Indenture Event of Default, or (b)
any Indenture Event of Default.
"Specified Investments" means (a) direct obligations of the United States
of America or obligations fully guaranteed by the United States of America; (b)
any mutual fund the portfolio of which is limited to obligations of the type
described in clause (a), including any proprietary mutual fund of The First
National Bank of Maryland for which such bank or an affiliate is investment
advisor or to which such bank provides other services and receives reasonable
compensation for such services; (c) commercial paper rated A-1/P-1 by S&P and
Moody's, respectively or, if such ratings are unavailable, rated by any
nationally recognized rating organization in the United States equal to the
highest rating assigned by such rating organization; (d) investments in
negotiable certificates of deposit, time deposits, banker's acceptances,
commercial paper or other direct obligations of, or obligations guaranteed by,
commercial banks organized under the laws of the United States or of any
political subdivision thereof (or any U.S. branch of a foreign bank) with issuer
ratings of at least B/C by Thomson Bankwatch, having maturities no later than 90
days following the date of such investment; (e) overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers; or (f) overnight repurchase agreements with respect to the
securities described in clause (a) above entered into with an office of a bank
or trust company which is located in the United States of America or any bank or
trust company which is organized under the laws of the United States or any
state thereof and has capital, surplus and undivided profits aggregating at
least $500 million.
"Subordination Agent" means The First National Bank of Maryland, a
national banking association, in its capacity as Subordination Agent.
"Transaction Costs" means those costs and expenses set forth in Section
8.01(a) of the Participation Agreement to be borne by the Company.
"Transportation Code" means Title 49 of the United States Code, subtitle
VII, as amended and in effect on the date of the Indenture or as subsequently
amended, or any successor or substituted legislation at the time in effect and
applicable, and the regulations promulgated pursuant thereto.
"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
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<PAGE>
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
on 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 public
securities markets, (i) one maturing as close as possible to, but earlier than,
the Average Life Date of such Certificate and (ii) 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 Premium will be the third Business Day
prior to the applicable prepayment 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 prepayment date.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Trust Indenture Estate" means all estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interest, and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments.
"United States", "U.S." or "US" means the United States of America.
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<PAGE>
Exhibit A-1(a) to
Owned Aircraft
Participation Agreement
[Midway Owned Aircraft Opinion]
[SUBJECT TO REVIEW BY MIDWAY GENERAL COUNSEL]
[Delivery Date]
To Each of the Parties Named
on the Attached Schedule
Re: Financing of One Canadair Regional
Jet Series 200ER Aircraft Bearing
U.S. Registration No. N______
Ladies and Gentlemen:
I am General Counsel for Midway Airlines Corporation, a Delaware
corporation (the "Company"), and have acted as counsel for the Company in
connection with the transactions contemplated by the Participation Agreement
dated as of _________, between the Company and The First National Bank of
Maryland, as Indenture Trustee, Pass Through Trustee and Subordination Agent.
This opinion is being delivered pursuant to Section 3.01(b)(viii)(A)(I) of
the Participation Agreement. Capitalized terms not defined herein are used as
defined in the Participation Agreement.
In connection with the opinions expressed below, I, or counsel under my
supervision in the office of the General Counsel of the Company, have examined
the Participation Agreement, the Purchase Agreement Assignment, the Indenture
and the Indenture Supplement covering the Aircraft (the "Company's Agreements").
In addition we have reviewed the other Operative Documents. In arriving at the
opinions expressed below, I have assumed (except as to the Company) the
genuineness of all signatures and the due authorization, execution and delivery
by the parties thereto of the Company's Agreements and that each such party has
full power and authority to perform its obligations thereunder. I have examined
and relied without independent verification on the representations and
warranties by parties other than the Company as to factual matters contained in
or made pursuant to the Company's Agreements. In addition, I have examined
originals or copies certified to my satisfaction, of such other
<PAGE>
agreements, documents, certificates and statements of government officials and
other papers as I have deemed necessary or advisable as a basis for such
opinions.
Based upon the foregoing, I am of the opinion that:
1. The Company is a corporation duly organized and validly existing in
good standing under the laws of the State of Delaware and has the corporate
power and authority to own or hold under lease its properties and conduct its
business as presently conducted and to enter into and perform its obligations
under the Company's Agreements. The Company is an "air carrier" within the
meaning of the Transportation Code and a holder of a certificate under Section
41102(a) of the Transportation Code and a "citizen of the United States" within
the meaning of Section 40102(a)(15) of the Transportation Code holding an "air
carrier operating certificate" issued under Chapter 447 of the Transportation
Code for aircraft capable of carrying ten or more individuals or 6,000 pounds or
more of cargo, and each such certificate is in full force and effect. The
Company is duly qualified to do business as a foreign corporation and in good
standing in each jurisdiction where the activities of the Company require such
qualification except where the failure to so qualify would not have a material
adverse effect on the Company or the ability of the Company to perform its
obligations under the Company's Agreements. The Company's chief executive office
(as such term is defined in the Uniform Commercial Code as in effect in the
State of North Carolina) is at 300 West Morgan Street, Suite 1200, Durham, North
Carolina 27701.
2. The execution, delivery and performance by the Company of the Company's
Agreements do not require the approval or consent of, or the giving of notice
to, any trustee, stockholders or holders of any indebtedness or obligations of
the Company (except for such consents or approvals as have been obtained on or
prior to the Delivery Date), and neither the execution and delivery by the
Company thereof nor the performance by the Company of the transactions
contemplated thereby nor compliance by the Company with any of the terms and
provisions thereof will contravene any applicable law of the State of Delaware
or the United States of America applicable to or binding upon the Company (other
than the securities or Blue Sky laws of the various states, as to which I
express no opinion), or any of its properties, or contravene or result in any
breach of, or constitute any default under or result in the creation of any Lien
(other than as permitted under the Operative Documents) upon any property of the
Company under any indenture, mortgage, chattel mortgage, deed of trust,
conditional sales contract bank loan or credit agreement, corporate charter,
bylaw or other agreement, or instrument to which the Company is a party or by
which the Company or any of its property may be bound or affected (except for
such conflicts, breaches or defaults or liens, charges or encumbrances, that,
singly or in the aggregate, would not have material adverse effect on the
Company's ability to perform its obligations under the Company's Agreements).
3. The execution, delivery and performance of the Company's Agreements
have been duly authorized by all necessary corporate action on the part of the
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<PAGE>
Company, and the Company's Agreements have been duly executed and delivered by
the Company.
4. Except for the filings of the Uniform Commercial Code financing
statements on the Delivery Date, the execution and delivery by the Company of
the Company's Agreements and the consummation by the Company of the transactions
contemplated thereby do not require the consent or approval of, or the giving of
notice to, or the registration, recording or filing of any document with, or the
taking of any other action with respect to any authority or agency of the State
of North Carolina.(*)
5. The Uniform Commercial Code financing statements referred to in Section
___ of the Participation Agreement have been filed with the Office of the
Secretary of State of North Carolina.(*)
6. There are no pending or, to our knowledge, threatened actions, suits,
or proceedings before any court or administrative agency or arbitration against
the Company or involving the Company that question the validity of any of the
Company's Agreements or that is required to have been disclosed in the Company's
Annual Report on Form 10-K filed for the year ended ___________________, or any
subsequent Quarterly Report on Form 10-Q or Current Report on Form 8-K, except
such as are therein disclosed.
No opinion is expressed herein as to state securities laws or other laws
other than the General Corporation Law of the State of Delaware [, the laws of
the State of North Carolina](*) and the federal laws of the United States.
This opinion is furnished by me as counsel to the Company to you as
parties to the Participation Agreement and is solely for your benefit.
Very truly yours,
- - ----------
(*) The opinions in paragraphs 4 and 5 will be delivered by a North Carolina
law firm in a legal opinion subject to customary qualifications.
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<PAGE>
Schedule of Addresses
The First National Bank of Maryland,
as Indenture Trustee, Pass Through
Trustee and Subordination Agent
ABN AMRO Bank N.V.
Standard & Poor's Rating Services
<PAGE>
Exhibit A-1(b) to
Leased Aircraft
Participation Agreement
[LETTERHEAD OF KENNEDY COVINGTON LOBDELL & HICKMAN, L.L.P.]
[Date]
To Each of the Parties Named
on the Attached Schedule
Re: Midway Airlines Corporation Participation Agreement N[__]
Ladies and Gentlemen:
We have acted as special North Carolina counsel to Midway Airlines
Corporation, a Delaware corporation (the "Company"), in connection with the
transactions contemplated by the Participation Agreement, dated as of [________
___, _______] (the "Participation Agreement"), among the Company and The First
National Bank of Maryland, as Indenture Trustee, Pass Through Trustee and
Subordination Agent, and the other parties named therein. This opinion is being
delivered pursuant to Section 3.01(b)(xviii)(A)(II) of the Participation
Agreement. Capitalized terms not defined herein are used as defined in the
Participation Agreement.
In connection with the opinion expressed below, we have examined
originals, or copies certified to our satisfaction, of the Participation
Agreement, the Trust Agreements and the Pass Through Trust Agreements (the
"Agreements"). In addition, we have reviewed originals, or copies certified to
our satisfaction, of the Indenture and the other Operative Documents executed
and delivered on the date hereof. In arriving at the opinion expressed below, we
have assumed the genuineness of all signatures and the due authorization,
execution and delivery by the parties thereto of the Agreements and that each
such party has the full power and authority to perform its obligations
thereunder. We have examined and relied without independent verification on the
representations and warranties by the parties as to factual matters contained in
or made pursuant to the Agreements. In addition, we have examined originals, or
copies certified to our satisfaction, of such other agreements, documents,
certificates and statements of government officials and other papers as we have
deemed necessary or advisable as a basis for such opinion.
With your permission, we have made the following factual assumptions for
purposes of this opinion:
<PAGE>
To Each of the Parties Named on the Attached Schedule
[date]
Page 2
1. The Company is in compliance with all federal and state laws and
regulations (other than the laws and regulations of the State of
North Carolina) relating to the execution and delivery by the
Company of the Documents and the consumption by the Company of the
transactions contemplated thereby.
2. Prior to the date hereof, the Company has been in compliance with
all North Carolina laws and regulations governing its operations.
Based upon the foregoing and subject to the qualifications set forth
below, we are of the opinion that (a) the Uniform Commercial Code financing
statements required to be filed in North Carolina on the Delivery Date pursuant
to Section 3.01(m) of the Participation Agreements have been duly filed and (b)
the execution and delivery by the Company of the Documents and the consummation
by the Company of the transactions contemplated thereby do not require the
consent or approval of, or the giving of notice to, or the registration,
recording or filing of any document with, or the taking of any other action with
respect to any authority or agency of the State of North Carolina.
The opinion expressed herein is limited to matters governed by the laws of
the State of North Carolina. You have not requested any opinion from us nor do
we express any opinion, concerning: (i) North Carolina state securities laws,
(ii) the North Carolina state tax implications of the issuance or the holding of
any Certificates or the underlying notes, (iii) the priority of any liens on any
portion of the Trust Estate or proceeds thereof, or (iv) the consequences of any
insolvency proceedings with respect for the Company.
This opinion letter is rendered only as of the date hereof. We undertake
no obligation to update this opinion letter after the date hereof or to give
notice as to any future changes of facts or law that might affect the opinions
set forth herein. This opinion letter is limited to the matters expressly stated
herein, and no other opinion shall be implied or inferred herefrom.
We have provided this opinion letter to the addressees in our capacity as
special counsel to the Company in connection with the transactions contemplated
by the Participation Agreements. This opinion letter is solely for your use and
may not be relied upon for any other purpose or by any other person without our
prior written consent.
Very truly yours,
<PAGE>
Exhibit A-2 to
Owned Aircraft
Participation Agreement
[F&J OWNED AIRCRAFT OPINION]
[Delivery Date]
To Each of the Parties Listed
on the Attached Schedule
Re: Financing of One Canadair Regional Jet
Series 200ER Aircraft -- U.S. Registration No. N_____
Ladies and Gentlemen:
We have acted as special New York counsel for Midway Airlines Corporation,
a Delaware corporation (the "Company"), in connection with the Participation
Agreement dated as of _________________, among the Company; and The First
National Bank of Maryland ("FNBM"), as Indenture Trustee, Pass Through Trustee
and Subordination Agent. Capitalized terms used herein and not otherwise defined
herein shall have the meanings set forth or referred to in the Participation
Agreement. For purposes hereof, "Documents" shall be a collective reference to
the Participation Agreement, the Indenture, Indenture Supplement No. 1 and the
Equipment Notes.
This opinion is furnished to you pursuant to Section 3.01(b)(viii)(B) of
the Participation Agreement.
In rendering this opinion, we have examined the Documents and such other
Operative Documents as are necessary in order to give the opinions expressed
herein. We have further examined and relied upon the accuracy of original,
certified, conformed, photographic or telecopied copies of such records,
agreements, certificates, certificates of public officials and such other
documents, and have made an investigation of such laws, as we have deemed
necessary and appropriate for the purpose of rendering this opinion. As to
certain questions of fact material to our opinions, we have relied solely upon
the accuracy of the statements, representations and warranties made in the
Documents and such other Operative Documents and we have made no independent
investigation or inquiry with respect to such factual matters.
Based on the foregoing and upon an examination of such questions of law as
we have considered necessary or appropriate, and subject to the assumptions,
exceptions, qualifications and limitations set forth below, we advise you that
in our opinion:
<PAGE>
1. Each of the Documents constitutes a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms.
The Equipment Notes are entitled to the benefits of the Indenture.
2. The execution and delivery by the Company of the Documents, the
consummation by the Company of the transactions contemplated thereby and the
compliance by the Company with any of the terms and provisions thereof do not
contravene any applicable federal law of the United States or any applicable law
of New York.
3. Except for the filings with the FAA referred to in paragraph 4 below,
the execution and delivery by the Company of the Documents and the consummation
by the Company of the transactions contemplated thereby do not require the
consent or approval of, or the giving of notice to, or the registration,
recording or filing of any document with, or the taking of any other action with
respect to any authority or agency of the federal government of the United
States of America or the State of New York.
4. The Indenture as supplemented by Indenture Supplement No. 1 thereto is
in due form for filing in accordance with Subtitle VII of Title 49 of the United
States Code (the "Act"), and will create, for the benefit of the Indenture
Trustee, a valid security interest in the Indenture Estate identified therein.
Except for the filings with the FAA referred to in the opinion dated today and
addressed to you of Crowe & Dunlevy, the filing of the Uniform Commercial Code
financing statements referenced in Section _______ of the Participation
Agreement, which filings we assume have been duly effected and are adequate for
their intended purpose (and subject to the timely filings in the future of
continuation statements with respect to such financing statements), no recording
or filing in the United States of America of any of the Operative Documents, nor
any other action, is necessary or advisable in order to establish and perfect in
the United States of America, the mortgage and security interest of the
Indenture Trustee under the Indenture on the Aircraft or the other property
included in the Indenture Estate in favor of the Indenture Trustee as against
the Company or any third party.
5. The Participation Agreement and the Indenture (the "Indenture Trustee
Documents") constitute legal, valid and binding obligations of the Indenture
Trustee, enforceable against the Indenture Trustee in accordance with their
respective terms.
6. The Participation Agreement constitutes the legal, valid and binding
obligation of the Pass Through Trustee, enforceable against the Pass Through
Trustee in accordance with its terms.
7. The Participation Agreement constitutes the legal, valid and binding
obligation of the Subordination Agent, enforceable against the Subordination
Agent in accordance with its terms.
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<PAGE>
8. So long as the Company continues to be a "citizen of the United
States," as defined in Section 40102 of Title 49 of the United States Code,
holding an air carrier operating certificate issued by the Secretary of
Transportation pursuant to Chapter 447 of Title 49 of the United States Code for
aircraft capable of carrying 10 or more individuals or 6,000 pounds or more of
cargo, the Indenture Trustee, would be entitled to the benefits of Section 1110
of the Bankruptcy Code ("Section 1110") with respect to the Aircraft.
We call your attention that the U.S. District Court for the District of
Colorado recently issued an opinion regarding Section 1110, In re Western
Pacific Airlines, Civil Action No. 98-K-358 (D. Cob. Mar. 10 and affirmed on
rehearing May 1, 1998). The decision, reversing an order of the bankruptcy
court, held that, although an airline debtor reaffirms its obligations and cures
its defaults under an aircraft lease within the prescribed period in accordance
with Section 1110, the protections under Section 1110 will cease after the first
sixty days in a chapter 11 case. An appeal from the decision of the District
Court is pending in the Court of Appeals for the Tenth Circuit. We have filed a
brief in the Tenth Circuit on behalf of another client seeking to overturn the
District Court's ruling. Although we are of the opinion that the decision of the
District Court was in error and that the protections of Section 1110, generally
speaking, should continue after the first sixty days in chapter 11, we can give
no assurance that the decision of the District Court will be reversed.
The foregoing opinions are subject to the following assumptions,
exceptions, qualifications and limitations:
A. The foregoing opinions are expressly limited to matters under and
governed by the internal laws of the State of New York and applicable federal
laws of the United States of America, except that we express no opinion as to
the securities law of any state, including the State of New York. Our opinion in
paragraph 2 above as to the contravention of certain laws, rules and regulations
is based upon such examination of laws and regulations as in our judgment was
necessary and appropriate for the purpose of such opinion.
B. The foregoing opinions regarding the enforceability of the Operative
Documents against any of the parties thereto are subject to the following:
(i) The enforceability of any of the Operative Documents may be limited
or affected by (a) bankruptcy, insolvency, reorganization,
moratorium, liquidation, rearrangement, probate, conservatorship,
fraudulent transfer, fraudulent conveyance and other similar laws
(including court decisions) now or hereafter in effect and affecting
the rights and remedies of creditors generally or providing for the
relief of debtors, (b) the refusal of a particular court to grant
(1) equitable remedies, including, without limiting the generality
of the foregoing, specific performance and injunctive relief or (2)
a particular remedy sought by the Indenture Trustee under the
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<PAGE>
Indenture as opposed to another remedy provided for therein or
another remedy available at law or in equity, but which does not in
our opinion make such remedies inadequate for the practical
realization of the benefits intended to be provided thereby and (c)
general principles of equity (regardless of whether enforcement is
sought in a proceeding in equity or at law).
(ii) In rendering the foregoing opinions, we express no opinion as to the
enforceability of provisions of any of the Operative Documents (a)
purporting to waive or affect rights, claims, defenses or other
benefits bestowed by law, including without limitation the right to
receive notices, to the extent that any of the same cannot be waived
or affected or (b) relating to indemnities to the extent prohibited
by public policy or limited by federal or state securities laws or
which might require indemnification for losses or expenses caused by
gross negligence, willful misconduct, fraud or illegality of an
indemnified party, the rights of third parties, or the exercise of
rights and remedies with respect to the Aircraft other than in a
commercially reasonable manner or as otherwise provided in the
Uniform Commercial Code or other applicable law.
(iii) We note that the enforceability of specific provisions of the
Operative Documents may be subject to standards of reasonableness,
care and diligence and "good faith" limitations and obligations such
as those provided in Sections 1-102(3) and 1-203, of the Uniform
Commercial Code and similar applicable principles of common law and
judicial decisions.
(iv) We express no opinion with respect to compliance with the anti-fraud
provisions of applicable federal rules or regulations.
C. With respect to the opinion given in paragraph 4 above as to the
creation of a security interest in the Indenture Estate, we express no opinion
as to the creation of any security interest in any portion of the Indenture
Estate other than (I) that portion of the Indenture Estate consisting of the
Aircraft, (II) that portion of the Indenture Estate (except for the Aircraft)
which is not excluded by Section 9-104 of the Uniform Commercial Code of any
relevant jurisdiction and (III) if possession or control and dominion or both by
the Indenture Trustee is required or necessary, such portion of the Indenture
Estate as has been deposited with the Indenture Trustee pursuant to the
Indenture, or which possession or control and dominion or both, has otherwise
effectively occurred.
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<PAGE>
D. The foregoing opinions, to the extent they address the creation and
perfection of a security interest in any portion of the Indenture Estate are
further subject to the following: we have made no examination of, and we express
no opinion as to, (a) the title of any person to the Indenture Estate or any
portion thereof, (b) the value of any security granted to the Indenture Trustee
and (c) the priority of any such security interest.
E. We have assumed the due authorization, execution and delivery of the
Operative Documents by each of the parties thereto (including the Company) and
that each of such parties has the full power, authority and legal right to
execute, deliver and perform such documents.
F. Except to the extent expressly set forth in paragraphs 1, 5, 6 and 7,
we have assumed that each of the Operative Documents is enforceable against each
of the parties thereto.
G. With respect to the opinions given in paragraphs 5, 6 and 7 our opinion
is subject to limitations of Maryland law applicable to FNBM or the Indenture
Trustee, Pass Through Trustee or Subordination Agent, as the case may be, as to
which we express no opinion.
H. We have assumed the genuineness of all signatures, the authenticity of
all documents submitted to us as originals and the conformity to the originals
of all documents submitted to us as copies, which facts we have not verified
independently.
I. We have assumed that the Operative Documents and the transactions
contemplated thereby are not within the prohibitions of Section 406 of the
Employee Retirement Income Security Act of 1974.
J. With respect to the opinion given in paragraph 8, we express no opinion
as to the availability of the benefits of Section 1110 of the Bankruptcy Code to
any Replacement Aircraft or Replacement Engine.
K. In giving the foregoing opinion, we have relied upon the opinions
delivered to you today of Crowe & Dunlevy with respect to the matters set forth
therein. Our opinion is subject to all applicable qualifications and exceptions
(except for those set forth in clauses (i) (subject however to paragraph A
above) and (ii) thereof) set forth in such opinion.
-5-
<PAGE>
The opinions expressed herein are solely for the benefit of and may only
be relied upon by, the named addressees in connection with the transactions
contemplated by the Participation Agreement. This opinion may not be furnished
or relied upon by any other person without the prior written consent of this
Firm. The opinions expressed herein are as of the date hereof and we make no
undertaking to amend or supplement such opinions as facts and circumstances come
to our attention or changes in the law occur which could affect such opinions.
Very truly yours,
-6-
<PAGE>
Schedule of Addresses
The First National Bank of Maryland,
as Indenture Trustee, Pass Through
Trustee and Subordination Agent
ABN AMRO Bank N.V.
Standard & Poor's Rating Services
<PAGE>
Exhibit A-3 to
Owned Aircraft
Participation Agreement
[FNBM Owned Aircraft Opinion]
__________, 199_
To the Persons Listed in Schedule A Attached Hereto
Re: Midway Airlines Corporation
Financing of One Canadair
Regional Jet Aircraft Series 200ER Aircraft
U.S. Registration No. N______
Gentlemen:
We have acted as special counsel to The First National Bank of Maryland, a
national banking association ("First National"), in connection with the
Participation Agreement [N_________], dated as of ________, 199_ (the
"Participation Agreement"), among Midway Airlines Corporation^ and First
National, not in its individual capacity (except as expressly set forth therein)
but solely as Indenture Trustee, as Pass-Through Trustee and as Subordination
Agent. Pursuant to the Participation Agreement, one Canadair Regional Jet Series
200ER Aircraft bearing U.S. Registration No. N______ (the "Aircraft") is being
financed. This opinion is furnished pursuant to Section 3.01(b)(xviii)(C) of the
Participation Agreement. Capitalized terms used herein and not defined have the
meanings given to such terms in the Participation Agreement, except that
references herein to any instrument shall mean such instrument as in effect on
the date hereof.
We have examined executed counterparts or copies otherwise identified to
our satisfaction of the following documents:
(a) the Participation Agreement;
(b) the Indenture; and
<PAGE>
________, 199_
Page 2
(c) the Equipment Notes
(each of the documents identified in paragraphs (a) through (c) above are
collectively referred to as the "Indenture Trustee's Documents").
We have also examined originals or copies of such other documents, such
corporate records, certificates and other statements of governmental officials
and corporate officers and other representatives of the corporations or entities
referred to herein and such other instruments as we have deemed necessary or
appropriate for the purposes of this opinion. Moreover, as to certain facts
material to the opinions expressed herein, we have relied upon representations
and warranties contained in the Indenture Trustee's Documents.
In basing the opinions and other matters set forth herein on "our
knowledge", the words "our knowledge" signify that, in the course of our review
and analysis for the purpose of rendering this opinion, no information has come
to our attention that would give us actual knowledge or actual notice that any
such opinions or other matters are not accurate or that any of the foregoing
documents, records, certificates, statements and information on which we have
relied are not accurate and complete. Except as otherwise stated herein, we have
undertaken no independent investigation or verification of such matters. The
words "our knowledge" and similar language used herein are intended to be
limited to the knowledge of the lawyers within our firm who have worked on
matters relating to this opinion letter.
Based upon the foregoing and upon an examination of such questions of law
as we have considered necessary or appropriate, and subject to the assumptions,
exceptions and qualifications set forth below, we advise you that, in our
opinion:
1. First National is a national banking association duly incorporated and
validly existing under the laws of the United States of America holding a valid
certificate to do business as a national banking association, with banking and
trust powers, and each of First National and the Indenture Trustee, as the case
may be, has or had, on the date of execution thereof, full corporate power,
authority and legal right to execute, deliver and perform its duties pursuant to
each of the Indenture Trustee's Documents to which it is or is to be a party and
to authenticate the Equipment Notes delivered on the date hereof.
2. Each of First National and the Indenture Trustee, as the case may be,
has duly authorized, executed and delivered each Indenture Trustee Document to
which it is a party; each such document constitutes a legal, valid and binding
obligation of the Indenture Trustee (and, to the extent set forth in the
respective Indenture Trustee's Documents, of First National) enforceable against
the Indenture Trustee (and, to the extent set forth in the respective Indenture
Trustee's Documents, against First National) in accordance with its terms.
3. The Equipment Notes issued and dated the date hereof have been duly
authenticated and delivered by the Indenture Trustee pursuant to the terms of
the Indenture.
<PAGE>
________, 199_
Page 3
4. Neither the authorization, execution and delivery by the Indenture
Trustee or First National, as the case may be, of the Indenture Trustee's
Documents, nor the authentication and delivery by the Indenture Trustee of the
Equipment Notes nor the fulfillment or compliance by the Indenture Trustee or
First National, as the case may be, with the respective terms and provisions
thereof nor the consummation of any of the transactions by the Indenture Trustee
or First National, as the case may be, contemplated thereby, requires the
consent or approval of, the giving of notice to, the registration with, or the
taking of any other action in respect of, any court or administrative or
governmental authority or agency of the State of Maryland or the United States
of America governing the banking or trust powers of First National.
5. The execution, delivery and performance by the Indenture Trustee or
First National, as the case may be, of each of the Indenture Trustee's Documents
and the authentication and delivery of the Equipment Notes by the Indenture
Trustee are not in violation of the articles of association or by-laws of First
National or of any law, governmental rule, or regulation of the State of
Maryland or the United States of America governing the banking or trust powers
of First National or, to our knowledge, of any indenture, mortgage, bank credit
agreement, note or bond purchase agreement, long-term lease, license or other
agreement or instrument to which it is a party or by which it is bound that is
material to the Indenture Trustee or First National or, to our knowledge, of any
judgment or order of the State of Maryland or the United States of America
relating to the banking or trust powers of First National.
6. There are no fees, taxes or other governmental charges payable by the
Owner Trustee, the Indenture Trustee (except taxes imposed on fees payable to
First National) or the holders of the Equipment Notes to the State of Maryland
or any political subdivision thereof under the laws of the State of Maryland or
any political subdivision thereof in existence on the date hereof, in connection
with the execution, delivery or performance of any of the Operative Agreements
solely because First National (a) has its principal place of business in the
State of Maryland, (b) performs (in its individual capacity or as Indenture
Trustee) any or all of its duties under the Indenture Trustee's Documents in the
State of Maryland, and (c) engages in any activities unrelated to the
transactions contemplated by the Indenture Trustee's Documents in the State of
Maryland. Neither the Indenture Trustee nor the trust created under the
Indenture will be subject to any fee, tax or other governmental charge (except
for taxes imposed on fees payable to First National) under the laws of the State
of Maryland or any political subdivision thereof in existence on the date
hereof, on, based on or measured by, directly or indirectly, the gross receipts,
net income or value of the Trust Indenture Estate solely because First National
(a) has its principal place of business in the State of Maryland, (b) performs
(in its individual capacity or as Indenture Trustee) any or all of its duties
under the Indenture Trustee's Documents in the State of Maryland, and (c)
engages in any activities unrelated to the transactions contemplated by the
Indenture Trustee's Documents in the State of Maryland. There is no fee, tax or
other governmental charges (except for taxes imposed on fees payable to First
National) under the laws of the State of Maryland or any political
<PAGE>
________, 199_
Page 4
subdivision thereof in existence on the date hereof, on, based on or measured by
any payments under the Equipment Notes by reason of the creation of the trust
under the Indenture solely because First National (a) has its principal place of
business in the State of Maryland, (b) performs (in its individual capacity or
as Indenture Trustee) any or all of its duties under the Indenture Trustee's
Documents in the State of Maryland, and (c) engages in any activities unrelated
to the transactions contemplated by the Indenture Trustee's Documents in the
State of Maryland. We express no opinion as to whether or not any fees, taxes or
other charges are now or hereafter may be payable by the Owner Participant to
the State of Maryland or any political subdivision thereof in connection with
(a) the execution, delivery or performance by the Owner Participant of any of
the Indenture, the Participation Agreement or any of the other Operative
Agreements, and (b) the making by the Owner Participant of its investment in the
Aircraft.
7. To our knowledge, there are no actions, suits, investigations or
proceedings pending or threatened against or affecting First National or the
Indenture Trustee, as the case may be, or any of its properties in any court or
before any administrative agency or arbitrator, which, if adversely determined,
would materially adversely affect the ability of First National or the Indenture
Trustee, as the case may be, to perform its obligations under any of the
Indenture Trustee's Documents, and to our knowledge, there are no pending or
threatened actions or proceedings before any court, administrative agency or
tribunal involving First National or the Indenture Trustee, as the case may be,
in connection with the transactions contemplated by any of the Indenture
Trustee's Documents.
The foregoing opinions are subject to the following assumptions,
exceptions and qualifications:
A. We are admitted to practice law in the State of Maryland and we do not
hold ourselves out as being experts on the laws of any other jurisdiction. The
foregoing opinions are limited to the laws of the State of Maryland and the
Federal laws of the United States of America governing the banking and trust
powers of First National. In addition, we express no opinion with respect to (i)
Federal securities laws, including the Securities Act of 1933, as amended, the
Securities Exchange Act of 1934, as amended, and the Trust Indenture Act of
1939, as amended, (ii) the Federal Aviation Act of 1953, as amended, and (iii)
state securities or blue sky laws. Insofar as the foregoing opinions relate to
the validity and enforceability in the State of Maryland of the Equipment Notes
and the other Indenture Trustee's Documents expressed to be governed by the laws
of the State of New York, we have assumed that the laws of the State of New York
are identical to the laws of the State of Maryland in all material respects, and
that the Equipment Notes and such Indenture Trustee's Documents constitute
legal, valid, binding and enforceable documents or instruments under such laws
(as to which we express no opinion).
B. The foregoing opinions regarding enforceability of any document or
instrument, are subject to (i) applicable bankruptcy, insolvency, fraudulent
conveyance, moratorium,
<PAGE>
________, 199_
Page 5
reorganization, receivership and similar laws affecting the rights and remedies
of creditors generally, and (ii) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
C. We have assumed the due authorization, execution and delivery by each
of the parties thereto, other than First National and the Indenture Trustee, of
the Indenture Trustee's Documents to which each is a party and that each of such
parties has the full power, authority and legal right to execute and deliver
each such document.
D. We have assumed that all signatures (other than those of the Indenture
Trustee or First National) on documents and instruments examined by us are
genuine, that all documents and instruments submitted to us as originals are
authentic, and that all documents and instruments submitted to us as copies
conform with the originals, which facts we have not independently verified.
E. We have assumed that the Participation Agreement and the transactions
contemplated thereby are not within the prohibitions of Section 406 of the
Employee Retirement Income Security Act of 1974, as amended.
F. We do not purport to be experts in respect of, or express any opinion
concerning laws, rules or regulations applicable to the particular nature of the
Aircraft and other equipment involved in this transaction.
G. We have made no investigation of, and we express no opinion concerning,
the nature of the title to any part of the Aircraft and other equipment or the
Trust Indenture Estate involved in this transaction or the priority of any
mortgage or security interest.
H. The opinions expressed herein concern only the effect of the laws
(excluding the principles of conflict of laws) of the State of Maryland and the
United States of America as currently in effect. We assume no obligation to
supplement this opinion if any applicable laws change after the date hereof or
if we become aware of any fact that might change the opinions expressed herein
after the date hereof.
I. The opinions expressed in this letter are limited to the matters set
forth in this letter, and no other opinions should be inferred beyond the
matters expressly stated.
<PAGE>
________, 199_
Page 6
This opinion is rendered solely for your benefit and may not be relied
upon by any other person or entity for any purpose without our prior written
consent.
Sincerely yours,
OBER, KALER, GRIMES & SHRIVER,
A PROFESSIONAL CORPORATION
By:___________________________
Shareholder
<PAGE>
________, 199_
Page 7
SCHEDULE A
ADDRESSEES
The First National Bank of Maryland, as Indenture Trustee and as Pass-Through
Trustee Baltimore, Maryland
Midway Airlines
Durham, North Carolina
<PAGE>
[LETTERHEAD OF CROWE & DUNLEVY]
Exhibit A-4 to
Owned Aircraft
Participation Agreement
[FAA Counsel Owned Aircraft Opinion]
___________, 1998
(insert addressees)
Re: ______________ model _______________ aircraft with manufacturer's
serial number __________ and United States nationality and
registration marks N_______ (the "Aircraft")
Ladies and Gentlemen:
This letter confirms that we filed with the Federal Aviation
Administration (the "FAA") today at __:__ __ .M., C.__.T., the _________ dated
as of _______________, 1998 (the "Security Agreement") between ________ as
debtor (the "Debtor") and ___________ as secured party (the "Secured Party")
covering the Aircraft and the ___________ model _________ aircraft engines with
manufacturer's serial numbers_________________________________ (the "Engines").
Based upon our examination of the Security Agreement and of such records
of the FAA as we deemed necessary to render this opinion and as were made
available to us by the FAA, it is our opinion that:
(a) the Security Agreement is in due form for recordation by and has
been duly filed for recordation with the FAA pursuant to and in
accordance with the provisions of Section 44107 of Title 49 of the
United States Code:
(b) legal title to the Aircraft is vested in the Debtor and the Aircraft
is duly registered in the name of the Debtor pursuant to and in
accordance with the provisions of Sections 44102 and 44103 of Title
49 of the United States Code:
(c) the Aircraft and the Engines are free and clear of all liens,
security interests and encumbrances of record with the FAA other
than such as are created by the Security Agreement;
<PAGE>
Page 2
(d) the Security Agreement creates a duly and validly perfected first
priority security interest in favor of the Secured Party in the
Aircraft and the Engines; and
(e) the Security Agreement is not required to be refiled with the FAA or
filed or recorded in any other place within the United States in
order to perfect or maintain the perfection of the security interest
created thereby in the Aircraft and the Engines under the applicable
laws of any jurisdiction within the United States.
No opinion is herein expressed as to: (i) laws other than the federal laws
of the United States; (ii) the validity or enforceability under local law of the
Security Agreement; or (iii) the recognition of the perfection of the security
interest created by the Security Agreement against third parties in any legal
proceedings outside the United States. Since our examination was limited to
records maintained by the FAA Aircraft Registry, our opinion does not cover
liens which are perfected without the filing of notice thereof with the FAA,
such as federal tax liens, liens arising under Section 1368(a) of Title 29 of
the United States Code and possessory artisans' liens and was subject to the
accuracy of FAA personnel in the filing, indexing and recording of instruments
filed with the FAA and in the search for encumbrance cross-reference index cards
for the Engines.
Very truly yours,
ROBIN D. JENSON
For the Firm
RDJ:pkk
<PAGE>
Exhibit B
Certain Economic Information
"Minimum Liability Amount" shall mean $_____________.
-30-
<PAGE>
[Exhibit C-2 to Note Purchase
Agreement - Form of Owned
Aircraft Indenture]
================================================================================
TRUST INDENTURE AND SECURITY AGREEMENT [N_____]
dated as of _______, ____, 199__
between
MIDWAY AIRLINES CORPORATION
and
THE FIRST NATIONAL BANK OF MARYLAND,
as Indenture Trustee
================================================================================
COVERING ONE CANADAIR REGIONAL JET SERIES 200ER AIRCRAFT
BEARING U.S. REGISTRATION NO. N____
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS............................................... 5
Section 1.01 Definitions........................................ 5
ARTICLE II ISSUE, EXECUTION, FORM AND
REGISTRATION OF EQUIPMENT NOTES;.......................... 5
Section 2.01. Authentication and Delivery of Equipment Notes..... 5
Section 2.02. Execution of Equipment Notes....................... 5
Section 2.03. Authentication..................................... 6
Section 2.04. Form and Terms of Equipment Notes; Payments on
Equipment Notes.................................... 6
Section 2.05. [Reserved]......................................... 8
Section 2.06. Registration, Transfer and Exchange................ 8
Section 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen
Equipment Notes.................................... 9
Section 2.08. Cancellation of Equipment Notes; Destruction
Thereof............................................ 10
Section 2.09. Termination of Interest in Trust Indenture Estate.. 10
Section 2.10. Equipment Notes in Respect of Replacement
Aircraft........................................... 11
Section 2.11. [Reserved]......................................... 11
Section 2.12. Subordination...................................... 11
ARTICLE III COVENANTS................................................. 12
Section 3.01. Payment of Principal, Make-Whole Premium and
Interest........................................... 12
Section 3.02. Offices for Payments, etc.......................... 12
Section 3.03. Appointment to Fill a Vacancy in Office of
Indenture Trustee.................................. 12
Section 3.04. Paying Agents...................................... 12
Section 3.05. [Reserved]......................................... 13
Section 3.06. [Reserved]......................................... 13
Section 3.07. Disposal of Collateral............................. 13
Section 3.08. No Representations or Warranties as to Aircraft
or Documents....................................... 13
Section 3.09. Further Assurances; Financing Statements........... 13
Section 3.10 Holder Lists: Ownership of Equipment Notes......... 13
ARTICLE IV COVENANTS OF COMPANY...................................... 14
Section 4.01. Possession, Operation and Use, Maintenance
Registration and Insignia.......................... 14
-i-
<PAGE>
Section 4.02. Inspection......................................... 18
Section 4.03. Replacement and Pooling of Parts; Alterations,
Modifications and Additions; Substitution of
Engines............................................ 19
Section 4.04. Loss, Destruction or Requisition................... 22
Section 4.05. Insurance.......................................... 25
Section 4.06. Liens.............................................. 29
Section 4.07. Further Assurances................................. 29
ARTICLE V RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE.................... 30
Section 5.01. Regular Distribution............................... 30
Section 5.02. Event of Loss and Replacement; Prepayment.......... 31
Section 5.03. Payment After Indenture Event of Default, etc...... 32
Section 5.04. Certain Payments................................... 35
Section 5.05. Other Payments..................................... 35
Section 5.06. [Reserved]......................................... 35
Section 5.07. Application of Payments............................ 35
Section 5.08. Investment of Amounts Held by Indenture Trustee.... 35
Section 5.09. Withholding Taxes.................................. 36
ARTICLE VI PREPAYMENT OF EQUIPMENT NOTES............................. 37
Section 6.01. No Prepayment Except as Specified.................. 37
Section 6.02. Prepayment of Equipment Notes...................... 37
Section 6.03. Notice of Prepayment to Holders.................... 38
Section 6.04. Deposit of Prepayment Price........................ 38
Section 6.05. Equipment Notes Payable on Prepayment Date......... 38
ARTICLE VII INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS.......................... 39
Section 7.01. Indenture Event of Default......................... 39
Section 7.02. Remedies........................................... 40
Section 7.03. Return of Aircraft, etc............................ 42
Section 7.04. Indenture Trustee May Prove Debt................... 44
Section 7.05. Remedies Cumulative................................ 46
Section 7.06. Suits for Enforcement.............................. 46
Section 7.07. Discontinuance of Proceedings...................... 46
Section 7.08. Unconditional Right of Holders to Payments on
Equipment Notes.................................... 47
Section 7.09. Control by Holders................................. 47
Section 7.10. Waiver of Past Indenture Default................... 47
-ii-
<PAGE>
Section 7.11. Notice of Indenture Default........................ 48
ARTICLE VIII [RESERVED]................................................ 48
ARTICLE IX CONCERNING THE INDENTURE TRUSTEE.......................... 48
Section 9.01. Acceptance of Trusts............................... 48
Section 9.02. Duties Before, and During, Existence of Indenture
Event of Default................................... 48
Section 9.03. Certain Rights of the Indenture Trustee............ 50
Section 9.04. Indenture Trustee Not Responsible for Recitals,
Equipment Notes, or Proceeds....................... 51
Section 9.05. Indenture Trustee and Agents May Hold Equipment
Notes; Collections, etc............................ 51
Section 9.06. Moneys Held by Indenture Trustee................... 51
Section 9.07. Right of Indenture Trustee to Rely on Officer's
Certificate, etc................................... 52
Section 9.08. Replacement Airframes and Replacement Engines...... 52
Section 9.09. Indenture Supplement for Replacements.............. 55
Section 9.10. Effect of Replacement.............................. 55
Section 9.11. Compensation....................................... 55
ARTICLE X CONCERNING THE HOLDERS.................................... 56
Section 10.01. Evidence of Action Taken by Holders................ 56
Section 10.02. Proof of Execution of Instruments and of Holding
of Equipment Notes................................. 56
Section 10.03. Holders to Be Treated as Owners.................... 56
Section 10.04. Equipment Notes Owned by Company Deemed Not
Outstanding........................................ 57
Section 10.05. ERISA.............................................. 57
ARTICLE XI [RESERVED]................................................ 58
ARTICLE XII SUCCESSOR TRUSTEES........................................ 58
Section 12.01. [Reserved]......................................... 58
Section 12.02. Resignation and Removal of Indenture Trustee:
Appointment of Successor........................... 58
Section 12.03. Persons Eligible for Appointment as Indenture
Trustee............................................ 59
Section 12.04. Acceptance of Appointment by Successor Trustee..... 59
Section 12.05. Merger, Consolidation or Succession to Business
of Indenture Trustee............................... 60
Section 12.06. Appointment of Separate Trustees................... 60
-iii-
<PAGE>
ARTICLE XIII SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS....................... 62
Section 13.01. Supplemental Indentures Without Consent of
Holders............................................ 62
Section 13.02. Supplemental Indentures With Consent of Holders.... 64
Section 13.03. Effect of Supplemental Indenture................... 65
Section 13.04. Documents to Be Given to Indenture Trustee......... 65
Section 13.05. Notation on Equipment Notes in Respect of
Supplemental Indentures............................ 65
Section 13.06. No Request Necessary for Indenture Supplement...... 65
Section 13.07. Notices to Liquidity Providers..................... 66
ARTICLE XIV SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS.......................................... 66
Section 14.01. Satisfaction and Discharge of Indenture:
Termination of Indenture........................... 66
Section 14.02. Application by Indenture Trustee of Funds
Deposited for Payment of Equipment Notes........... 67
Section 14.03. Repayment of Moneys Held by Paying Agent........... 67
Section 14.04. Transfer of Unclaimed Money Held by Indenture
Trustee and Paying Agent........................... 67
ARTICLE XV MISCELLANEOUS............................................. 67
Section 15.01. Capacity in Which Acting........................... 67
Section 15.02. No Legal Title to Trust Indenture Estate in
Holders ........................................... 67
Section 15.03. Sale of Collateral by Indenture Trustee is
Binding............................................ 68
Section 15.04. Indenture Trustee, FNBM, Company, Liquidity
Providers and Holders Only......................... 68
Section 15.05. No Action Contrary to Company's Rights............. 68
Section 15.06. Notices............................................ 68
Section 15.07. Officer's Certificates and Opinions of Counsel..... 68
Section 15.08. Severability....................................... 69
Section 15.09. No Oral Modifications or Continuing Waivers........ 69
Section 15.10. Successors and Assigns............................. 69
Section 15.11. Headings........................................... 70
Section 15.12. Normal Commercial Relations........................ 70
Section 15.13. Governing Law; Counterparts........................ 70
Annex A - Principal Amount of Equipment Notes
Annex B - Amortization Schedule
Appendix A - Definitions
Exhibit A - Form of Indenture Supplement
-iv-
<PAGE>
Exhibit B - Form of Equipment Note
Exhibit C - List of Countries
-v-
<PAGE>
TRUST INDENTURE AND SECURITY AGREEMENT [N_______]
TRUST INDENTURE AND SECURITY AGREEMENT [N ] dated as of ___________,
__, 199__ (the "Indenture"), between MIDWAY AIRLINES CORPORATION, a Delaware
corporation and THE FIRST NATIONAL BANK OF MARYLAND, a national banking
association (when acting in its individual capacity, "FNBM"), as Indenture
Trustee hereunder (the "Indenture Trustee").
W I T N E S S E T H:
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Company, the Indenture Trustee, the Pass Through
Trustees and the Subordination Agent have entered into the Participation
Agreement, pursuant to which the Pass Through Trustees have agreed to purchase
the Equipment Notes from the Company by advancing to the Company an aggregate
amount equal to the principal amount of such Equipment Notes, and the Company
has agreed to issue and deliver pursuant to this Indenture such Equipment Notes
to the Pass Through Trustees, and the Company shall use the proceeds from the
purchase of such Equipment Notes in connection with the financing of the
acquisition of the Aircraft; and
WHEREAS, the Company desires by this Indenture, among other things
(i) to issue the Equipment Notes as provided in the Participation Agreement, and
(ii) to grant to the Indenture Trustee a Lien on the Collateral in accordance
with the terms hereof, in trust, as security for the Company's obligations to
the Holders, for the equal and ratable benefit and security of such Holders;
WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Company, and authenticated, issued and delivered hereunder, the
valid obligations of the Company; and
WHEREAS, all things necessary to make this Indenture the valid,
binding and legal obligation of the Company, enforceable in accordance with its
terms, have been done and performed and have happened.
NOW, THEREFORE, the parties agree as follows:
<PAGE>
GRANTING CLAUSE
NOW, THEREFORE, in consideration of the mutual promises contained
herein and to secure (i) the prompt payment of the principal of and Make-Whole
Premium, if any, and interest on, and all other amounts due with respect to, all
the Equipment Notes from time to time outstanding under this Indenture and all
other amounts due hereunder and (ii) the performance and observance by the
Company of all the agreements, covenants and provisions in this Indenture, the
Equipment Notes and the Participation Agreement contained for the benefit of the
Holders, and the prompt payment of any and all amounts from time to time owing
under the Participation Agreement by the Company to the Holders and each of the
Indenture Indemnitees (provided, that, with respect to amounts owed to the
Liquidity Providers which relate to amounts due under the Liquidity Facilities,
the amounts secured hereby shall only include such amounts to the extent due and
owing pursuant to the final paragraph of Section 2.4 hereof) (collectively the
"Secured Obligations") and for the uses and purposes and subject to the terms
and provisions of this Indenture, and in consideration of the premises and of
the covenants in this Indenture and in the Equipment Notes and of the purchase
of the Equipment Notes by their Holders, and of the sum of $1 paid to the
Company by the Indenture Trustee at or before the delivery of this Indenture,
the receipt and sufficiency of which are hereby acknowledged, the Company has
granted, bargained, sold, assigned, transferred, conveyed, mortgaged, pledged,
granted a first priority security interest in and confirmed, and does hereby
grant, bargain, sell, assign, transfer, convey, mortgage, pledge and grant a
first priority security interest in and confirm to the Indenture Trustee, its
successors and assigns, in trust for the equal and ratable security and benefit
of the Holders and each of the Indenture Indemnitees, a first priority security
interest in and first mortgage Lien on all estate, right, title and interest of
the Company in, to and under the following described property, rights and
privileges (which collectively, but including all property specifically
subjected to the Lien of this Indenture by the terms hereof, by any supplement
to this Indenture (including the Indenture Supplement) or any mortgage
supplemental to this Indenture, are herein referred to as the "Collateral"),
subject always to the terms and conditions of this Indenture:
(1) The Airframe, as described in the Indenture Supplement, and any
airframe substituted in replacement thereof pursuant to the provisions of this
Indenture; the Engines, as the same are more particularly described in the
Indenture Supplement, whether or not such Engines shall be installed in or
attached to the Airframe or any other airframe, and any Replacement Engine
therefor; and all Parts in respect of the Airframe and the Engines and all
records, logs and other documents at any time maintained with respect to the
foregoing property;
(2) All the tolls, rents, issues, profits, products, revenues and
other income (including sales proceeds) of the property subjected or required to
be subjected to the Lien of this Indenture (it being understood that revenues
earned for the carriage of persons, property as mail are not such proceeds) and
all of the estate, right, title and interest of the Company in and to the same
and every part of said property;
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(3) All other moneys and securities (including Permitted
Investments) 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 Company
pursuant to any term of any Operative Agreement, and held or required to be held
by the Indenture Trustee hereunder;
(4) All requisition and insurance proceeds with respect to the
Aircraft or any part thereof, including insurance required to be maintained by
the Company under Section 4.05 hereof;
(5) All right, interest, claims and demands of the Company in, to
and under the Purchase Agreement to the extent the same relate to continuing
rights of the Company in respect of any warranty, express or implied, as to
title, materials, workmanship, design or patent infringement with respect to the
Aircraft and to any service life policy, aircraft or engine performance
guarantee and indemnity provisions with respect to the Aircraft together with
all rights, powers, privileges, options and other benefits of the Company
thereunder with respect to the Aircraft, including, without limitation, the
right to make all waivers and agreements, to give and receive all notices and
other instruments or communications, to take such action upon the occurrence of
a default thereunder, including the commencement, conduct and consummation of
legal, administrative or other proceedings, as shall be permitted thereby or by
law, and to do any and all other things which the Company is or may be entitled
to do thereunder reserving to the Company, however, (i) all of the Company's
rights and interests in and to the Purchase Agreement as and to the extent that
the same relate to aircraft other than the Aircraft and (ii) with respect to the
Aircraft, so long as Manufacturer shall not have received notice from the
Indenture Trustee that an Indenture Event of Default has occurred and is
continuing and the Indenture Trustee has declared the Indenture to be in default
and until Manufacturer has received notice from the Indenture Trustee that such
Indenture Event of Default has been cured or waived, the right to demand, accept
and retain all rights in and to all property, data and services which
Manufacturer is obligated to provide or does provide pursuant to the Purchase
Agreement; and
(6) All proceeds of the foregoing.
PROVIDED, HOWEVER, that notwithstanding any of the foregoing provisions, so long
as no Indenture Event of Default shall have occurred and be continuing the
Company shall have the right, to the exclusion of the Indenture Trustee, (a) to
quiet enjoyment of the Airframe and Engines, and to possess, use, retain and
control the Airframe and Engines and all revenues, income and profits derived
therefrom, and (b) with respect to the Purchase Agreement, to exercise in the
Company's name all rights and powers of the buyer under the Purchase Agreement
and to retain any recovery or benefit resulting from the enforcement of any
warranty or indemnity under the Purchase Agreement; and provided further that,
notwithstanding the occurrence and continuation of an Indenture Event of
Default, the Indenture Trustee shall not enter into any
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amendment of the Purchase Agreement which would increase the obligations of the
Company thereunder.
HABENDUM CLAUSE
TO HAVE AND TO HOLD the aforesaid property unto the Indenture Trustee, its
successors and assigns, in trust for the equal and ratable benefit and security
of the Holders from time to time of the Equipment Notes and the Indenture
Indemnitees, except as provided in Section 2.12 and Article V hereof, without
any priority of any one Equipment Note over any other and for the uses and
purposes and subject to the terms and conditions set forth in this Indenture.
It is expressly agreed that anything contained in this Indenture to the
contrary notwithstanding, the Company shall remain liable under the Operative
Agreements and the Purchase Agreement to perform all of the obligations assumed
by it under any of those documents, all in accordance with and pursuant to the
terms and provisions of those documents, and the Indenture Trustee, the Holders
and the Indenture Indemnitees shall have no obligation or liability under such
documents by reason of or arising out of the assignment under this Indenture,
nor shall the Indenture Trustee, the Holders or the Indenture Indemnitees be
required or obligated in any manner to perform or fulfill any obligations of the
Company under or pursuant to the Operative Agreements or the Purchase Agreement
or, except as expressly provided in this Indenture, 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 Company agrees that it will not enter into
any agreement that would amend, modify, supplement, rescind, cancel or terminate
the Purchase Agreement in respect of the Aircraft without the prior written
consent of the Indenture Trustee, to the extent any such amendment,
modification, supplement, recision, cancellation or termination would have a
material adverse effect on the Indenture Trustee or the Holders.
The Company does hereby irrevocably constitute and appoint the Indenture
Trustee the true and lawful attorney of the Company (which appointment is
coupled with an interest) with full power (in the name of the Company or
otherwise) to ask, require, demand and receive any and all moneys and claims for
money (in each case including insurance and requisition proceeds) due and to
become due under or arising out of the Indenture property which now or hereafter
constitutes part of the Collateral, 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 proceeding which the Indenture Trustee may deem to be
necessary or advisable in the premises; provided that, the Indenture Trustee
shall not exercise any such rights except upon the occurrence and during the
continuance of an Indenture Event of Default.
The Company agrees that at any time and from time to time, upon the
written request of the Indenture Trustee, the Company will, at its own expense
promptly and
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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.
It is hereby further covenanted and agreed by and between the parties as
follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Unless the context otherwise requires,
capitalized terms utilized herein shall have the meanings set forth or
incorporated by reference, and shall be construed in the manner described, in
Appendix A to this Indenture.
ARTICLE II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF EQUIPMENT NOTES;
Section 2.01. Authentication and Delivery of Equipment Notes. Upon the
execution and delivery of this Indenture, and from time to time thereafter,
Equipment Notes in the aggregate principal amount set forth on Annex A hereto
shall be executed by the Company and delivered to the Indenture Trustee for
authentication, and the Indenture Trustee shall thereupon authenticate and
deliver said Equipment Notes to or upon the oral or written order of the
Company, signed, if written, by an authorized officer of the Company, without
any further action by the Company.
Section 2.02. Execution of Equipment Notes. The Equipment Notes shall be
signed on behalf of the Company by an authorized officer of the Company. Such
signatures may be the manual or facsimile signatures of such officer and minor
errors or defects in any reproduction of any such signature shall not affect the
validity or enforceability of any Equipment Note which has been duly
authenticated and delivered by the Indenture Trustee.
In case any officer of the Company who shall have signed any of the
Equipment Notes shall cease to be such officer before the Equipment Notes so
signed shall be authenticated and delivered by the Indenture Trustee or disposed
of by the Company, such Equipment Note nevertheless may be authenticated and
delivered or disposed of as though the person who signed such Equipment Note had
not ceased to be such officer of the Company; and any Equipment Note may be
signed on behalf of the Company by such person or persons as, at the actual date
of the execution of such Equipment Note, shall be the proper officers of the
Company, although at the date of
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the execution and delivery of this Indenture any such person was not such an
officer. Equipment Notes bearing the facsimile signatures of individuals who
were authorized officers of the Company at the time such Equipment Notes were
issued shall bind the Company, 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.
Section 2.03. Authentication. Only such Equipment Notes as shall bear
thereon a certificate of authentication substantially in the form set forth in
Exhibit B, executed by the Indenture Trustee by manual signature of one of its
authorized officers, shall be entitled to the security and benefits of this
Indenture or be valid or obligatory for any purpose. Such certificate by the
Indenture Trustee upon any Equipment Note executed by the Company shall be
conclusive evidence that the Equipment Note so authenticated has been duly
authenticated and delivered hereunder and that the Holder, as evidenced on the
Register, is entitled to the security and benefits of this Indenture.
Section 2.04. Form and Terms of Equipment Notes; Payments on Equipment
Notes. The Equipment Notes and the Indenture Trustee's certificate of
authentication shall be substantially in the form set forth in Exhibit B hereto.
The Equipment Notes shall be issuable as registered securities without coupons
and shall be numbered, lettered, or otherwise distinguished in such manner or in
accordance with such plans as the Company may determine with the approval of the
Indenture Trustee.
The Equipment Notes shall be issued in registered form only and in
denominations of $1,000 and any integral multiple thereof, shall be dated the
Delivery Date, shall be issued in four separate series consisting of Series A,
Series B, Series C, and Series D and shall be issued in the principal amounts,
and shall bear interest at the rates per annum, specified on Annex A. Interest
shall be calculated on the basis of a 360-day year of twelve 30-day months.
Any of the Equipment Notes may be issued with appropriate insertions,
omissions, substitutions and variations, and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the provisions
of this Indenture, as may be required to comply with any law or with any rules
or regulations pursuant thereto, or with the rules of any securities market in
which the Equipment Notes are admitted to trading, or to conform to general
usage.
Each Equipment Note shall bear interest from the date of original issuance
thereof or from the most recent date to which interest has been paid, and shall
be payable in arrears on _______________, 199__, and on each January 2 and July
2 thereafter until maturity; provided that, under certain circumstances provided
in the Registration Rights Agreement, including in the event a Registration
Event does not occur on or prior to the date (the "Increase Date") required
pursuant to the Registration Rights Agreement, such interest rate shall be
increased by 0.5% from and including the Increase Date to but excluding the date
such Registration Event does occur. The
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principal amount of each Equipment Note shall be payable on the dates and in the
installments as set forth in Annex B hereto.
Notwithstanding the preceding paragraph, each Equipment Note shall bear
interest at the Past Due Rate on any principal, interest and any other amount
payable hereunder or under such Equipment Note, which shall not be paid in full
when due (whether at stated maturity, by acceleration, by mandatory prepayment
or otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full, payable from time to time on demand
of the Indenture Trustee.
The principal of, and Make-Whole Premium, if any, and interest on, the
Equipment Notes shall be payable at the Corporate Trust Department of the
Indenture Trustee or at any office or agency maintained for such purpose
pursuant to Section 3.02 hereof in immediately available funds prior to 12:00
noon (New York time) on the due date thereof and the Indenture Trustee shall
remit all such amounts received by it to the Holders at such account or accounts
at such financial institution or institutions as the Holders shall have
designated to the Indenture Trustee in writing, in immediately available funds,
such payment to be made if the payment was received prior to 12:00 noon New York
time by the Indenture Trustee on any Business Day, by 1:00 p.m. New York time on
such Business Day; otherwise, the Indenture Trustee shall make payment promptly,
but not later than 11:00 A.M. New York time on the next succeeding Business Day.
If any amount payable under the Equipment Notes, or under this Indenture, falls
due on a day that is not a Business Day, then such sum shall be payable on the
next succeeding Business Day, without (provided that payment is made on such
next succeeding Business Day) additional interest thereon for the period of such
extension.
The Holder at the close of business on any Record Date with respect to any
Payment Date shall be entitled to receive the interest if any payable on such
Payment Date notwithstanding any transfer or exchange of such Equipment Note
subsequent to the Record Date and prior to such Payment Date, except if and to
the extent the Company shall default in the payment of the interest due on such
Payment Date, in which case such defaulted interest shall be paid to the Holder
at the close of business on a subsequent Record Date (which shall be not less
than five or more than 15 Business Days prior to the date of payment of such
defaulted interest) established by notice given by mail by or on behalf of the
Company to the Holders not less than 15 days preceding such subsequent Record
Date.
The Company agrees to pay to the Indenture Trustee for distribution in
accordance with Section 5.04 hereof (a) any and all indemnity amounts payable by
the Company to (i) the Indenture Trustee in its individual capacity, (ii) the
Subordination Agent or (iii) each Liquidity Provider, in each case pursuant to
Article 6 of the Participation Agreement and (b) the Pro Rata Share of all
amounts owed to each Liquidity Provider by the Subordination Agent under each
Liquidity Facility other than amounts due as (i) repayments of the principal of
advances thereunder, (ii) interest on Downgrade Drawings and Non-Extension
Drawings, except to the extent exceeding
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investment earnings thereon and (iii) interest on Interest Drawings and Final
Drawings except to the extent included in Net Interest and Related Charges. As
used in this Section, "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 under
this Indenture other than the Series D Equipment Notes and the denominator
of which is the aggregate principal balance of all Equipment Notes issued
under this Indenture and the Related Indentures other than the Series D
Equipment Notes, and
(B) with respect to all Net Interest and Related Charges (x)
if there exists a Payment Default under any Equipment Note issued under
this Indenture a fraction, the numerator of which is the aggregate
principal balance then outstanding of Equipment Notes issued under this
Indenture other than the Series D Equipment Notes and the denominator of
which is the aggregate principal balance then outstanding of all Equipment
Notes issued under this Indenture and the Related Indentures other than
the Series D Equipment Notes under which there exists a Payment Default or
(y) at all other times, zero.
As used in this Section, "Net Interest and Related Charges" means the sum of (i)
the amount, if any, by which interest payable to each Liquidity Provider on any
Interest Drawing and Final Drawing exceeds the amount which would be payable if
such drawings bore interest at the weighted average Past Due Rate applicable to
amounts in default on all Equipment Notes 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 replacement Liquidity Facility)
which result from any Interest Drawing or Final Drawing. As used in this
Section, a "Payment Default" when used in connection with an Equipment Note
issued hereunder or a Equipment Note issued under any Related Indenture means a
default in the payment of principal thereof or interest thereon (which default
has not been cured), other than solely because of acceleration.
Section 2.05. [Reserved]
Section 2.06. Registration, Transfer and Exchange. The Indenture Trustee
will keep, on behalf of the Company, at each office or agency to be maintained
for the purpose as provided in Section 3.02 hereof a Register or Registers on
which, subject to such reasonable regulations as it may prescribe, it will
register, and will register the transfer of, Equipment Notes as provided in this
Article. Such Register shall be in written form in the English language or in
any other form capable of being converted into such form within a reasonable
period of time. Upon due presentation for registration of transfer of any
Equipment Note at any such office or agency, the Company shall execute and the
Indenture Trustee shall authenticate and deliver in the name of the transferee
or transferees, in authorized denominations, a new Equipment Note or Equipment
Notes of the same Series, and with the same principal amount,
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interest rate and amortization schedule, for an equal aggregate principal
amount; provided, that such Equipment Note being transferred shall be canceled
in accordance with Section 2.08 hereof simultaneously with the issuance of the
new Equipment Note. Any Equipment Note or Equipment Notes may be exchanged for
an Equipment Note or Equipment Notes of the same Series but in other authorized
denominations, in an equal aggregate principal amount. Equipment Notes to be
exchanged shall be surrendered at any office or agency to be maintained by the
Indenture Trustee for the purpose as provided in Section 3.02 hereof, and the
Company shall execute and the Indenture Trustee shall authenticate and deliver
in exchange therefor the Equipment Note or Equipment Notes which the Holder
making the exchange shall be entitled to receive, bearing numbers not
contemporaneously or previously outstanding.
All Equipment Notes presented for registration of transfer, exchange,
prepayment or payment shall (if so required by the Company or the Indenture
Trustee) be duly endorsed by, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company and the Indenture
Trustee duly executed by the Holder or its attorney duly authorized in writing
and the Indenture Trustee may require evidence satisfactory to it as to the
compliance of any such transfer with the Securities Act. The Indenture Trustee
may require payment from the Holder of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection with any exchange or
registration of transfer of Equipment Notes. No service charge shall be levied
for any such transaction. The Indenture Trustee shall not be required to
exchange or register a transfer of any Equipment Notes (a) for a period of 15
days immediately preceding the first mailing of notice of prepayment of such
Equipment Notes or (b) with respect to which notice of prepayment has been given
pursuant to Section 6.03 hereof and such notice has not been revoked. All
Equipment Notes issued upon any transfer or exchange of Equipment Notes shall be
valid obligations of the Company, evidencing the same debt, and entitled to the
same security and benefits under this Indenture, as the Equipment Notes
surrendered upon such transfer or exchange.
Section 2.07. Mutilated, Defaced, Destroyed, Lost and Stolen Equipment
Notes. In case any Equipment Note shall become mutilated, defaced or be
apparently destroyed, lost or stolen, the Company in its discretion may execute,
and upon the written request of any Holder shall execute, and the Indenture
Trustee shall authenticate and deliver in replacement thereof, a new Equipment
Note, payable to the same Holder, bearing the same principal amount and interest
rate as the Equipment Note being replaced and bearing a number not
contemporaneously or previously outstanding, in exchange and substitution for
the mutilated or defaced Equipment Note, or in lieu of and substitution for the
Equipment Note so apparently destroyed, lost or stolen. In the case of any
Equipment Note so apparently destroyed, lost or stolen, the applicant for a
substitute Equipment Note shall furnish to the Company and the Indenture Trustee
such security or indemnity as may be required by them to indemnify and defend
and to hold each of them harmless and evidence to their satisfaction of the
apparent destruction, loss or theft of such Equipment Note and of the ownership
thereof.
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Upon the issuance of any substitute Equipment Note, the Company or the
Indenture Trustee may require payment from the Holder of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses incurred in connection therewith. In
case any Equipment Note which has matured or is about to mature, or has been
called for prepayment in full, shall become mutilated or defaced or be
apparently destroyed, lost or stolen, the Company may, instead of issuing a
substitute Equipment Note, pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated or defaced Equipment Note),
if the applicant of any Equipment Note so apparently destroyed, lost or stolen,
for such payment shall furnish to the Company and to the Indenture Trustee such
security or indemnity as any of them may require to hold each of them harmless
and the applicant shall also furnish to the Company and the Indenture Trustee
evidence to their satisfaction of the apparent destruction, loss or theft of
such Equipment Note and of the ownership thereof.
Every substitute Equipment Note issued pursuant to the provisions of this
Section by virtue of the fact that any Equipment Note is apparently destroyed,
lost or stolen shall constitute an original additional contractual obligation of
the Company, whether or not the apparently destroyed, lost or stolen Equipment
Note shall be enforceable at any time by anyone and shall be entitled to all the
security and benefits of (but shall be subject to all the limitations of rights
set forth in) this Indenture equally and proportionately with any and all other
Equipment Notes duly authenticated and delivered hereunder. All Equipment Notes
shall be held and owned upon the express condition that, to the extent permitted
by law, the foregoing provisions are exclusive with respect to the replacement
or payment of mutilated, defaced, or apparently destroyed, lost or stolen
Equipment Notes and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the contrary
with respect to the replacement or payment of negotiable instruments or other
securities without their surrender.
Section 2.08. Cancellation of Equipment Notes; Destruction Thereof. All
Equipment Notes surrendered for payment, prepayment, registration of transfer or
exchange, if surrendered to the Company or any agent of the Company or the
Indenture Trustee, shall be delivered to the Indenture Trustee for cancellation
or, if surrendered to the Indenture Trustee, shall be canceled by it; and no
Equipment Notes shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Indenture. The Indenture Trustee shall destroy
cancelled Equipment Notes held by it and deliver a certificate of destruction to
the Company. If the Company shall acquire any of the Equipment Notes, such
acquisition shall not operate as a prepayment or satisfaction of the
indebtedness represented by such Equipment Notes unless and until the same are
delivered to the Indenture Trustee for cancellation.
Section 2.09. Termination of Interest in Trust Indenture Estate. A Holder
shall not, as such, have any further interest in, or other right with respect
to, the Trust Indenture Estate when and if the principal amount of and
Make-Whole Premium, if any, and interest on and other amounts due under all
Equipment Notes held by such
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Holder and all other sums payable to such Holder hereunder and under the other
Operative Agreements shall have been paid in full.
Section 2.10. Equipment Notes in Respect of Replacement Aircraft. Upon the
execution and delivery of a supplement to this Indenture covering a Replacement
Airframe and/or Replacement Engine, as provided in Section 9.09 hereof, each
Equipment Note shall be deemed to have been issued in connection with such
Replacement Airframe and/or Replacement Engine and (in the case of a Replacement
Airframe) each Equipment Note issued thereafter upon a transfer or exchange of,
or as a replacement for, an Equipment Note, shall be designated as having been
issued in connection with such Replacement Airframe, but without any other
change therein except as provided for in this Article II.
Section 2.11. [Reserved]
Section 2.12. Subordination. (a) The Company and, by acceptance of its
Equipment Notes of any Series, each Holder of such Series, hereby agree that no
payment or distribution shall be made on or in respect of the Secured
Obligations owed to such Certificate Holder of such Series, including any
payment or distribution of cash, property or securities after the commencement
of a proceeding of the type referred to in clause (v), (vi) or (vii) of Section
7.01 hereof, except as expressly provided in Article V hereof.
(b) By the acceptance of its Equipment Notes of any Series (other than
Series A), each Holder of such Series agrees that in the event that such Holder,
in its capacity as a 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 2.12 or Article V hereof, it will hold any amount so
received in trust for the Senior Holder (as defined in Section 2.12(c) hereof)
and will forthwith turn over such payment to the Indenture Trustee in the form
received to be applied as provided in Article V hereof.
(c) As used in this Section 2.12, the term "Senior Holder" shall mean, (i)
the Holders of Series A Equipment Notes 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
Holders of Series B Equipment Notes until the Secured Obligations in respect of
Series B Equipment Notes have been paid in full, (iii) after the Secured
Obligations in respect of Series B Equipment Notes have been paid in full, the
Holders of Series C Equipment Notes until the Secured Obligations in respect of
Series C Equipment Notes have been paid in full, and (iv) after the Secured
Obligations in respect of Series C Equipment Notes have been paid in full, the
Holders of Series D Equipment Notes until the Secured Obligations in respect of
Series D Equipment Notes have been paid in full.
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ARTICLE III
COVENANTS
Section 3.01. Payment of Principal, Make-Whole Premium and Interest. The
Company covenants and agrees that it will duly and punctually pay or cause to be
paid the principal of, and interest and Make-Whole Premium, if any, and all
other amounts due on, each of the Equipment Notes and under this Indenture at
the place or places, at the respective times and in the manner provided in this
Indenture and in the Equipment Notes.
Section 3.02. Offices for Payments, etc. So long as any of the Equipment
Notes remain outstanding, the Indenture Trustee will maintain the following: (a)
an office or agency where the Equipment Notes may be presented for payment and
(b) a facility or agency where the Equipment Notes may be presented for
registration of transfer and for exchange and for prepayment as provided in this
Indenture (the "Registrar"). The Registrar shall keep a register (the
"Register") with respect to the Equipment Notes and their transfer and exchange.
The Indenture Trustee may appoint one or more co-registrars ("Co-Registrars")
for the Equipment Notes and may terminate any such appointment at any time upon
written notice. The term "Registrar" includes any Co-Registrar. The Indenture
Trustee shall initially act as Registrar.
Section 3.03. Appointment to Fill a Vacancy in Office of Indenture
Trustee. The Company, whenever necessary to avoid or fill a vacancy in the
office of Indenture Trustee, will appoint, in the manner provided in Section
12.02 hereof, an Indenture Trustee, so that there shall at all times be an
Indenture Trustee hereunder.
Section 3.04. Paying Agents. Whenever the Indenture Trustee in its sole
discretion shall appoint a paying agent (the "Paying Agent"), it will cause the
Paying Agent to execute and deliver an instrument in which the Paying Agent
shall agree with the Indenture Trustee, subject to the provisions of this
Section:
(a) that it will hold all sums received by it as such agent
for the payment of the principal of, and interest and Make-Whole Premium,
if any, on the Equipment Notes (whether such sums have been paid to it by
the Indenture Trustee or the Company) in trust for the benefit of the
Holders or of the Indenture Trustee, and
(b) that it will give the Indenture Trustee notice of any
failure by the Company to make any payment of the principal of or interest
or Make-Whole Premium, if any, on the Equipment Notes when the same shall
be due and payable.
Anything in this Section to the contrary notwithstanding, the agreements
to hold sums in trust as provided in this Section are subject to the provisions
of Sections 14.03 and 14.04 hereof.
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Section 3.05. [Reserved]
Section 3.06. [Reserved]
Section 3.07. Disposal of Collateral. At any time and from time to time
any part of the Collateral may be sold or disposed of in accordance with the
provisions of this Indenture. The Indenture Trustee shall, from time to time,
release any part of the Collateral so sold or disposed of or as to which an
Event of Loss has occurred from the Lien of this Indenture. In addition, to the
extent that such property constitutes an Airframe or Engine, the further
requirements of Section 9.08 hereof shall be satisfied.
Section 3.08. No Representations or Warranties as to Aircraft or
Documents. THE INDENTURE TRUSTEE DOES NOT MAKE NOR SHALL BE DEEMED TO HAVE MADE
ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
AIRWORTHINESS, WORKMANSHIP, VALUE, CONDITION, DESIGN, COMPLIANCE WITH
SPECIFICATIONS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR USE OR PURPOSE OF
THE AIRCRAFT OR ANY ENGINE, 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 WHATSOEVER.
Section 3.09. Further Assurances; Financing Statements. At any time and
from time to time, upon the request of the Indenture Trustee, the Company, at
its own expense, 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 advisable to perfect, preserve or protect the Liens 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 granted herein, 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 Liens or assignments
created or intended to be created hereby.
Section 3.10 Holder Lists: Ownership of Equipment Notes. (a) The Indenture
Trustee shall preserve in as current a form as is reasonably practicable the
most recent list available to it of the names and addresses of the Holders. If
the Indenture Trustee is not the Registrar, the Registrar shall furnish to the
Indenture Trustee semi-annually not more than ten days after each Record Date,
as of such Record Date, or at such other times as the Indenture Trustee may
request in writing, a list, in such form and as of such date as the Indenture
Trustee may reasonably require, containing all the information in the possession
or control of the Registrar as to the names and addresses of the Holders and the
amounts and Maturities of the Equipment Notes held by such Holders.
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(b) Ownership of the Equipment Notes shall be proved by the Register kept
by the Registrar.
ARTICLE IV
COVENANTS OF COMPANY
Section 4.01. Possession, Operation and Use,
Maintenance Registration and Insignia.
(a) General.
Except as otherwise expressly provided herein, the Company shall be
entitled to operate, use, locate, employ or otherwise utilize or not utilize the
Airframe, Engines and Parts in any lawful manner or place in accordance with the
Company's business judgment.
(b) Possession.
The Company shall not lease, or otherwise in any manner deliver,
relinquish or transfer possession of the Airframe or any Engine to any Person or
install any Engine, or permit any Engine to be installed, on any airframe other
than the Airframe, so long as such Airframe is subject to the Lien of this
Indenture, without the prior consent of the Indenture Trustee, which consent
shall not be unreasonably withheld, except that the Company may without the
prior consent of the Indenture Trustee:
(i) enter into a charter or wet lease or other similar
arrangement under which the Company has operational control of
the Airframe and any Engines installed thereon in the course
of the Company's business (which shall not be considered a
transfer of possession hereunder), provided that the Company's
obligations under this Indenture shall continue in full force
and effect notwithstanding any such charter or wet lease or
other similar arrangement;
(ii) deliver possession of the Airframe or any Engine or
any Part to the manufacturer thereof or to any organization
for testing, service, repair, maintenance, overhaul work or
other similar purposes or for alterations or modifications or
additions required or permitted by the terms of this
Indenture;
(iii) subject the Airframe and any Engines installed
thereon to interchange agreements or any Engine to interchange
or pooling agreements or arrangements which are applicable to
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other similar property owned by or leased to the Company and
are entered into by the Company in the course of its airline
business with any air carrier, provided, that (A) no such
agreement or arrangement shall under any circumstances result
in, contemplate or require the transfer of title to the
Aircraft or Airframe and (B) if the Company's title to any
Engine shall be divested under any such agreement or
arrangement, such divestiture shall be deemed to be an Event
of Loss with respect to such Engine and the Company shall
comply with Section 4.03(e) hereof in respect thereof;
(iv) install an Engine on an airframe owned by the
Company free and clear of all Liens except (A) Permitted
Liens, (B) those which apply only to the engines (other than
the Engines), appliances, parts, instruments, appurtenances,
accessories, furnishings and other equipment (other than
Parts) installed on such airframe, and (C) those created by
the rights of other air carriers under interchange or pooling
agreements or other arrangements customary in the airline
industry which do not contemplate, permit or require the
transfer of title to such airframe or engines installed
thereon;
(v) install an Engine on an airframe, leased to the
Company or purchased by the Company subject to a conditional
sale or other security agreement, provided that such Engine
shall not thereby become subject to the lien of such lease,
conditional sale or other security agreement;
(vi) install an Engine on an airframe, owned by the
Company, leased by the Company or purchased by the Company
subject to a conditional sale or other security agreement
under circumstances where neither clause (iv) nor clause (v)
above is applicable, provided that any divestiture or
non-curable impairment of title to such Engine resulting from
such installation shall be deemed an Event of Loss with
respect to such Engine and the Company shall comply with
Section 4.03 (e) hereof;
(vii) transfer possession of the Airframe or Engine to
the United States of America or any instrumentality thereof
pursuant to the Civil Reserve Air Fleet Program (as
established and administered pursuant to Executive Order
11490, as amended, as superseded by United States Executive
Order No. 12656) or any similar or substitute program;
(viii) transfer possession of the Airframe or any Engine
to the United States of America, or to a foreign government,
when
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required by Applicable Law (it being understood that nothing
in this clause (viii) shall relieve the Company from its
obligations under Section 4.04(a) if such transfer becomes an
Event of Loss); and
(ix) transfer possession of the Airframe or any Engine
to the United States of America or any instrumentality or
agency thereof pursuant to a sublease, contract or other
instrument;
(x) so long as no Specified Default shall have occurred
and be continuing, and subject to the provisions of this
Section 4.01(b), enter into a lease with respect to any Engine
or the Airframe and Engines or engines then installed on the
Airframe to a Permitted Lessee which is not the subject of a
petition filed under any bankruptcy laws or other insolvency
laws in effect at the time such lease is entered into, or any
other foreign air carrier; provided that in the case only of a
lease to a foreign air carrier that is not a Permitted Lessee,
the Indenture Trustee receives at the time of such lease an
opinion of counsel to the Company (which counsel shall be
reasonably satisfactory to the Indenture Trustee) to the
effect that there exist no possessory rights in favor of the
lessee under the laws of such sublessee's country which would,
upon bankruptcy or insolvency of or other default by the
Company and assuming that at such time such lessee is not
insolvent or bankrupt, prevent the return of such Engine or
the Airframe and such Engine or engine to the Indenture
Trustee in accordance with and when permitted by the terms of
Section 7.02 upon the exercise by the Indenture Trustee of its
remedies under Section 7.02;
provided that (1) the rights of any transferee who receives possession by reason
of a transfer permitted by this Section 4.01(b) (other than by a transfer of an
Engine which is deemed an Event of Loss) shall be subject and subordinate to all
the terms of this Indenture, (2) the Company shall remain primarily liable
hereunder for the performance of all the terms of this Indenture and all the
terms and conditions of this Indenture and the other applicable Operative
Agreements shall remain in effect and (3) no lease or transfer of possession
otherwise in compliance with this Section 4.01(b) shall (x) result in any
registration or reregistration of the Aircraft except to the extent permitted by
Section 4.01(e) or the maintenance, operation or use thereof except in
compliance with Sections 4.01(c) and 4.01(d), or (y) permit any action not
permitted to the Company hereunder.
In the case of any lease permitted under this Section 4.01(b), the
Company will include in such lease appropriate provisions which (a) make such
lease expressly subject and subordinate to all of the terms of this Indenture
including the rights of the Indenture Trustee to avoid such lease in the
exercise of its rights to repossession of the Airframe and Engines hereunder;
(b) expressly prohibit any subleasing of the Airframe
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and Engines; (c) require that the Airframe and Engines be maintained in
accordance with a maintenance program approved by the Aeronautical Authority
applicable thereto; (d) require the lessee to comply with the terms of Section
4.05 hereof; and (e) require that the Airframe and Engines be used in accordance
with the limitations applicable to the Company's possession and use provided in
this Indenture.
The Indenture Trustee hereby agrees for the benefit of the lessor or
secured party of any airframe (other than the Airframe) leased to the Company or
purchased by the Company subject to a conditional sale or other security
agreement, which lease or conditional sale or other security agreement 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, that the Indenture Trustee 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 owned by such lessor or is subject to such conditional
sale or other security agreement or security interest in favor of such secured
party.
(c) Operation and Use.
The Company shall not operate, use or locate the Airframe or any
Engine, or suffer such Airframe or any Engine to be operated, used or located
(i) in any area excluded from coverage by any insurance required by the terms of
Section 4.05 hereof, except in the case of a requisition by the United States of
America where the Company obtains indemnity from the Government against
substantially the same risks and for at least the amounts of the insurance
required by Section 4.05 hereof covering such area, or (ii) outside the United
States or Canada in any recognized or, in the Company's reasonable judgment,
threatened area of hostilities unless covered by war risk insurance, or in
either case unless the Airframe or such Engine is operated or used under
contract with the Government under which contract the Government assumes
liability for substantially the same risks in at least the same amounts as would
be covered by such insurance. So long as the Airframe or an Engine is subject to
the Lien of this Indenture, the Company shall not permit the Airframe or such
Engine to be used or operated in violation of any Applicable Law or in violation
of any airworthiness certificate, license or registration relating to the
Aircraft or such Engine issued by any competent governmental authority, unless
(i) the validity thereof is being contested in good faith and by appropriate
proceedings which do not involve a material danger of the sale, forfeiture or
loss of the Airframe or such Engine, or (ii) it is not possible for the Company
to comply with the laws of a jurisdiction other than the United States (or other
than any jurisdiction in which the Aircraft is then registered) because of a
conflict with the applicable laws of the United States (or such jurisdiction in
which the Aircraft is then registered).
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(d) Maintenance.
So long as the Airframe or an Engine is subject to the Lien of an
Indenture, the Company, at its own cost and expense, shall service, repair,
maintain, overhaul and test the Airframe and such Engine or cause the same to be
done in accordance with a maintenance program approved by the Aeronautical
Authority, and shall keep or cause to be kept the Airframe and such Engine in
such operating condition as may be necessary to enable the airworthiness
certification of the Aircraft to be maintained in good standing at all times
under the applicable rules and regulations of the Aeronautical Authority, except
when aircraft of the same type, model or series as the Airframe (powered by
engines of the same type as those with which the Airframe shall be equipped at
the time of grounding) registered in the same country have been grounded by the
Aeronautical Authority, provided, however, that if the airworthiness certificate
of the Aircraft shall be withdrawn, then, subject to Section 4.04 hereof, so
long as the Company is taking or causing to be taken all necessary action to
promptly correct the condition which caused such withdrawal, no Indenture
Default or Indenture Event of Default shall arise from such withdrawal. Nothing
herein shall be deemed to prevent the Company from taking the Aircraft out of
service for maintenance or modifications permitted hereunder or storage in
accordance with applicable Aeronautical Authority requirements and sound
practice for such storage. The Company shall maintain or cause to be maintained
all records, logs and other documents required by the Aeronautical Authority to
be maintained in respect of the Aircraft.
(e) Registration
Except as otherwise permitted by Section 4.02(b) of the
Participation Agreement, or as otherwise required by the Transportation Code or
rules, regulations, or orders promulgated thereunder, so long as the Airframe or
an Engine is subject to the Lien of an Indenture, the Aircraft shall be duly
registered in the name of the Company under the Transportation Code.
Section 4.02. Inspection
So long as the Airframe or an Engine is subject to the Lien of an
Indenture, at all reasonable times but upon at least 15 days' prior notice to
the Company and at a time and place reasonably acceptable to the Company, the
Indenture Trustee or its authorized representatives may at its own expense and
risk conduct a visual walk-around inspection of the Aircraft and any such Engine
(including a visual walk-around inspection of the Aircraft during any "C" check
or other heavy maintenance) and may inspect the books and records of the Company
relating to the operation and maintenance thereof; provided that (a) such
representatives shall be fully insured to the reasonable satisfaction of the
Company by the Indenture Trustee with respect to any risks incurred in
connection with any such inspection, (b) any such inspection shall be subject to
the safety, security and workplace rules applicable at the location where such
inspection is conducted and any applicable governmental rules or
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regulations, (c) in the case of an inspection during a maintenance visit, such
inspection shall not in any respect interfere with the normal conduct of such
maintenance visit or extend the time required for such maintenance visit or, in
any event, at any time interfere with the use or operation of the Airframe or
any Engine or with the normal conduct of the Company's or a permitted
sublessee's business, and (d) the Company shall not be required to undertake or
incur any additional liabilities in connection with any such inspection. All
information obtained in connection with any such inspection shall be held
confidential by the Indenture Trustee and shall not be furnished or disclosed by
the Indenture Trustee to anyone other than its bank examiners, auditors,
accountants, agents and legal counsel and except as may be required by an order
of any court or administrative agency or by any statute, rule, regulation or
order of any governmental authority or as may be necessary to enforce the terms
of this Indenture. The 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.
Section 4.03. Replacement and Pooling of Parts; Alterations, Modifications and
Additions; Substitution of Engines.
(a) Replacement of Parts.
So long as the Airframe or an Engine is subject to the Lien of this
Indenture, except as otherwise provided in the proviso to the third sentence of
Section 4.03(d) or if the Airframe or an Engine to which a Part relates has
suffered an Event of Loss, the Company, at its own cost and expense, will
promptly replace all Parts that 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, the Company, at its
own cost and expense, may remove any Parts, whether or not worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use, provided that the Company, at its own cost and expense,
shall, except as otherwise provided in the proviso to the third sentence of
Section 4.03(d), replace such Parts as promptly as practicable with replacement
Parts or temporary replacement parts as provided in Section 4.03(c) hereof. All
replacement Parts shall be free and clear of all Liens except for pooling
arrangements to the extent permitted by Section 4.03(c) and Permitted Liens and
shall be in as good operating condition as, and shall have a value and utility
at least equal to, the Parts replaced assuming such replaced Parts were in the
condition and repair required to be maintained by the terms hereof.
(b) Subject to Lien.
Except as otherwise provided in the proviso to the third sentence of
Section 4.03(d), all Parts at any time removed from the Airframe or any Engine
shall remain and subject to the Lien of this Indenture, no matter where located,
until such time as such Parts shall be replaced by Parts that have been
incorporated or installed in or attached to such Airframe or Engine and that
meet the requirements for
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replacement Parts specified in Section 4.03(a). Immediately upon any replacement
Part becoming incorporated or installed in or attached to an Airframe or Engine
as provided in Section 4.03(a), without further act, (i) the replaced Part shall
thereupon be free and clear of the Lien of this Indenture and shall no longer be
deemed a Part hereunder; and (ii) such replacement Part shall become subject to
the Lien of this Indenture and be deemed part of such Airframe or Engine, as the
case may be, for all purposes hereof to the same extent as the Parts originally
incorporated or installed in or attached to such Airframe or Engine.
(c) Pooling or Parts Leasing.
Any Part removed from the Airframe or from any Engine as provided in
Section 4.03(a) may be subjected by the Company to a pooling or parts leasing
agreement or arrangement of a type customary in the airline industry entered
into in the ordinary course of the Company's business, provided the part
replacing such removed Part shall be incorporated or installed in or attached to
such Airframe or Engine in accordance with Sections 4.03(a) and 4.03(b) as
promptly as practicable 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 4.03(a) may be owned by another airline
or vendor as customary in the airline industry, subject to a pooling or parts
leasing arrangement, provided that the Company, at its expense within a
commercially reasonable time, either (i) causes title to such temporary
replacement part to become subject to the Lien of this Indenture, free and clear
of all Liens except Permitted Liens, at which time such temporary replacement
part shall become a Part or (ii) replaces such temporary replacement part by
incorporating or installing in or attaching to such Airframe or Engine a further
replacement Part owned by the Company free and clear of all Liens except
Permitted Liens and which will become subject to the Lien of this Indenture in
accordance with Section 4.03(b).
(d) Alterations, Modifications and Additions.
The Company, at its own expense, shall make alterations and
modifications in and additions to the Airframe and any Engine as may be required
to be made from time to time by Applicable Law regardless of upon whom such
requirements are, by their terms, nominally imposed; provided, that the Company
may, in good faith, contest the validity or application of any such standard in
any reasonable manner which does not materially adversely affect the lien of
this Indenture. In addition, the Company, at its own expense, may from time to
time make or cause to be made such alterations and modifications in and
additions to the Airframe and any Engine as the Company may deem desirable in
the proper conduct of its business (including, without limitation, removal of
Parts), provided further that no such alteration, modification or addition
diminishes, in the Company's reasonable judgment, the value, utility, condition
or airworthiness of such Airframe or Engine below the value, utility, condition
or airworthiness thereof immediately prior to such alteration, modification or
addition, assuming such Airframe or Engine was then in the condition
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required to be maintained by the terms hereof, except that the value (but not
the utility, condition or airworthiness) of the Aircraft may be reduced by the
value of Parts which the Company deems obsolete or no longer suitable or
appropriate for use in the Airframe or any Engine which shall have been removed
and not replaced, if the aggregate value of all such obsolete or unsuitable
Parts removed from the Aircraft and not replaced shall not exceed $300,000. All
Parts incorporated or installed in or attached or added to the Airframe or any
Engine as the result of any alteration, modification or addition effected by the
Company shall be free and clear of any Liens except Permitted Liens and become
subject to the Lien of this Indenture; provided that the Company may at any time
remove any such Part from the Airframe or an Engine if (i) such Part is in
addition to, and not in replacement of or in substitution for, any Part
originally incorporated or installed in or attached to such Airframe or Engine
on the Delivery Date or any Part in replacement of, or in substitution for, any
such original Part, (ii) such Part is not required to be incorporated or
installed in or attached or added to such Airframe or Engine pursuant to the
terms of Section 4.01(d) or the first sentence of this Section 4.03(d) and (iii)
such Part can be removed from such Airframe or Engine without diminishing or
impairing the value, condition, utility or airworthiness which such Airframe or
Engine would have had at the time of removal had such alteration, modification
or addition not been effected by the Company assuming the Aircraft was otherwise
maintained in the condition required by this Indenture. Upon the removal by the
Company of any such Part as above provided, title thereto shall be free and
clear of all rights of the Indenture Trustee and the Lien of this Indenture
shall no longer be deemed a Part hereunder.
(e) Substitution of Engines.
The Company shall have the right at its option at any time, on at
least 30 days' prior notice to the Indenture Trustee and the Indenture Trustee,
to substitute, and if an Event of Loss shall have occurred with respect to an
Engine, shall within 90 days of the occurrence of such Event of Loss and on at
least five days' prior notice to the Indenture Trustee substitute, a Replacement
Engine for any Engine not then installed or held for use on the Airframe. In
such event, immediately upon the effectiveness of such substitution on the date
set forth in such notice and without further act, (i) the replaced Engine shall
thereupon be released from the Lien of this Indenture and shall no longer be
deemed an Engine hereunder, and (iii) such Replacement Engine shall become
subject to the Lien of this Indenture and be deemed part of the Aircraft for all
purposes hereof to the same extent as the Engine originally installed on or
attached to the Airframe. Upon the substitution of a Replacement Engine, the
conditions set forth in Section 9.08 shall be satisfied at the Company's sole
cost and expense and the parties agree to cooperate with the Company to the
extent necessary to enable it to timely satisfy such conditions.
Upon satisfaction of all conditions to such substitution, (x) the
Indenture Trustee shall execute and deliver to the Company such documents and
instruments as the Company shall reasonably request to evidence the release of
such Engine from the Lien of this Indenture; (y) the Indenture Trustee shall
assign to the Company all claims
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it may have against any other Person relating to an Event of Loss giving rise to
such substitution and (z) the Company shall receive all insurance proceeds and
proceeds in respect of any Event of Loss giving rise to such replacement to the
extent not previously applied to the purchase price of the Replacement Engine as
provided in Sections 4.05(e)(i) and 4.04(e)(ii).
Section 4.04. Loss, Destruction or Requisition.
(a) Event of Loss with Respect to the Airframe.
Upon the occurrence of an Event of Loss with respect to the
Airframe, the Company shall forthwith (and in any event within 30 days after
such occurrence) give the Indenture Trustee notice of such Event of Loss. The
Company shall, within 60 days after such occurrence, give the Indenture Trustee
notice of its election to perform one of the following options (it being agreed
that if the Company shall not have given the Indenture Trustee such notice of
such election, the Company shall be deemed to have elected to perform the option
identified in the following clause (ii)):
(i) subject to the satisfaction of the closing
conditions contained in Section 9.08, on a date not more than
180 days after the occurrence of the Event of Loss, cause a
Replacement Airframe, (together with the same number of
Replacement Engines as the number of Engines, if any, which
were subject to such Event of Loss) to be subjected to the
Lien of this Indenture; provided that, if the Company shall
not perform its obligation to effect such replacement under
this clause (i) during the 180-day period of time provided
herein, it shall give the Indenture Trustee notice to such
effect upon or before the expiration of such period of time
and shall promptly pay on the first Business Day next
following the thirtieth (30th) day after the date of such
notice to the Indenture Trustee, in immediately available
funds, the amount specified in clause (ii) below; or
(ii) pay or cause to be paid to the Indenture Trustee in
immediately available funds on a date specified at least 30
days in advance by the Company, which date shall be a Business
Day not more than 180 days after the occurrence of the Event
of Loss, an amount equal to in immediately available funds,
for distribution to the holders as provided in Section 5.02,
an amount equal to the aggregate unpaid principal of the
Equipment Notes, together with accrued but unpaid interest
thereon to the date of payment, plus any other amounts then
payable hereunder to the Holders.
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(b) Effect of Replacement.
Should the Company have provided a Replacement Aircraft as provided
for in Section 4.04(a)(i) above, the Lien of this Indenture will cease with
respect to the replaced Airframe and any Engines installed thereon at the time
of such Event of Loss and the Indenture Trustee shall (i) execute and deliver to
the Company such documents and instruments, prepared at the Company's expense,
as the Company shall reasonably request to evidence (on the public record or
otherwise) the release of the Indenture Trustee's security interest in and to
the replaced Airframe and the Engine or Engines if any installed on the Airframe
at the time of the Event of Loss, (ii) assign to the Company all claims it may
have against any other Person arising from the Event of Loss and (iv) the
Company shall be entitled to receive all insurance proceeds and proceeds from
any award in respect of condemnation, confiscation, seizure or requisition,
including any investment interest thereon, to the extent not previously applied
to the purchase price of the Replacement Aircraft as provided in Sections
4.05(e)(iii) and 8(e)(i). Should the Company have provided a Replacement
Airframe, together with Replacement Engines, if any, all provisions of this
Indenture relating to the Airframe and Engine or Engines, if any, being replaced
shall be applicable to the Replacement Airframe and Replacement Engine or
Replacement Engines with the same force and effect.
(c) Effect of Payment.
In the event of a payment in full of the amounts payable as provided
in Section 4.04(a)(ii), (i) the Indenture Trustee shall execute and deliver to
the Company such documents and instruments, prepared at the Company's expense,
as the Company shall reasonably request to evidence (on the public record or
otherwise) the release of the Security Trustee's purchase money equipment
security interest in and to the replaced Airframe and the Engine or Engines if
any installed on the Airframe at the time of the Event of Loss; (ii) any
remaining insurance proceeds, including any investment interest thereon, shall
be promptly paid over to the Company; and (iii) the Indenture Trustee shall
convey to the Company all claims for damage to such Airframe and Engines, if
any, against third persons arising from the Event of Loss.
(d) Conditions to Airframe Replacement.
The Company's right to substitute a Replacement Aircraft as provided
in Section 4.04(a)(i) shall be subject to the fulfillment, at the Company's sole
cost and expense, in addition to the conditions contained in such Section
4.04(a)(i), of the conditions precedent set forth in Section 9.08.
(e) Non-Insurance Payments Received on Account of an Event of Loss.
As between the Indenture Trustee and the Company, any payments on
account of an Event of Loss (other than insurance proceeds or other payments the
application of which is provided for in this Section 4.04 or elsewhere in this
Indenture,
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as the case may be, or payments in respect of damage to the business or property
of the Company) with respect to the Aircraft, an Engine or any Part received at
any time by the Indenture Trustee or by the Company from any governmental
authority or other Person will be applied as follows:
(i) if such payments are received with respect to an
Event of Loss as to the Aircraft, and the Airframe or the
Airframe and the Engines or engines installed thereon are
being replaced by the Company pursuant to Section 4.04(a)(i),
such payments shall be paid over to, or retained by, the
Company, provided that if the Company has not completed such
replacement, such payments shall be paid over to, or retained
by, the Indenture Trustee as security, and upon completion of,
or in connection with a closing for, such replacement, be paid
over to or retained by the Company;
(ii) if such payments are received with respect to an
Event of Loss to an Engine or Part that has been or is being
replaced by the Company pursuant to the terms hereof, such
payments shall be paid over to, or retained by, the Company;
and
(iii) if such payments are received with respect to an
Event of Loss as to the Aircraft, and if the Airframe or the
Airframe and the Engines or engines installed thereon has not
been and will not be replaced as contemplated by Section
4.04(a), so much of such payments as shall not exceed the
amounts required to be paid by the Company pursuant to Section
4.04(a) hereof shall be applied in reduction of the Company's
obligation to pay such amounts, to the extent not already paid
by the Company, and, after all such amounts required to be
paid to the Indenture Trustee pursuant to Section 4.04(a)(ii)
above shall be paid in full, shall be paid over to the
Company.
(f) Requisition for Use.
In the event of a requisition for use by any government of the
Airframe and the Engines, if any, or engines installed on the Airframe, the
Company shall promptly notify the Indenture Trustee of such requisition and all
of the Company's obligations under this Indenture shall continue to the same
extent as if such requisition had not occurred except to the extent that the
performance or observance of any obligation by the Company shall have been
prevented or delayed by such requisition, provided that the Company's
obligations for the payment of money and under Section 4.05 (except while an
assumption of liability by the Government of the scope referred to in Section
4.01(c) is in effect) shall not be reduced or delayed by such requisition. Any
payments received by the Indenture Trustee or the Company from such government
with respect to such requisition of use shall be paid over to, or retained by,
the Company. In the event of an Event of Loss of an Engine resulting from the
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requisition for use by a government of such Engine (but not the Airframe), the
Company will replace such Engine hereunder by complying with the terms of
Section 4.03(e) and any payments received by the Indenture Trustee or the
Company from such government with respect to such requisition shall be paid over
to, or retained by, the Company.
(g) Certain Payments to be Held As Security.
Any amount referred to in this Section 4.04 or Section 4.05 hereof
which is payable to the Company shall not be paid to the Company, or, if it has
been previously paid directly to the Company, shall not be retained by the
Company, if at the time of such payment a Specified Default shall have occurred
and be continuing, but shall be paid to and held by the Indenture Trustee as
security for the obligations of the Company under this Indenture, and at such
time as there shall not be continuing any such Specified Default, such amount
and any gain realized as a result of Permitted Investments required to be made
pursuant to Section 5.08 shall be paid over to the Company.
Section 4.05. Insurance.
(a) Public Liability and Property Damage Insurance.
Subject to the rights of the Company under Section 4.05(d), so long
as the Airframe or an Engine is subject to the Lien of the Indenture, the
Company shall, without expense to the Indenture Trustee, maintain or cause to be
maintained in effect with insurers of recognized responsibility public liability
insurance (including, without limitation, passenger legal liability, property
damage and product liability coverage but excluding manufacturer's product
liability coverage) with respect to the Aircraft in an amount not less than the
Company may carry from time to time on other similar aircraft in its fleet but
not less than the Minimum Liability Amount; provided that an agreement of the
Government to insure against or indemnify for substantially the same risks to at
least the same amount shall satisfy the requirements of this Section 4.05(a).
Such insurance shall be of the type usually carried by the Company with respect
to similar aircraft and engines, and covering risks of the kind customarily
insured against by the Company.
During any period that the Aircraft is grounded and not in operation
for any reason, the Company may modify the insurance required by this Section
4.05(a)(i) to reduce the amounts of public liability and property damage
insurance and (ii) to modify the scope of the risks covered and the type of
insurance, in both circumstances to conform to such insurance customary in the
United States airlines industry for regional air carriers similarly situated
with the Company in respect of similar aircraft which are grounded, not in
operation, and stored or hangared, except that the amounts of coverage and scope
of risk covered and the type of insurance shall be the same as from time to time
applicable to aircraft owned or leased by Company on the ground, not in
operation, and stored or hangared.
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(b) Insurance Against Loss or Damage to the Aircraft and Engines.
Subject to the rights of the Company under Section 4.05(d), so long
as the Airframe or an Engine is subject to the Lien of the Indenture, the
Company shall, without expense to the Indenture Trustee, maintain or cause to be
maintained in effect at all times with insurers of recognized responsibility all
risk, agreed value, ground and flight hull insurance, which may exclude war
risks and allied perils, covering the Aircraft for an amount not less than the
Required Insurance Amount; provided that, neither the Company nor any Permitted
Lessee shall be required to maintain all-risk flight aircraft hull insurance
with respect to any period in which the Aircraft is grounded for any reason and
properly stored or hangared. Such hull insurance or other personal property
insurance of the Company shall cover Engines or engines and Parts temporarily
removed from the Airframe, pending replacement by installation of the same or
similar Engines, engines or Parts on the Airframe but such insurance need not
cover an Engine while attached to an airframe not owned, leased or operated by
the Company or a Permitted Lessee. Such insurance shall be of the type usually
carried by the Company or a Permitted Lessee with respect to similar aircraft
and engines, and covering risks of the kind customarily insured against by the
Company or such Permitted Lessee. If and to the extent that the Company or a
Permitted Lessee operates the Aircraft (A) on routes where it maintains war risk
insurance in effect with respect to other similar owned or leased aircraft in
its fleet, or (B) on routes (other than routes within the United States, Canada,
Mexico, Bermuda and islands other than Cuba in the Caribbean Basin) where the
custom in the industry is to carry war risk insurance, the Company shall
maintain or cause to be maintained such insurance in effect with respect to the
Aircraft in the lesser of an amount at least equal to the Required Insurance
Amount or the amount of such insurance customarily carried by corporations
engaged in the same or similar business similarly situated with the Company or
such Permitted Lessee and owning or operating similar aircraft and engines on
such routes or similar routes, provided that if the requirement to maintain war
risk insurance arises under clause (A) of this sentence, such insurance shall be
maintained in an amount not less than that maintained by the Company or such
Permitted Lessee on similar aircraft in its fleet. An agreement by the
Government to insure against or indemnify for substantially the same risks to at
least the same amount will satisfy any of the requirements of this Section
4.05(b).
(c) Additional Insureds: Loss Payment.
The Company shall cause all policies of insurance carried in
accordance with this Section 4.05 to name the Additional Insureds as their
respective interests may appear as additional insureds. Such policies shall
provide with respect to such Additional Insureds that (i) none of their
respective interests in such policies shall be invalidated by any act or
omission or breach of warranty or condition contained in such policies by the
Company or, in the case of any particular Additional Insured, any other
Additional Insured; (ii) no cancellation or lapse of coverage for nonpayment of
premium or otherwise, and no substantial change of coverage which adversely
affects the interests of any such Additional Insured, shall be effective as to
such Additional Insured
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until 30 days (or such lesser period as may be applicable in the case of any war
risk coverage) after receipt by such Additional Insured of written notice from
the insurers of such cancellation, lapse or change; (iii) they shall have no
liability for premiums, commissions, calls, assessments or advances with respect
to such policies; (iv) such policies will be primary without any right of
contribution from any other insurance carried by such Additional Insureds; and
(v) the insurers waive any rights of set-off, counterclaim, deduction or
subrogation against such Additional Insureds. Each liability policy shall
provide that all the provisions thereof, except the limits of liability, shall
operate in the same manner as if there were a separate policy covering each
insured and provide that the exercise by the insurer of rights of subrogation
derived from rights retained by the Company will not delay payment of any claim
that would otherwise be payable but for such rights of subrogation. Each hull
policy shall name the Indenture Trustee as loss payee as long as the Indenture
shall remain in effect; provided that, so long as the insurers shall not have
received written notice that an Indenture Event of Default has occurred and is
continuing, if insurance proceeds in the aggregate equal $2,000,000 or less,
then such proceeds shall be payable to the Company and, notwithstanding the
foregoing, any amounts up to the Required Insurance Amount (i) of any proceeds
which in the aggregate exceed $2,000,000, (ii) of any proceeds in respect of a
total loss or an Event of Loss or (iii) if the insurers shall have received
written notice that an Indenture Event of Default has occurred and is
continuing, any proceeds with respect to any single loss, shall be payable to
such loss payee.
(d) Deductibles and Self-Insurance.
The Company may from time to time self-insure, by way of deductible
or premium adjustment provisions in insurance policies or otherwise, the risks
required to be insured against pursuant to this Section 9 in such amounts as are
then self-insured with respect to similar owned or leased aircraft in the
Company's fleet but in no case shall such self-insurance in the aggregate exceed
$15,000,000 on a per occurrence or on fleetwide basis. A deductible per
occurrence that is not in excess of the prevailing standard market deductible
for similar aircraft, shall be permitted in addition to such self-insurance.
(e) Application of Hull Insurance Proceeds.
Subject to Section 4.04(g), as between the Indenture Trustee and the
Company, any payments received under policies of hull or other property
insurance required to be maintained by the Company pursuant to Section 4.05(b),
shall be applied as follows:
(i) if such payments are received with respect to loss
or damage (including an Event of Loss with respect to an
Engine) not constituting an Event of Loss with respect to the
Airframe, payments in the aggregate of $2,000,000 or less
shall be paid over to or retained by the Company and, subject
to Section 4.05(c), any payments which in the aggregate are
greater than $2,000,000 shall be paid over to or retained by
the Indenture Trustee for payment
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to the Company only upon performance of its repair or
replacement obligation;
(ii) if such payments are received with respect to an
Event of Loss with respect to the Airframe and the Airframe is
not being replaced by the Company pursuant to Section
4.04(a)(i), so much of such payments as shall not exceed the
Required Insurance Amount and other amounts required to be
paid by the Company pursuant to Section 4.04(a)(ii) shall be
applied in reduction of the Company's obligation to pay such
amounts if not already paid by the Company, and to reimburse
the Company if such amounts shall have been paid, and the
balance, if any, of such payments shall be promptly paid over
to or retained by the Company; and
(iii) if such payments are received with respect to the
Airframe or the Airframe and Engines or engines installed
thereon and the Airframe is being replaced by the Company
pursuant to Section 4.04(a)(i), such payments shall be paid
over to, or retained by the Company, provided that if the
Company has not completed such replacement, such payments
shall be paid over to, or retained by, the Indenture Trustee
as security, and upon completion of, or in connection with a
closing for, such replacement, be paid over to or retained by
the Company.
(f) Insurance for Own Account.
Nothing in this Section 9 shall prohibit the Company obtaining
insurance with respect to the Aircraft for its own account (including, without
limitation, hull insurance under the same policies maintained pursuant to this
Section 4.05 in amounts in excess of those required to be maintained pursuant to
this Section 4.05) and any proceeds payable thereunder shall be payable as
provided in the insurance policy relating thereto, provided that no such
insurance may be obtained which would limit or otherwise adversely affect the
availability of coverage or payment of any insurance required to be obtained or
maintained pursuant to this Section 4.05, it being understood that all salvage
rights to the Airframe or the Engines shall remain with the Company's insurers
at all times.
(g) Reports, etc.
So long as the Airframe or an Engine is subject to the Lien of the
Indenture, the Company will furnish to the Indenture Trustee evidence of renewal
of the insurance policies required pursuant to this Section 4.05 prior to the
cancellation, lapse or expiration of such insurance policies and, on or before
the renewal dates of the insurance policies carried by the Company pursuant to
this Section 4.05, a report signed by a firm of aircraft insurance brokers, not
affiliated with the Company, appointed by the Company, stating the opinion of
such firm that the insurance then carried and
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maintained on the Aircraft complies with the terms hereof and that such renewal
insurance will on and after the effective date thereof so comply with the terms
hereof, provided that all information contained in such report shall be held
confidential by the Indenture Trustee except, and shall not be furnished or
disclosed by them to anyone as may be required by Applicable Law. The Company
will instruct such firm to give prompt written advice to the Indenture Trustee
of any default in the payment of any premium and of any other act or omission on
the part of the Company of which it has knowledge and which would in such firm's
opinion invalidate or render unenforceable, in whole or in any material part,
any insurance on the Aircraft. The Company will also instruct such firm to
advise the Indenture Trustee in writing at least 30 days prior to the
termination or cancellation of, or material adverse change in, such insurance
carried and maintained on the Aircraft pursuant to this Section 4.05.
Section 4.06. Liens.
So long as the Airframe or an Engine is subject to the Lien of this
Indenture, the Company shall not directly or indirectly create, incur, assume or
suffer to exist any Lien on or with respect to the Airframe or any Engine or
title thereto or any interest therein or in this Indenture except (a) the Lien
of this Indenture and the rights of the parties to the other Operative
Agreements; (b) the rights of others under agreements or arrangements to the
extent expressly permitted in Sections 4.01(b) and 4.03(c); (c) Liens for Taxes
either not yet due or being contested in good faith by appropriate proceedings
so long as such proceedings do not involve a material danger of the sale,
forfeiture or loss of the Airframe or an Engine; (d) Liens of suppliers,
mechanics, workers, repairers, employees, airport operators, air traffic control
authorities or other like Liens arising in the ordinary course of business and
for amounts the payment of which is either not yet delinquent or is being
contested in good faith (and for the payment of which adequate reserves have
been provided) by appropriate proceedings, so long as such proceedings do not
involve a material danger of the sale, forfeiture or loss of the Airframe or an
Engine; (e) Liens arising out of judgments or awards against the Company with
respect to which at the time there shall have been secured a stay of execution;
(f) Indenture Trustee's Liens, (g) salvage and similar rights of insurers under
policies of insurance maintained with respect to the Aircraft and (h) Liens with
respect to which the Company (or any Permitted Lessee) has provided a bond or
other security adequate in the reasonable opinion of the Indenture Trustee.
Liens described in clauses (a) through (h) above are referred to herein as
"Permitted Liens." The Company shall promptly, at its own expense, take such
action as may be necessary to duly discharge (by bonding or otherwise) any Lien
other than a Permitted Lien arising at any time that the Lien of this Indenture
is in effect.
Section 4.07. Further Assurances.
The Company and the Indenture Trustee will each promptly and duly
execute and deliver to the other such further documents and assurances and take
such further action as the other may from time to time reasonably request in
order to more
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effectively carry out the intent and purpose of this Indenture and to establish
and protect the rights and remedies created or intended to be created in favor
of the Indenture Trustee and the Company hereunder, including, without
limitation, if requested by the Indenture Trustee or the Company, the execution
and delivery of supplements or amendments hereto, in recordable form, subjecting
any replacement or substituted aircraft or engine to this Indenture and the
recording or filing of counterparts hereof, or of financing statements with
respect hereto.
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
Section 5.01. Regular Distribution. Except as otherwise provided in
Section 5.03 hereof, each installment of principal and interest in respect of
the Equipment Notes shall be distributed by the Indenture Trustee no later than
the time herein provided 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 principal and interest (as well
as any interest on any overdue principal and, to the extent
permitted by applicable law, on any overdue interest) then due under
all Series A Equipment Notes shall be distributed to the Holders of
Series A Equipment Notes 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 paragraph (i) above, so much of such
installment or payment as shall be required to pay in full the
aggregate amount of the payment or payments of principal and
interest (as well as any interest on any overdue principal and, to
the extent permitted by applicable law, on any overdue interest)
then due under all Series B Equipment Notes shall be distributed to
the Holders of Series B Equipment Notes 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 paragraph (ii) above, so much of such
installment or payment as shall be required to pay in full the
aggregate amount of the payment or payments of principal and
interest (as well as any interest on any overdue principal and, to
the extent permitted by applicable law, on any overdue interest)
then due under all Series C Equipment Notes shall be distributed to
the Holders of Series C
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Equipment Notes 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 Notebears to the aggregate amount of
the payments then due under all Series C Equipment Notes.
(iv) after giving effect to paragraph (iii) above, so much of such
installment or payment as shall be required to pay in full the
aggregate amount of the payment or payments of principal and
interest (as well as any interest on any overdue principal and, to
the extent permitted by applicable law, on any overdue interest) and
then due under all Series D Equipment Notes shall be distributed to
the Holders of Series D Equipment Notes 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.
Section 5.02. Event of Loss and Replacement; Prepayment. (a) Except as
otherwise provided in Section 5.03 hereof, any payment received by the Indenture
Trustee as the result or in connection with of an Event of Loss with respect to
the Aircraft (and with respect to which the Company has not made the replacement
election in Section 4.04(a)(i)) or as the result of, or in connection with any
event giving rise to, a prepayment pursuant to Section 6.02 hereof, shall be
promptly distributed by the Indenture Trustee in the following order of
priority:
first, (a) to reimburse the Indenture Trustee for any costs or expenses
reasonably incurred in connection with such prepayment and (b) then
to pay any other similar amounts then due to the other Indenture
Indemnitees;
second, (i) to pay the amounts specified in paragraph (i) of clause "second"
of Section 5.03 hereof then due and payable in respect of the Series
A Equipment Notes;
(ii) after giving effect to paragraph (i) above, to pay the amounts
specified in paragraph (ii) of clause "second" of Section 5.03
hereof then due and payable in respect of the Series B Equipment
Notes;
(iii) after giving effect to paragraph (ii) above, to pay the
amounts specified in paragraph (iii) of clause "second" of Section
5.03 hereof then due and payable in respect of the Series C
Equipment Notes; and
(iv) after giving effect to paragraph (iii) above, to pay the
amounts specified in paragraph (iv) of clause "second" of Section
5.03 hereof then due and payable in respect of the Series D
Equipment Notes;
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provided, that payments pursuant to this clause "second" shall be
made without the payment of Make-Whole Premium; and
third, as provided in clause "third" of Section 5.03 hereof;
provided that if a Replacement Airframe shall be substituted for an Airframe
subject to an Event of Loss as provided in Sections 4.04(a)(i) and 9.08 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 Collateral and,
unless otherwise applied pursuant to Section 5.01 or 5.03 hereof, such proceeds
shall be released to the Company upon the release of such damaged Airframe and
the replacement thereof as herein provided.
(b) Any amounts received directly or indirectly from any governmental
authority, insurer or other party pursuant to any provision of Section 4.04 or
4.05 hereof as the result of loss or damage not constituting an Event of Loss
with respect to the Aircraft, or as a result of such loss or damage constituting
an Event of Loss if and to the extent that such amounts would at the time be
required to be paid to the Company pursuant to Section 4.04 or 4.05 hereof but
for the fact that a Specified Default exists shall be held by the Indenture
Trustee as security for the obligations of the Company hereunder and shall be
invested in accordance with the terms of Section 5.08 hereof and at such time as
the conditions for payment to the Company specified in Section 4.04 or 4.05
hereof, as the case may be, shall be fulfilled and no Specified Default exists,
such amount, and the proceeds of any investment thereof, shall, to the extent
not theretofore applied, be paid to the Company.
Section 5.03. Payment After Indenture Event of Default, etc. Except as
otherwise provided in Sections 5.02(b), 5.04(b), 5.04(c) and 5.05 hereof, all
payments received and all amounts held or realized by the Indenture Trustee
after an Indenture Event of Default shall have occurred and so long as such an
Indenture Event of Default shall be continuing and the Equipment Notes shall
have become due and payable as provided in Section 7.02(b) or (c) hereof, shall
be promptly distributed by the Indenture Trustee in the following order of
priority:
first, so much of such payments or amounts as shall be required to pay or
reimburse (i) the Indenture Trustee for any tax (except to the
extent resulting from a failure of the Indenture Trustee to withhold
pursuant to Section 5.09 hereof), 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 7.03(b) hereof) incurred by the
Indenture Trustee (to the extent not previously reimbursed) the
expenses of any sale, taking or other proceeding, attorneys' fees
and expenses, court costs, and any other expenditures incurred or
expenditures or advances made by the Indenture Trustee or the
Holders in the protection, exercise or enforcement of any right,
power
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or remedy or any damages sustained by the Indenture Trustee or the
Holders, liquidated or otherwise, upon such Indenture Event of
Default, shall be applied by the Indenture Trustee as between itself
and the Holders in reimbursement of such expenses and (ii) all
similar amounts payable to the other Indenture Indemnitees hereunder
and under the Participation Agreement; and in the case the aggregate
amount to be so distributed is insufficient to pay as set forth in
clauses (i) and (ii), then ratably, without priority of one over the
other, in proportion to the amounts owed each hereunder;
second, so much of such payment or amounts remaining as shall be required to
reimburse the then existing or prior Holders for payments made
pursuant to Section 9.03(d) hereof (to the extent not previously
reimbursed) shall be distributed to such then existing or prior
Holders ratably, without priority of one over the other, in
accordance with the amount of the payment or payments made by each
such then existing or prior Holder pursuant to said Section 9.03(d)
hereof;
third, (i) so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid principal amount of all
Series A Equipment Notes, and the accrued but unpaid interest and
other amounts due thereon and all other Secured Obligations (other
than Make-Whole Premium) in respect of the Series A Equipment Notes
to the date of distribution, shall be distributed to the Holders of
Series A Equipment Notes, 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
Premium) 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 (other than Make-Whole Premium) 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 (other than Make-Whole
Premium) in respect of the Series B Equipment Notes to the date of
distribution, shall be distributed to the Holders of Series B
Equipment Notes, 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
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due hereunder or thereunder (other than Make-Whole Premium) 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 (other
than Make-Whole Premium) 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 (other than Make-Whole
Premium) in respect of the Series C Equipment Notes to the date of
distribution, shall be distributed to the Holders of Series C
Equipment Notes, 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
Premium) 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 (other than Make-Whole Premium) 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 (other than Make-Whole
Premium) in respect of the Series D Equipment Notes to the date of
distribution, shall be distributed to the Holders of Series D
Equipment Notes, 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
Premium) 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 (other than Make-Whole Premium) to the date of distribution;
(it being understood that amounts payable under this clause "second"
shall not in any event include Make-Whole Premium); and
fourth, the balance, if any of such payments or amounts remaining thereafter
shall be distributed to the Company.
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Section 5.04. Certain Payments. Notwithstanding anything to the contrary
contained in this Article V, the Indenture Trustee will distribute, promptly
upon receipt, any indemnity or other payment received by it from the Company in
respect of (i) the Indenture Trustee in its individual capacity, (ii) the
Subordination Agent, (iii) each Liquidity Provider, (iv) the Pass-Through
Trustee and (v) any other Indenture Indemnitees, in each case pursuant to
Article 7 of the Participation Agreement, directly to the Person (which may
include the Indenture Trustee) entitled thereto. Any payment received by the
Indenture Trustee under clause (b) of the last paragraph of Section 2.04 shall
be distributed to the Subordination Agent to be distributed in accordance with
the terms of the Intercreditor Agreement.
Section 5.05. Other Payments. 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 (a) to the
extent received or realized at any time prior to the payment in full of all
obligations to the Holders, in the order of priority specified in Section 5.01
hereof, and (b) to the extent received or realized at any time after payment in
full of all obligations to the Holders, in the following order of priority:
first, in the manner provided in clause "first" of Section 5.03 hereof, and
second, in the manner provided in clause "third" of Section 5.03 hereof.
Section 5.06. [Reserved]
Section 5.07. Application of Payments. Each payment of principal of and
interest or other amounts due on each Equipment Note shall, except as otherwise
provided herein, be applied,
first, to the payment of interest on such Equipment Note due and payable to
the date of such payment, as provided in such Certificate, as well
as any interest on overdue principal and Make-Whole Premium, if any,
and, to the extent permitted by law, interest and other amounts due
thereunder,
second, to the payment of any other amount (other than the principal of such
Equipment Note), including any Make-Whole Premium, due hereunder or
under such Equipment Note to such Holder; and
third, to the payment of the principal of such Equipment Note if then due
hereunder or under such Equipment Note.
Section 5.08. Investment of Amounts Held by Indenture Trustee. Amounts
held by the Indenture Trustee pursuant to Section 5.02(b) hereof or otherwise to
be invested pursuant to this Section 5.08 shall be invested by the Indenture
Trustee from time to time in securities selected by (i) so long as no Indenture
Event of Default shall have occurred and be continuing, the Company (and in the
absence of written direction
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by the Company, the Indenture Trustee shall invest such monies in direct
obligations of the United States of America) or (ii) so long as an Indenture
Event of Default shall have occurred and be continuing, the Indenture Trustee
and in each case shall be of the type meeting the criteria for Permitted
Investments. Unless otherwise expressly provided in this Indenture, any income
realized as a result of any such investment, net of the Indenture Trustee's
reasonable fees and expenses in making such investment, shall be held and
applied by the Indenture Trustee in the same manner as the principal amount of
such investment is to be applied and any losses, net of earnings and such
reasonable fees and expenses, shall be charged against the principal amount
invested. The Company shall be responsible for and will promptly pay to the
Indenture Trustee, on demand, the amount of any loss realized as the result of
any such investment (together with any fees, commissions and other costs and
expenses, if any, incurred by the Indenture Trustee in connection with such
investment), such amount to be disposed of in accordance with the terms hereof.
The Indenture Trustee shall not be liable for any loss resulting from any
investment made by it or any investment sold by it under this Indenture in
accordance with instructions from the Company 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.
Unless otherwise confirmed in writing, an account statement delivered by
the Indenture Trustee to the Company shall be deemed written confirmation by the
Company that the investment transactions identified therein accurately reflect
the investment directions given to the Indenture Trustee by the Company unless
the Company notifies the Indenture Trustee in writing to the contrary within 30
days of the date of receipt of such statement.
Section 5.09. Withholding Taxes The Indenture Trustee, as agent for the
Company, shall exclude and withhold from each payment of principal, premium, if
any, and interest and other amounts due hereunder or under the Equipment Notes,
and any and all 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 taxes or similar charges are required
to be withheld with respect to any amounts payable in respect of the Equipment
Notes, it will withhold such amounts and timely pay the same to the appropriate
authority in the name of and on behalf of the Holders, 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 Holder
appropriate documentation showing the payment thereof, together with such
additional documentary evidence as such Holder may reasonably request from time
to time.
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ARTICLE VI
PREPAYMENT OF EQUIPMENT NOTES
Section 6.01. No Prepayment Except as Specified. Except as provided in
Sections 6.02, the Equipment Notes may not be prepaid.
Section 6.02. Prepayment of Equipment Notes. (a) The Outstanding Equipment
Notes shall be prepaid in full and not in part:
(i) If an Event of Loss occurs with respect to the Airframe or
with respect to the Airframe and the Engines or engines then installed on
the Airframe (unless pursuant to Section 4.04(a)(i) replacement equipment
is substituted therefor).
(ii) At the option of the Company, upon not less than 25 days'
prior written notice.
(b) In the case of a prepayment of the Equipment Notes pursuant to Section
6.02(a)(i) above, the Equipment Notes shall be prepaid in full on the date as
specified in Section 4.04(a)(ii). In the case of a prepayment of the Equipment
Notes pursuant to Section 6.02(a)(ii) above, the Equipment Notes shall be
prepaid on the date designated in the notice referred to therein. The day on
which the Equipment Notes are to be prepaid pursuant to this Section 6.01(b) is
herein referred to as the "Prepayment Date".
On or prior to the Prepayment Date, immediately available funds shall be
deposited with the Indenture Trustee in an amount in respect of the Equipment
Notes equal to:
(1) if such prepayment is made pursuant to Section 6.02(a)(i)
the sum of (A) the aggregate principal amount of such Equipment Notes then
Outstanding, (B) accrued interest on the Equipment Notes to the Prepayment
Date and (C) all other aggregate sums due the Indenture Trustee hereunder
or under the Participation Agreement, but excluding any Make-Whole Premium
or other premium or penalty, or
(2) if such prepayment is made pursuant to Section
6.02(a)(ii), the sum of the amounts specified in clauses (A), (B) and (C)
of the preceding clause (1) plus any Make-Whole Premium payable in respect
of all Equipment Notes
(the aggregate amount required to be paid pursuant to this sentence being herein
referred to as the "Prepayment Price").
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Section 6.03. Notice of Prepayment to Holders. In order to effect any
prepayment set forth in Section 6.02(a) hereof, the Indenture Trustee shall give
prompt notice by first class mail of prepayment to each Holder. Any notice of
prepayment given by the Company may be revoked by the Company at any time on or
before the Prepayment Date by prompt notice to the Holders.
All notices of prepayment shall state: (1) the Prepayment Date, (2) the
applicable basis for determining the Prepayment Price, (3) that on the
Prepayment Date, subject to the provisions hereof, the Prepayment Price will
become due and payable, and that interest on the Equipment Notes shall cease to
accrue on and after such Prepayment Date, and (4) the place or places where such
Equipment Notes are to be surrendered for payment.
Section 6.04. Deposit of Prepayment Price. On the Prepayment Date, the
Company shall, to the extent an amount equal to the Prepayment Price, as the
case may be, shall not then be held in cash by the Indenture Trustee in
immediately available funds and deposited for the purpose, pay to the Indenture
Trustee an amount equal to the difference between (a) the amount then so held
and (b) the Prepayment Price. If there shall so be on deposit and/or deposited
the applicable Prepayment Price on or prior to a Prepayment Date, interest shall
cease to accrue in respect of all the Outstanding Equipment Notes on and after
such Prepayment Date.
Section 6.05. Equipment Notes Payable on Prepayment Date. On the
Prepayment Date, the Outstanding Equipment Notes shall (except (A) if the
Company has requested the Indenture Trustee to revoke such notice of prepayment
in accordance with Section 6.03 hereof) become due and payable and from and
after such Prepayment Date (unless there shall be a default in the payment of
the Prepayment Price) such Equipment Notes shall cease to bear interest. Upon
surrender by any Holder of its Equipment Note for prepayment in accordance with
said notice, such Holder shall be paid the principal amount of its Equipment
Note then outstanding, accrued interest thereon to the Prepayment Date, all
other sums due to such Holder hereunder, plus, if a Make-Whole Premium is
payable pursuant to Section 6.02(b) hereof, the Make-Whole Premium in respect
of such Equipment Note.
If any Equipment Note called for prepayment shall not be so paid upon
timely surrender thereof for prepayment, the principal shall, until paid,
continue to bear interest from the Prepayment Date at the interest rate
applicable to such Equipment Note.
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ARTICLE VII
INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS
Section 7.01. Indenture Event of Default. "Indenture Event of Default"
means any of the following events (whatever the reason for such Indenture Event
of Default and whether it 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):
(i) the failure of the Company (i) to pay principal, interest
or Make-Whole Premium, if any, on any Equipment Note when due, and such
failure shall have continued unremedied for ten Business Days after the
date when due or (ii) to pay any other amounts hereunder or under the
Equipment Notes when due and such failure shall have continued unremedied
for a period of 30 days after the Company shall receive written demand
therefor from the Indenture Trustee or by the Holders of not less than 25%
in aggregate principal amount of Outstanding Equipment Notes; or
(ii) (A) any representation or warranty made the Company, in
any Operative Agreement or in any certificate the Company, furnished to
the Indenture Trustee or any Holder in connection herewith or therewith or
pursuant hereto or thereto shall prove to have been incorrect in any
material respect when made and was and remains in any respect material to
the Holders and such misrepresentation shall not have been corrected
within 30 days following notice thereof identified as a "Notice of
Indenture Event of Default" being given to the Company by the Indenture
Trustee or by a Majority in Interest of Certificate Holders, unless such
misrepresentation is capable of being corrected, and Company shall, after
the delivery of such notice, be diligently proceeding to correct such
misrepresentation and shall in fact correct such misrepresentation within
180 days after delivery of such notice; or
(iii) any covenant made by the Company shall be breached in
any material respect and such breach shall remain unremedied for a period
of 30 days after there has been given to the Company by a Majority in
Interest Holders a written notice identified as a "Notice of Indenture
Event of Default" specifying such breach and requiring it to be remedied
unless such failure is curable and the Company shall, after the delivery
of such notice, be diligently proceeding to correct such failure and shall
in fact correct such failure 180 days after delivery of such notice; or
(iv) the Company shall file any petition or answer seeking for
itself any reorganization, arrangement, composition, readjustment,
liquidation,
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dissolution or similar relief under any present or future bankruptcy,
insolvency or similar statute, law or regulation;
(v) an order for relief shall be entered in respect of the
Company by a court having jurisdiction in the premises in an involuntary
case under the federal bankruptcy laws as now or hereafter in effect; or
the Company shall file any answer admitting or not contesting the material
allegations of a petition filed against the Company in any proceeding
referred to in clause (vi) below or seek or consent or acquiesce in the
appointment of any trustee, custodian, receiver or liquidator of the
Company or of all or any substantial part of its properties; or
(vi) without the consent or acquiescence of the Company an
order shall be entered constituting an order for relief or approving a
petition for relief or reorganization or any other petition seeking any
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or other similar relief under any present or future
bankruptcy, insolvency or similar statute, law or regulation, or if any
such petition shall be filed against the Company and such petition shall
not be dismissed within 60 days, or if, without the consent or
acquiescence of the Company as the case may be, an order shall be entered
appointing a trustee, custodian, receiver or liquidator of the Company or
of all or any substantial part of the properties of the Company and such
order shall not be dismissed within 60 days;
Section 7.02. Remedies. (a) If an Indenture Event of Default shall have
occurred and be continuing and so long as the same shall be continuing
unremedied, then and in every such case, the Indenture Trustee may, and when
required by the provisions of Article IX or Section 7.02(c) hereof, shall (i)
exercise any or all of the rights and powers and pursue any and all of the
remedies pursuant to this Article VII. The Indenture Trustee may take possession
of all or any part of the properties covered or intended to be covered by the
Lien and security interest created hereby or pursuant hereto and may exclude the
Company, and any transferee of the Company (subject to Section 15.05 hereof),
and all Persons claiming under any of them wholly or partly therefrom. In
addition, the Indenture Trustee may (subject to the provisions of the next
succeeding paragraph) exercise any other right or remedy in lieu of or in
addition to the foregoing that may be available to it under applicable law, or
proceed by appropriate court action to enforce the terms hereof. 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.
(b) If an Indenture Event of Default under clause (iv), (v) or (vi) of
Section 7.01 hereof shall occur and be continuing, the unpaid principal of all
Outstanding Equipment Notes, together with interest accrued but unpaid thereon
and all other amounts due thereunder, but without Make-Whole Premium, shall
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immediately become due and payable, without presentment, demand, protest or
notice, all of which are hereby waived.
(c) If any Indenture Event of Default not described in the preceding
paragraph (b) shall have occurred and be continuing, then and in every such
case, the Indenture Trustee may on its own accord or at the direction of a
Majority in Interest of Holders, at any time, by written notice to the Company,
declare the principal of all the Equipment Notes to be due and payable,
whereupon the unpaid principal amount of all Outstanding Equipment Notes,
together with accrued interest thereon and all other amounts due thereunder, but
without Make-Whole Premium, shall immediately become due and payable without
presentment, demand, protest or other notice, all of which are hereby waived. At
any time after such declaration and prior to the sale or disposition of the
Trust Indenture Estate, however, a Majority in Interest of Holders by notice to
the Company may rescind such declaration, whether made by the Indenture Trustee
on its own accord or as directed, if (x) there has been paid or deposited with
the Indenture Trustee a sum sufficient to pay all overdue installments of
interest on all Equipment Notes (together, to the extent permitted by law, with
interest on such overdue installments of interest), the principal on any
Equipment Notes that would have become due otherwise than by such declaration of
acceleration, all sums paid or advanced by the Indenture Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, its agents and counsel, or (y) all Indenture Events of
Default (other than the nonpayment of principal that has become due solely
because of such acceleration) have been either cured or waived as provided in
Section 7.11 hereof. No such rescission shall affect any subsequent default or
impair any right consequent thereon.
(d) Each Holder shall be entitled at any sale to credit against any
purchase price bid at such sale by such Holder all or any part of the unpaid
obligations owing to such Holder secured by the Lien of this Indenture (but only
to the extent that an amount equal to such purchase price would have been paid
to such Holder pursuant to Article V hereof if such purchase price were paid in
cash and the foregoing provisions of this subsection (d) were not given effect).
(e) In the event of any sale of the Collateral, or any part thereof,
pursuant to any judgment or decree of any court or otherwise in connection with
the enforcement of any of the term of this Indenture, the unpaid principal
amount of all Equipment Notes then outstanding, together with accrued interest
thereon (without Make-Whole Amount), and other amounts due thereunder, shall
immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(f) Notwithstanding anything contained herein, so long as the Pass Through
Trustee under any Pass Through Trust Agreement (or its designee) is a Holder,
the Indenture Trustee will not be authorized or empowered to acquire title to
the Trust Indenture Estate or take any action with respect to the Trust
Indenture Estate so acquired by it if such acquisition or action would cause any
Trust to fail to qualify as a "grantor trust" for federal income tax purposes.
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Section 7.03. Return of Aircraft, etc. (a) Subject to Section 7.02 hereof,
if an Indenture Event of Default shall have occurred and be continuing, at the
request of the Indenture Trustee, the Company shall promptly execute and deliver
to the Indenture Trustee such documents as the Indenture Trustee may reasonably
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 Collateral to which the Indenture Trustee shall at the
time be entitled under this Indenture. Subject to the foregoing, if the Company
shall for any reason fail to execute and deliver such documents after such
request by the Indenture Trustee, the Indenture Trustee may pursue all or part
of such wherever it may be found and enter any of the premises of the Company
wherever such Collateral may be or be supposed to be and search for such
Collateral and take possession of and remove such Collateral. All expenses of
pursuing, searching for and taking such Collateral shall, until paid, be secured
by the Lien of this Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may, from
time to time, at the expense of the Company, make all such expenditures for
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, modification, alterations and repairs to and of the Collateral, as
the Indenture Trustee may reasonably deem proper. In each case subject to
Section 7.02 hereof, the Indenture Trustee shall have the right to maintain,
use, operate, store, insure, lease, dispose of, modify, alter, control or manage
the Collateral and to carry on the business and to exercise all rights and
powers of the Company relating to the Collateral as the Indenture Trustee may
reasonably deem best, including the right to enter into any and all such
agreements with respect to the maintenance, use, operation insurance, storage,
leasing, control, management, modification, alteration or disposition of all or
any part of the Trust Indenture Estate as the Indenture Trustee may determine.
Further, the Indenture Trustee shall be entitled to collect and receive directly
all tolls, rents, revenues, issues, income, products and profits of the
Collateral and every part thereof, 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 under this Indenture. Such tolls, rents, revenues, issues, income,
products and profits shall be applied to pay the expenses of the use, operation,
storage, insurance, leasing, control, management, modification, alteration or
disposition of the Collateral and of all maintenance and repairs, and of
conducting the business thereof, and to make all payments which the Indenture
Trustee may be required or may reasonably elect to make for any taxes,
assessments, insurance or other proper charges upon the Collateral (including
the employment of engineers and accountants to examine, inspect and make reports
upon the properties and books and records of the Company), and all other
payments which the Indenture Trustee may be required or authorized to make under
any provision of this Indenture, as well as just and reasonable compensation for
the services of the Indenture Trustee and of all persons properly engaged and
employed for such purposes by the Indenture Trustee; provided, that any excess
amounts shall be promptly distributed in accordance with Section 5.03 hereof.
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(c) Subject to Section 7.02 hereof, if an Indenture Event of Default shall
have occurred and be continuing and the Indenture Trustee shall be entitled to
exercise remedies hereunder, the Indenture Trustee, either with or without
taking possession, and either before or after taking possession, and without
instituting any legal proceedings whatsoever, may sell, assign, transfer and
deliver the whole or, from time to time, to the extent permitted by law, any
part of the Collateral, or any part thereof, or interest therein, at any private
sale or public auction to the highest bidder, with or without demand,
advertisement or notice, except that in respect of any private sale 30 days'
prior written notice by registered mail to the Company will be provided, for
cash or, with the consent of the Company, credit or for other property, for
immediate or future delivery, and for such price or prices and on such terms as
the Indenture Trustee in exercising reasonable commercial discretion may
determine; provided, that any such action shall be at the time lawful and that
all mandatory legal requirements shall be complied with. Any notice required
pursuant to the terms hereof in the case of a public sale, shall state the time
and place fixed for such sale. Any such public sale shall be held at such time
or times within ordinary business hours as the Indenture Trustee shall fix in
the notice of such sale. At any such sale, the Collateral may be sold in one lot
as an entirety or in separate lots. The Indenture Trustee shall not be obligated
to make any sale pursuant to such notice. The Indenture Trustee may, without
notice or publication, adjourn any public or private sale or cause the same to
be adjourned from time to time by announcement at the time and place fixed for
such sale, and any such sale may be made at any time or place to which the same
may be so adjourned without further notice or publication. The Indenture Trustee
may exercise such right of sale without possession or production of the
Equipment Notes or proof of ownership thereof, and as representative of the
Holders may exercise such right without notice to the Holders or without
including the Holders as parties to any suit or proceedings relating to the
foreclosure of any part of the Collateral. The Company shall execute any and all
such bills of sale, assignments and other documents, and perform and do all
other acts and things requested by the Indenture Trustee in order to permit
consummation of any sale of the Collateral in accordance with this Section
7.03(c) and to effectuate the transfer or conveyance referred to in the first
sentence of this Section 7.03(c). Notwithstanding any other provision of this
Indenture, the Indenture Trustee shall not sell the Collateral or any part
thereof unless the Equipment Notes shall have been accelerated.
(d) To the extent permitted by Applicable Law, and subject to Section 7.02
hereof, the Indenture Trustee or any Holder may be a purchaser of the or any
part thereof or any interest therein at any sale thereof, whether pursuant to
foreclosure or power of sale or otherwise. The Indenture Trustee may apply
against the purchase price therefor the amount then due hereunder or under any
of the Equipment Notes secured hereby and any Holder may apply against the
purchase price therefor the amount then due to it hereunder or under the
Equipment Notes held by such Holder to the extent of such portion of the
purchase price as it would have received had it been entitled to share any
distribution thereof. The Indenture Trustee or any Holder or nominee thereof
shall, upon any such purchase, acquire good title to the property so purchased,
free of
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the Lien of this Indenture and, to the extent permitted by applicable law, free
of all rights of redemption in the Company in respect of the property so
purchased.
(e) The Indenture Trustee shall, as a matter of right, be entitled to the
appointment of a receiver (who may be the Indenture Trustee or any successor or
nominee) for all or any part of the Collateral, whether such receivership be
incidental to a proposed sale of the Collateral or the taking of possession
thereof or otherwise, and the Company hereby consents to the appointment of such
receiver and will not oppose any such appointment. Any receiver appointed for
all or any part of the Collateral shall be entitled to exercise all of the
rights and powers of the Indenture Trustee with respect to the Collateral.
(f) Subject to the provisions of this Indenture, to the extent permitted
by Applicable Law, upon the occurrence and during the continuation of an
Indenture Event of Default the Company irrevocably appoints the Indenture
Trustee the true and lawful attorney-in-fact of the Company (which appointment
is coupled with an interest) in its name and stead and on its behalf, for the
purpose of effectuating any sale, assignment, transfer or delivery for the
enforcement of the Lien of this Indenture, whether pursuant to foreclosure or
power of sale, assignments and other instruments as may be necessary or
appropriate, with full power substitution, the Company hereby ratifying and
confirming all that such attorney or any substitute shall do by virtue hereof in
accordance with applicable law. Nevertheless, if so requested by the Indenture
Trustee or any purchaser, the Company shall ratify and confirm any such sale,
assignment, transfer or delivery, by executing and delivering to the Indenture
Trustee or such purchaser all bills of sale, assignments, releases and other
proper instruments to effect such ratification and confirmation as may be
designated in any such request.
Section 7.04. Indenture Trustee May Prove Debt. If the Company shall fail
to pay any amount payable hereunder or under the Equipment Notes, the Indenture
Trustee, in its own name and as trustee of an express trust, shall be entitled
and empowered to institute any action or proceedings at law or in equity for the
collection of the sums so due and unpaid, and may prosecute any such action or
proceedings to judgment or final decree, and may enforce any such judgment or
final decree against the Company and collect in the manner provided by law out
of the property of the Company wherever situated, the moneys adjudged or decreed
to be payable; provided, that any sale of any portion of the Collateral shall be
done in accordance with Sections 7.02 and 7.03(c) hereof.
In case there shall be pending proceedings relative to the Company under
the Bankruptcy Code or any other applicable Federal or state bankruptcy,
insolvency or other similar law, or in case a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official shall
have been appointed for or taken possession of the Company or its property, or
in case of any other comparable judicial proceedings relative to the Company, or
to the creditors or property of the Company, the Indenture Trustee, irrespective
of whether the principal of the
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Equipment Notes shall then be due and payable as therein or herein expressed or
by declaration or otherwise and irrespective of whether the Indenture Trustee
shall have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount
of principal, interest and other amounts owing and unpaid in respect of
the Equipment Notes or hereunder, and to file such other papers or
documents as may be necessary or advisable in order to have the claims of
the Indenture Trustee (including any claim for reasonable compensation to
the Indenture Trustee and each predecessor Indenture Trustee, and their
respective agents, attorneys and counsel, and for reimbursement of the
Indenture Trustee and each predecessor Indenture Trustee, except as a
result of negligence or bad faith) and of the Holders allowed in any
judicial proceedings relative to the Company or to the creditors or
property of the Company,
(b) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders in any election of a trustee or a standby
trustee in arrangement, reorganization, liquidation or other bankruptcy or
insolvency proceedings or person performing similar functions in
comparable proceedings, and
(c) to collect and receive any moneys or other property
payable or deliverable on any such claims, and to distribute all amounts
received with respect to the claims of the Holders and of the Indenture
Trustee on their behalf;
and any trustee, receiver, or liquidator, custodian or other similar official is
hereby authorized by each of the Holders to make payments to the Indenture
Trustee, and, in the event that the Indenture Trustee shall consent to the
making of payments directly to the Holders, to pay to the Indenture Trustee such
amounts as shall be sufficient to cover reasonable compensation to the Indenture
Trustee, each predecessor Indenture Trustee and their respective agents,
attorneys and counsel, and all other expenses and liabilities incurred, and all
advances made, by the Indenture Trustee and each predecessor Indenture Trustee
except as a result of negligence or willful misconduct.
Nothing contained herein shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Equipment Notes or the rights of any Holder thereof, or to
authorize the Indenture Trustee to vote in respect of the claim of any Holder in
any such proceeding except, as aforesaid, to vote for the election of a trustee
in bankruptcy or similar person.
All rights of action and rights to assert claims under this Indenture, or
under any of the Equipment Notes, may be enforced by the Indenture Trustee
without the possession of such Equipment Notes. Any trial or other proceedings
instituted by the
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Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Holders, as provided herein.
In any proceedings brought by the Indenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party) the Indenture Trustee shall be
held to represent all the Holders of the Equipment Notes, and it shall not be
necessary to make any Holders parties to such proceedings.
Section 7.05. Remedies Cumulative. Each and every right, power and remedy
given to the Indenture Trustee in this Indenture shall be cumulative and shall
be in addition to every other right, power and remedy specifically given herein
or now or hereafter existing at law, in equity or by statute, and each and every
right, power and remedy whether specifically given herein 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 or the Holders, 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 later any other right,
power or remedy. No delay or omission by the Indenture Trustee or of any Holder
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 Company or to be an acquiescence in any such
default.
Section 7.06. Suits for Enforcement. If an Indenture Event of Default has
occurred, has not been waived and is continuing, the Indenture Trustee may in
its discretion and subject to its rights of appropriate indemnification under
Sections 7.09 and 9.03 and Article XI hereof proceed to protect and enforce its
rights and rights of the Holders by such appropriate judicial proceedings as the
Indenture Trustee shall deem most effectual to protect and enforce any of such
rights, either at law or in equity or in bankruptcy or otherwise, whether for
the specific enforcement of any covenant or agreement contained in this
Indenture or in aid of the exercise of any power granted in this Indenture or to
enforce any other legal or equitable right vested in the Indenture Trustee or
the Holders by this Indenture or by law; provided that, any sale of any portion
of the Trust Indenture Estate shall be done in accordance with Sections 7.02 and
7.03(c) hereof.
Section 7.07. Discontinuance of Proceedings. In case the Indenture Trustee
or any Holder shall have instituted any proceeding to enforce any right, power
or remedy under this Indenture 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 Indenture Trustee or such Holder, then the
Company, the Indenture Trustee, and the Holders shall, subject to any binding
determination in such proceeding, be restored to their former positions and
rights under this Indenture with
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respect to the Trust Indenture Estate, and all rights, remedies and powers of
the Indenture Trustee and the Holders shall continue as if no such proceeding
had been instituted.
Section 7.08. Unconditional Right of Holders to Payments on Equipment
Notes. Notwithstanding any other provision in this Indenture and any provision
of any Certificate, the right of any Holder to receive payment of the principal
of and interest and Make-Whole Premium, if any, on such Equipment Note on or
after the respective due dates and in the manner expressed in such Certificate,
or, subject to Section 7.08 hereof, to institute suit for the enforcement of any
such payment on or after such respective dates as provided herein, shall not be
impaired or affected without the consent of such Holder.
Section 7.09. Control by Holders. The Majority in Interest of Holders
shall have the right to direct the Indenture Trustee as to the time, method, and
place of conducting any proceeding for any remedy available to the Indenture
Trustee under this Indenture, or exercising any trust or power conferred on the
Indenture Trustee by this Indenture; provided that such direction shall not be
otherwise than in accordance with law and the provisions of this Indenture and
the Indenture Trustee shall have received, to the extent provided in Sections
7.06 and 9.03 and Article XI hereof, such reasonable indemnification as it may
require against the costs, expenses and liabilities to be incurred by the
Indenture Trustee; and provided further that (subject to the provisions of
Section 9.02 hereof) the Indenture Trustee shall have the right to decline to
follow any such direction if the Indenture Trustee, being advised by counsel,
shall determine that the action or proceeding so directed may not lawfully be
taken or if the Indenture Trustee in good faith by its board of directors, the
executive committee, or a trust committee of directors or Responsible Officers
of the Indenture Trustee shall determine that the action or proceedings so
directed would involve the Indenture Trustee in personal liability or if the
Indenture Trustee in good faith shall so determine that the actions or
forbearance specified in or pursuant to such direction shall be unduly
prejudicial to the interests of Holders not joining in the giving of said
direction, it being understood that (subject to Section 9.02 hereof) the
Indenture Trustee shall have no duty to ascertain whether or not such actions or
forbearance are unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the Indenture Trustee
in its discretion to take any action deemed proper by the Indenture Trustee and
which is not inconsistent with the direction by the Majority in Interest of
Holders.
Section 7.10. Waiver of Past Indenture Default. Upon written instructions
from the Majority in Interest of Holders, the Indenture Trustee shall waive any
past Indenture Default 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
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all Holders and each Liquidity Provider, the Indenture Trustee shall not waive
any Indenture Default (a) in the payment of the principal of or Make-Whole
Premium, if any, or interest on, or other amounts due under, any Equipment Note
then Outstanding, or (b) in respect of a covenant or provision of this Indenture
which, under Article XIII hereof, cannot be modified or amended without the
consent of each Holder.
Section 7.11. Notice of Indenture Default. The Indenture Trustee shall
transmit to the Company, the Holders and the Liquidity Provider notice of any
Indenture Event of Default actually known to a Responsible Officer of the
Indenture Trustee or any Indenture Event of Default or Indenture Default arising
out of Section 7.01(i), such notice to be transmitted by mail to the Holders,
the Liquidity Provider and the Company promptly after the occurrence thereof,
unless any such Indenture Default or Indenture Event of Default shall have been
cured before the giving of such notice; except in the case of default in the
payment of the principal of or interest on or any other amount due under any of
the Equipment Notes, the Indenture Trustee shall be protected in withholding
such notice to the Holders if and so long as the board of directors, the
executive committee, or a trust committee of directors or trustees and/or
Responsible Officers of the Indenture Trustee in good faith determines that the
withholding of such notice is in the interests of the Holders.
ARTICLE VIII
[RESERVED]
ARTICLE IX
CONCERNING THE INDENTURE TRUSTEE
Section 9.01. Acceptance of Trusts. The Indenture Trustee in its
individual capacity hereby accepts the trusts imposed upon it by this Indenture,
and covenants and agrees to perform the same as expressed herein and agrees to
receive and disburse all moneys constituting part of the Collateral in
accordance with the terms hereof.
Section 9.02. Duties Before, and During, Existence of Indenture Event of
Default. (a) The Indenture Trustee, prior to the occurrence of an Indenture
Event of Default and after the curing or waiving of all Indenture Events of
Default which may have occurred, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. So long as an Indenture
Event of Default has occurred and has not been cured or waived, the Indenture
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as a
prudent man would exercise or use under the circumstances in the conduct of his
own affairs. No provision of this Indenture shall be construed to relieve the
Indenture Trustee from liability for its own negligent action,
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its own negligent failure to act (or any simple negligence in the handling of
funds) or its own willful misconduct, except that:
(i) prior to the occurrence of an Indenture Event of Default and after the
curing or waiving of all Indenture Events of Default which may have occurred:
(x) the duties and obligations of the Indenture Trustee shall
be determined solely by the express provisions of this Indenture, and the
Indenture Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read in to this Indenture
against the Indenture Trustee; and
(y) in the absence of bad faith on the part of the Indenture
Trustee, the Indenture Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon
any statements, certificates or opinions furnished to the Indenture
Trustee and conforming to the requirements of this Indenture; but in the
case of any such statements, certificate or opinions which by any
provision hereof are specifically required to be furnished to the
Indenture Trustee, the Indenture Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements of
this Indenture;
(ii) the Indenture Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers of the
Indenture Trustee, unless it shall be proved that the Indenture Trustee was
negligent in ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to any action
taken or not taken by it in good faith in accordance with the direction of the
Holders of not less than a majority in aggregate principal amount of Outstanding
Equipment Notes relating to the time, method and place of conducting any
proceeding for any remedy available to the Indenture Trustee, or exercising any
trust or power conferred upon the Indenture Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if the Indenture Trustee shall have determined
in good faith that the repayment of such funds or adequate indemnity against
such liability is not reasonably assured to it.
The Indenture Trustee agrees that it will execute and the Company agrees
that it will, at its own expense, file or cause to be filed such continuation
statements with respect to financing statements relating to the security
interest created hereunder in the Collateral as may be specified from time to
time in written instructions of the Holders of not less than 25% in aggregate
principal amount of Equipment Notes (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);
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provided that, notwithstanding the foregoing, the Indenture Trustee may execute
and file or cause to be filed any financing statement which it from time to time
deems appropriate.
(b) [Reserved]
(c) 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 XI hereof or under any other Operative
Agreement) promptly take such action as may be necessary duly to discharge all
Indenture Trustee's Liens on any part of the Trust Indenture Estate.
(d) [Reserved]
(e) The Indenture Trustee will furnish to each Holder promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and other instruments furnished to
the Indenture Trustee, to the extent that the same shall not have been otherwise
furnished to such Holder pursuant to this Indenture or to the extent the
Indenture Trustee does not reasonably believe that the same shall have been
furnished by the Company directly to such Holder.
Section 9.03. Certain Rights of the Indenture Trustee. Subject to Section
9.02 hereof:
(a) the Indenture Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, note, coupon, security 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, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by an Officer's Certificate (unless other
evidence in respect thereof be herein specifically prescribed) upon which the
Indenture Trustee may rely to prove or establish a matter set forth therein;
(c) the Indenture Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by it hereunder in
good faith and in accordance with such advice or Opinion of Counsel;
(d) the Indenture Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Indenture Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred therein or thereby;
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(e) the Indenture Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Indenture Event of Default hereunder and
after the curing or waiving of all Indenture Events of Default, the Indenture
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, appraisal, bond, debenture, note,
coupon, security, or other paper or document unless requested in writing to do
so by the Majority in Interest of Holders; provided that, if the payment within
a reasonable time to the Indenture Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Indenture Trustee, not reasonably assured to the Indenture
Trustee by the security afforded to it by the terms of this Indenture, the
Indenture Trustee may require reasonable indemnity against such costs, expenses
or liabilities as a condition to proceeding; the reasonable expenses of every
such examination shall be paid by the Company or, if paid by the Indenture
Trustee or any predecessor trustee, shall be repaid by the Company upon demand;
and
(g) the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys not regularly in its employ and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of any such
agent or attorney appointed with due care by it hereunder.
Section 9.04. Indenture Trustee Not Responsible for Recitals, Equipment
Notes, or Proceeds. The Indenture Trustee assumes no responsibility for the
correctness of the recitals contained herein and in the Equipment Notes, except
the Indenture Trustee's certificates of authentication. The Indenture Trustee
makes no representation as to the validity or sufficiency of this Indenture or
of the Equipment Notes. The Indenture Trustee shall not be accountable for the
use or application by the Company of any of the Equipment Notes or of the
proceeds thereof.
Section 9.05. Indenture Trustee and Agents May Hold Equipment Notes;
Collections, etc. The Indenture Trustee or any agent of the Indenture Trustee in
its individual or any other capacity may become the owner or pledgee of
Equipment Notes with the same rights it would have if it were not the Indenture
Trustee or such agent and may otherwise deal with the Company and receive,
collect, hold and retain collections from the Company with the same rights it
would have if it were not the Indenture Trustee or such agent.
Section 9.06. Moneys Held by Indenture Trustee. Subject to Sections 5.08
hereof and 14.04 hereof, all moneys received by the Indenture Trustee shall,
until used or applied as herein provided, be held in trust for the purposes for
which they were received, but need not be segregated from other funds except to
the extent required by mandatory provisions of law. Neither the Company nor,
subject to Section 5.08 hereof,
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the Indenture Trustee nor any agent thereof shall be under any liability for
interest on any moneys received by it hereunder.
Section 9.07. Right of Indenture Trustee to Rely on Officer's Certificate,
etc. Subject to Sections 9.02 and 9.03 hereof, whenever in the administration of
the trusts of this Indenture the Indenture Trustee shall deem it necessary or
desirable that a matter be proved or established prior to taking or suffering or
omitting any action hereunder, such matter (unless other evidence in respect
thereof be specifically prescribed herein) may, in the absence of bad faith on
the part of the Indenture Trustee, be deemed to be conclusively proved and
established by an Officer's Equipment Note delivered to the Indenture Trustee,
and such certificate, in the absence of bad faith on the part of the Indenture
Trustee, shall be full warrant to the Indenture Trustee for any action taken,
suffered or omitted by it under the provisions of this Indenture upon the faith
thereof.
Section 9.08. Replacement Airframes and Replacement Engines. At any time
and from time to time any Airframe or Engine may, or is required to, be replaced
under Section 4.04(a) or 4.03(e) hereof by a Replacement Airframe or Replacement
Engine, as the case may be, shall be replaced in accordance with the provisions
of this Section 9.08 and the provisions of such preceding Sections hereof, the
Company shall, from time to time, direct the Indenture Trustee to execute and
deliver to or as directed in writing by the Company an appropriate instrument
releasing such Airframe and/or Engine as appropriate from the Lien of this
Indenture and the Indenture Trustee shall execute and deliver such instrument as
aforesaid without recourse or warranty, but only upon receipt by or deposit with
the Indenture Trustee of the following:
(1) A written request from the Company requesting such release and
specifically describing the Airframe and/or Engine(s) to be so released.
(2) A certificate signed by a duly authorized officer of the Company
stating the following:
A. With respect to the replacement of any Airframe:
(i) a description of the Airframe subject to the Event of Loss
including the manufacturer, model, FAA registration number (or other
applicable registration information) and manufacturer's serial number;
(ii) a description of the Replacement Airframe, including the
manufacturer, model, FAA registration number (or other applicable
registration information) and manufacturer's serial number;
(iii) that on the date of the supplement to this Indenture
relating to the Replacement Airframe the Company will be the legal owner
of and have good title to such Replacement Airframe free and clear of all
Liens except Permitted Liens that such Replacement Airframe will on such
date be in at least
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as good operating condition and repair as required by the terms of this
Indenture, and that such Replacement Airframe has been or, substantially
concurrently with such replacement, will be duly registered in the name of
the Company under the Transportation Code or under the law then applicable
to the registration of the Airframe subject to the Event of Loss and that
an airworthiness certificate has been duly issued under the Transportation
Code (or such other applicable law) with respect to such Replacement
Airframe and that such registration and certificate is, or will be, in
full force and effect, and that the Company will have the full right and
authority to use such Replacement Airframe;
(iv) that the insurance required by Section 4.05 hereof is in
full force and effect with respect to such Replacement Airframe;
(v) that the Replacement Airframe is of the same or an
improved make or model as the Airframe requested to be released from this
Indenture;
(vi) that the value of the Replacement Airframe as of the date
of such certificate is not less than the value of the Airframe requested
to be released (assuming such Airframe was in the condition and repair
required to be maintained under this Indenture);
(vii) that no Indenture Event of Default exists or would
result from the making and granting of the request for release and the
addition of a Replacement Airframe;
(viii) that the release of the Airframe subject to the Event
of Loss will not impair the security of the Indenture in contravention of
any of the provisions of this Indenture; and
(ix) that upon such replacement, the Lien of this Indenture
will apply to the Replacement Airframe and such Lien will be a first
priority security interest in favor of the Indenture Trustee.
B. With respect to the replacement of any Engine:
(i) a description of the Engine subject to the Event of Loss
including the manufacturer's serial number;
(ii) a description of the Replacement Engine including the
manufacturer's name, the engine model and serial number;
(iii) that on the date of the supplement to this Indenture
relating to the Replacement Engine the Company will be the legal owner of
such Replacement Engine free and clear of all Liens except Permitted
Liens, and that such Replacement Engine will on such date be in at least
as good operating condition
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and repair as required by the terms of the Indenture and will otherwise
conform to the requirements set forth in the definition of "Replacement
Engine";
(iv) that the value of the Replacement Engine as of the date
of such certificate is not less than the value of the Engine to be
released (without regard to the number of hours or cycles remaining until
the next scheduled maintenance visit, and assuming such Engine was in the
condition and repair required to be maintained under the Indenture);
(v) that the release of the Engine subject to the Event of
Loss will not impair the security of the Indenture in contravention of any
of the provisions of this Indenture;
(vi) that upon such replacement, the Lien of this Indenture
will apply to the Replacement Engine and such Lien will be a first
priority security interest in favor of the Indenture Trustee; and
(vii) that each of the conditions specified in Section 4.03(e)
of this Indenture with respect to such Replacement Engine has been
satisfied.
(3) The appropriate instruments subjecting such Replacement Airframe or
Replacement Engine to the Trust Agreement and to the Lien of this Indenture.
(4) A certificate from a firm of independent aircraft appraisers of
national standing reasonably satisfactory to the Indenture Trustee and the
Company confirming the accuracy of the information set forth in clause (2)A(vi)
of this Section 9.08.
(5) The opinions of counsel to the Company (which may be Company's General
Counsel), or (with respect to those matters set forth in clause (ii) below
relating to the filing of documents pursuant to the Transportation Code) of the
Company's special aviation counsel, or (in either case) other counsel reasonably
satisfactory to the Indenture Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property which have been or are therewith delivered to and deposited with
the Indenture Trustee conform to the requirements of this 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; and
(ii) the Replacement Airframe or Replacement Engine has been
validly subjected to the Lien of this Indenture, the instruments
subjecting such Replacement Airframe or Replacement Engine to the Lien of
this Indenture, have been duly filed for recordation pursuant to the
Transportation Code or any other law then applicable to the registration
of the Aircraft, and no further action, filing or recording of any
document is necessary or advisable in order to
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establish and perfect the Lien of this Indenture on such Replacement
Airframe or Replacement Engine and, with respect to a Replacement
Airframe, the Indenture Trustee would be entitled to the benefits of
Section 1110 of the Bankruptcy Code with respect to such Replacement
Airframe, provided, that such opinion need not be to the effect specified
in the foregoing clause to the extent that the benefits of such Section
1110 would not have been, by reason of a change in law or governmental
interpretation thereof after the date hereof, available to the Indenture
Trustee with respect to the Aircraft immediately prior to such
substitution had such Event of Loss not occurred.
Section 9.09. Indenture Supplement for Replacements. In the event of the
substitution of a Replacement Airframe or a Replacement Engine as contemplated
by Section 4.04(a) or 4.03(e) hereof, as the case may be, the Company and the
Indenture Trustee agree for the benefit of the Holders, subject to fulfillment
of the conditions precedent and compliance by the Company with its obligations
set forth in Section 4.04(a) or 4.03(e) hereof, as the case may be, to execute
and deliver a supplement to this Indenture as contemplated by Section 9.08(3)
hereof and, provided no Indenture Event of Default shall have occurred and be
continuing, execute and deliver to the Company an appropriate instrument
releasing the Airframe or Engine being replaced from the Lien of this Indenture.
Section 9.10. Effect of Replacement. In the event of the substitution of a
Replacement Airframe or a Replacement Engine as contemplated by Section 4.04(a)
or 4.03(e) hereof as the case may be, and Section 9.08 hereof, all provisions of
this Indenture relating to the Airframe or Engine or Engines being replaced
shall be applicable to such Replacement Airframe or Replacement Engine or
Engines with the same force and effect as if such Replacement Airframe or
Replacement Engine or Engines were the same Airframe or engine or engines, as
the case may be, as the Airframe or Engine or Engines being replaced but for any
Event of Loss with respect to the Airframe or Engine or Engines being replaced.
Section 9.11. Compensation. The Company covenants and agrees to pay, and
the Indenture Trustee shall be entitled to receive, reasonable compensation and
payment or reimbursement for its reasonable advances, expenses and disbursements
(including the reasonable compensation and expenses and disbursements of its
counsel, agents and other persons not regularly in its employ) in connection
with its services rendered hereunder or in any way relating to or arising out of
the administration of the Collateral and shall have a priority claim on the
Collateral for the payment of such compensation, advances, expenses and
disbursements to the extent that such compensation, advances, expenses and
disbursements shall not be paid by the Company, and shall have the right to use
or apply any moneys held by it hereunder in the Collateral toward such payments.
The Indenture Trustee agrees that it shall have no right against any Holder for
any fee as compensation for its services as trustee under this Indenture.
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ARTICLE X
CONCERNING THE HOLDERS
Section 10.01. Evidence of Action Taken by Holders. (a) Any request,
demand, authorization, direction, notice, consent, waiver or other action
provided by this Indenture to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially similar tenor signed
by such Holders in person or by an agent duly appointed in writing, and, except
as otherwise expressly provided herein, such action shall become effective when
such instrument or instruments are delivered to the Indenture Trustee and, if
expressly required herein, to the Company. 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 9.02 and 9.03 hereof) conclusive in
favor of the Indenture Trustee and the Company, if made in the manner provided
in this Article.
(b) For the purpose of determining the Holders entitled to vote or consent
to any direction, waiver or other action of such Holders under Section 7.10 or
7.11 hereof, the Company may set a record date for such vote or consent by
specifying such record date in an Officer's Certificate delivered to the
Indenture Trustee. Such record date shall be a date not more than 15 days prior
to the first solicitation of such vote or consent.
Section 10.02. Proof of Execution of Instruments and of Holding of
Equipment Notes. Subject to Sections 9.02 and 9.03 hereof, the execution of any
instrument by a Holder or his agent or proxy may be proved in accordance with
such reasonable rules and regulations as may be prescribed by the Indenture
Trustee. The holding of Equipment Notes shall be proved by the Register or by a
certificate of the Registrar.
Section 10.03. Holders to Be Treated as Owners. Prior to due presentment
for registration of transfer of any Equipment Note, the Company, the Indenture
Trustee, any agent of the Indenture Trustee, the Paying Agent, if any and the
Registrar shall deem and treat the Person in whose name such Equipment shall be
registered upon the Register as the absolute owner of such Equipment Note
(whether or not such Equipment Note shall be overdue and notwithstanding any
notation of ownership or other writing thereon) for the purpose of receiving
payment of or on account of the principal of and, subject to the provisions of
this Indenture, interest on such Equipment Note and for all other purposes; and
neither the Company nor the Indenture Trustee (nor any agent of the Indenture
Trustee) nor the Paying Agent, if any, nor the Registrar shall be affected by
any notice to the contrary. All such payments so made to any such person, or
upon his order, shall be valid, and, to the extent of the sum or sums so paid,
effectual to satisfy and discharge the liability for moneys payable upon any
such Equipment Note.
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Section 10.04. Equipment Notes Owned by Company Deemed Not Outstanding. In
determining whether the Holders of the requisite aggregate principal amount of
Equipment Notes have concurred in any direction, consent or waiver under this
Indenture, Equipment Notes which are owned by the Company, or any Affiliate
thereof shall be disregarded and deemed not to be Outstanding for the purpose of
any such determination; provided that for the purpose of determining whether the
Indenture Trustee shall be protected in relying on any such direction, consent
or waiver, only if a Responsible Officer of the Indenture Trustee has actual
knowledge that certain Equipment Notes are so owned by any person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Company, shall such Equipment Notes be so disregarded; and
provided further that if all Equipment Notes which would be deemed Outstanding
in the absence of the foregoing provision are owned by the Company, or by any
Affiliate thereof, then such Equipment Notes shall be deemed Outstanding for the
purpose of any such determination. Equipment Notes so owned which have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Indenture Trustee the pledgee's right so to act with
respect to such Equipment Notes and that the pledgee is not the Company, or any
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with the Company. In case of a dispute as to such right,
the advice of counsel shall be full protection in respect of any decision made
by the Indenture Trustee in accordance with such advice, unless the Company is
actually named in the Register. Upon request of the Indenture Trustee, the
Company shall furnish to the Indenture Trustee promptly an Officer's Certificate
listing and identifying all Equipment Notes, if any, known by the Company, to be
owned or held by or for any of the above-described persons; and, subject to
Sections 9.02 and 9.03 hereof, the Indenture Trustee shall be entitled to accept
such Officer's Certificate as conclusive evidence of the facts set forth therein
and of the fact that all Equipment Notes not listed therein are outstanding for
the purpose of any such determination.
Section 10.05. ERISA. Any Person, other than the Subordination Agent and
any Pass-Through Trustee who is acquiring the Equipment Notes will be deemed to
represent and warrant that (i) no assets of an employee benefit plan subject to
Title I of ERISA or an individual retirement account or plan subject to Section
4975 of the Code, or any trust established under any such plan or account, have
been used to acquire or hold any of the Equipment Notes, or (ii) that one or
more administrative or statutory exemptions from the prohibited transaction
rules under Section 406 of ERISA and Section 4975 of the Code applies to its
purchase and holding of the Equipment Notes such that its purchase and holding
of the Equipment Notes will not result in a non-exempt prohibited transaction
under Section 406 of ERISA and Section 4975 of the Code.
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ARTICLE XI
[RESERVED]
ARTICLE XII
SUCCESSOR TRUSTEES
Section 12.01. [Reserved].
Section 12.02. 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 days' prior written notice to the
Company and each Holder, such resignation to be effective upon the acceptance of
the trusteeship by a successor Indenture Trustee. In addition, the Company or
the Majority in Interest of the Holders may at any time remove the Indenture
Trustee without cause by an instrument in writing delivered to the Indenture
Trustee, and the Indenture Trustee shall promptly notify each Holder thereof of
such action 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, the Majority in Interest of the Certificate
Holders (based on the recommendation of the Company), may appoint a successor
Indenture Trustee by an instrument signed by such Holders. If a successor
Indenture Trustee shall not have been appointed within 30 days after such notice
of resignation or removal, the Indenture Trustee, the Company or any Holder may
apply to any court of competent jurisdiction to appoint a successor Indenture
Trustee to act until such time, if any, as a successor shall have been appointed
as provided above. The successor Indenture Trustee so appointed by such court
shall immediately and without further act be superseded by any successor
Indenture Trustee appointed as provided above.
(b) In case at any time any of the following shall occur:
(i) the Indenture Trustee shall cease to be eligible in
accordance with the provisions of Section 12.03 hereof and shall fail to
resign after written request therefor by the Company or by any Holder; or
(ii) the Indenture Trustee shall become incapable of acting,
or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator
of the Indenture Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Indenture Trustee or of
its property or affairs for the purpose of rehabilitation, conservation or
liquidation;
then the Company may remove the Indenture Trustee and appoint a successor
trustee by written instrument, in duplicate, executed by a Responsible Officer
of the Company, one copy of which instrument shall be delivered to the Indenture
Trustee so removed
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and one copy to the successor trustee, or, subject to the provisions of Section
7.13 hereof, any Holder who has been a bona fide Holder for at least six months
may, on behalf of himself and all others similarly situated Holders, petition
any court of competent jurisdiction for the removal of the Indenture Trustee and
the appointment of a successor trustee. Such court may thereupon, after such
notice, if any, as it may deem proper and prescribe, remove the Indenture
Trustee and appoint a successor trustee, which removal and appointment shall
become effective upon acceptance of appointment by the successor trustee as
provided in Section 12.04 hereof. The successor Indenture Trustee so appointed
by such court shall immediately and without further act be superseded by any
successor Indenture Trustee appointed as provided above within one year from the
date of appointment by such court.
Section 12.03. Persons Eligible for Appointment as Indenture Trustee.
There shall at all times be an Indenture Trustee hereunder which shall be (i)(x)
a bank or trust company organized and doing business under the laws of the
United States of America or any state or the District of Columbia having a
combined capital and surplus of at least $100,000,000 or (y) a bank or trust
company whose obligations hereunder are fully guaranteed by a direct or indirect
parent thereof having a combined capital and surplus of at least $100,000,000
and (ii) a Person authorized under applicable law to exercise corporate trust
powers and subject to supervision of examination by Federal, state or District
of Columbia authority. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section, 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 Indenture Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Indenture
Trustee shall resign immediately in the manner and with the effect specified in
Section 12.02 hereof.
Section 12.04. Acceptance of Appointment by Successor Trustee. Any
successor trustee appointed as provided in Section 12.02 hereof shall execute
and deliver to the Company and to its predecessor trustee an instrument
accepting such appointment hereunder, in form and substance reasonably
satisfactory to the Company, and thereupon the resignation or removal of the
predecessor trustee shall become effective and such successor trustee, without
any further act, deed or conveyance, shall become vested with all rights,
powers, duties and obligations of its predecessor hereunder, with like effect as
if originally named as trustee herein; but, nevertheless, on the written request
of the Company or of the successor trustee, upon payment of its charges then
unpaid, the trustee ceasing to act shall, subject to Section 14.04 hereof, pay
over to the successor trustee all moneys at the time held by it hereunder and
shall execute and deliver an instrument transferring to such successor trustee
all such rights, powers, duties and obligations. Upon request of any such
successor trustee, the Company shall execute any and all instruments in writing
for more fully and certainly vesting in and confirming to such successor trustee
all such rights and powers. Any trustee ceasing to act shall, nevertheless,
retain a prior claim upon all property or funds
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held or collected by such trustee to secure any amounts then due it pursuant to
the provisions of Article XI hereof.
No successor trustee shall accept appointment as provided in this Section
12.04 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 12.03 hereof.
Upon acceptance of appointment by a successor trustee as provided in this
Section 12.04, the successor trustee shall mail notice thereof by first-class
mail to the Holders at their last addresses as they shall appear in the
Register, and shall mail a copy of such notice to the Company. If the acceptance
of appointment is substantially contemporaneous with the resignation, then the
notice called for by the preceding sentence may be combined with the notice
called for by Section 12.02 hereof.
Section 12.05. Merger, Consolidation or Succession to Business of
Indenture Trustee. 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 succeeding to the corporate trust
business of the Indenture Trustee, shall be the successor to the Indenture
Trustee hereunder, provided that, anything herein to the contrary
notwithstanding, such corporation shall be eligible under the provisions of
Section 12.03 hereof, without the execution or filing of any paper or any
further act on the part of any of the parties hereto.
In case at the time such successor to the Indenture Trustee shall succeed
to the trusts created by this Indenture any of the Equipment Notes shall have
been authenticated but not delivered, any such successor to the Indenture
Trustee may adopt the certificate of authentication of any predecessor Indenture
Trustee and deliver such Equipment Notes so authenticated; and, in case at that
time any of the Equipment Notes shall not have been authenticated, any successor
to the Indenture Trustee may authenticate such Equipment Notes either in the
name of any predecessor hereunder or in the name of the successor Indenture
Trustee; and in all such cases such certificate shall have the full force which
it is anywhere in the Equipment Notes or in this Indenture provided that the
certificate of the Indenture Trustee shall have; provided, that the right to
adopt the certificate of authentication of any predecessor Indenture Trustee or
to authenticate Equipment Notes in the name of any predecessor Indenture Trustee
shall apply only to its successor or successors by merger, conversion or
consolidation.
Section 12.06. 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 Collateral 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 a separate trustee or separate trustees or
co-trustee, acting jointly with the Indenture Trustee, of all or any part of the
Collateral, to the full extent that local law
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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 Company, 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 or they shall be vested with such title to the Trust Indenture Estate or any
part thereof, and with such rights, powers, duties and obligations, as shall be
specified in the instrument of appointment, and such rights, powers, duties and
obligations shall be conferred or imposed upon and exercised or performed by the
Indenture Trustee, or the Indenture Trustee and such separate trustee or
separate trustees or co-trustee jointly with the Indenture Trustee subject to
all the terms of this Indenture, 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 shall be
exercised and performed by such separate trustee or separate trustees or
co-trustee, as the case may be. Any separate trustee or separate trustees or
co-trustee may, at any time by an instrument in writing, constitute the
Indenture Trustee its or his attorney-in-fact and agent with full power and
authority to do all acts and things and to exercise all discretion on its or his
behalf and in its or his 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, duties and
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 (including without limitation Article XI hereof) shall extend
to and apply to each separate trustee or co-trustee appointed pursuant to the
foregoing provisions of this Section 12.06.
(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
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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 Collateral 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 exercisable 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 liable either personally or
in its capacity as such trustee, by reason of any act or omission of any
other trustee hereunder.
If at any time the Indenture Trustee shall deem it no longer necessary or
prudent in order to conform to any such law, the Indenture Trustee shall execute
and deliver an indenture supplemental hereto and all other instruments and
agreements necessary or proper to remove any additional trustee or separate
trustee.
(e) Any request, approval or consent in writing by the Indenture Trustee
to any additional trustee or separate trustee shall be sufficient warrant to
such additional trustee or separate trustee, as the case may be, to take such
action as may be so requested, approved or consented to.
(f) Notwithstanding any other provision of this Section 12.06, the powers
of any additional trustee or separate trustee shall not exceed those of the
Indenture Trustee hereunder.
ARTICLE XIII
SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
Section 13.01. Supplemental Indentures Without Consent of Holders. The
Company and the Indenture Trustee, without consent of the Holders, may enter
into an indenture or indentures supplemental hereto for one or more of the
following purposes:
(a) to convey, transfer, assign, mortgage or pledge any property or assets
to the Indenture Trustee as security for the Equipment Notes;
(b) to evidence the succession of another corporation to the Company or
successive successions, and the assumption by the successor corporation of the
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covenants, agreements and obligations of the Company herein and in the Equipment
Notes;
(c) to add to the covenants of the Company such further covenants,
restrictions, conditions or provisions as it and the Indenture Trustee shall
consider to be for the protection of the Holders, and to make the occurrence, or
the occurrence and continuance, of a default in any such additional covenants,
restrictions, conditions or provisions an Indenture Event of Default permitting
the enforcement of all or any of the several remedies provided herein; provided,
that in respect of any such additional covenant, restriction, condition or
provision such supplemental indenture may provide for a particular period of
grace after default (which period may be shorter or longer than that allowed in
the case of other defaults) or may provide for an immediate enforcement upon
such an Indenture Event of Default or may limit the remedies available to the
Indenture Trustee upon such an Indenture Event of Default or may limit the right
of not less than the Majority in Interest of Holders to waive such an Indenture
Event of Default;
(d) to surrender any right or power conferred herein upon the Company;
(e) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture; or to make such other provisions in regard to matters or questions
arising under this Indenture or under any supplemental indenture as the Company
may deem necessary or desirable and which shall not adversely affect the
interests of the Holders;
(f) 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 or to subject any Replacement Airframe or Replacement
Engine to the Lien of this Indenture in accordance with the provisions hereof or
to release from the Lien of this Indenture property that has been substituted on
or removed from the Aircraft as contemplated in Section 3.07 hereof; provided
that supplements to this Indenture entered into for the purpose of subjecting
any Replacement Airframe or Replacement Engine to the Lien of this Indenture
need only be executed by the Company and the Indenture Trustee;
(g) to provide for the issuance under this Indenture of Equipment Notes in
coupon form (including Equipment Notes registrable as to principal only) and to
provide for exchangeability of such Equipment Notes with Equipment Notes issued
hereunder in fully registered form, and to make all appropriate changes for such
purpose;
(h) to effect the re-registration of the Aircraft pursuant to Section
4.02(b) of the Participation Agreement; and
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(i) to add, eliminate or change any provision hereunder so long as such
action shall not adversely affect the interests of the Holders;
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture, to make any further appropriate agreements and
stipulations which may be contained therein 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.
Any such supplemental indenture may be executed without the consent of the
Holders of Outstanding Equipment Notes, notwithstanding any of the provisions of
Section 13.02 hereof.
Section 13.02. Supplemental Indentures With Consent of Holders. With the
consent (evidenced as provided in Article X) of the Majority in Interest of
Holders, the Company and the Indenture Trustee may, from time to time and at any
time, enter into an indenture or indentures supplemental hereto for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Indenture or of any supplemental indenture or of modifying in
any manner the rights of the Holders; provided, however, that, without the
consent of each and every Holder and each Liquidity Provider, no such amendment
of or supplement to this Indenture or any indenture supplemental hereto, or
modification of the terms of, or consent under, any thereof, shall (a) modify
any of the provisions of Section 7.11 hereof or this Section 13.02, (b) reduce
the amount or extend the time of payment of any amount owing or payable under
any Equipment Note or reduce the interest payable on any Equipment Note, or
alter or modify the provisions of Article V hereof with respect to the order of
priorities in which distributions thereunder shall be made as among Holders of
different Series of Equipment Notes or as between the Holder and the Company or
with respect to the amount or time of payment of any such distribution, or alter
or modify the circumstances under which a Make-Whole Premium shall be payable,
or alter the currency in which any amount payable under any Equipment Note is to
be paid, or impair the right of any Holder to commence legal proceedings to
enforce a right to receive payment hereunder, or (c) create or permit the
creation of any Lien on the Trust Indenture Estate or any part thereof prior to
or pari passu with the Lien of this Indenture, except as expressly permitted
herein, or deprive any Holder of the benefit of the Lien of this Indenture on
the Trust Indenture Estate, except as provided in Section 7.02 hereof or in
connection with the exercise of remedies under Article VII. This Section 13.02
shall not apply to any indenture or indentures supplemental hereto permitted by,
and complying with the terms of, Section 13.06 hereof.
Upon the request of the Company and upon the filing with the Indenture
Trustee of evidence of the consent of Holders and other documents, if any,
required by Section 10.01, the Indenture Trustee shall join with the Company in
the execution of
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such supplemental indenture unless such supplemental indenture affects the
Indenture Trustee's own rights, duties or immunities under this Indenture or
otherwise, in which case the Indenture Trustee may in its discretion, but shall
not be obligated to, enter into such supplemental indenture.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such consent shall approve the substance thereof.
Promptly after the execution by the Company and the Indenture Trustee of
any supplemental indenture pursuant to the provisions of this Section, the
Indenture Trustee shall mail a notice thereof by first-class mail to the Holders
at their addresses as they shall appear on the registry books of the Registrar,
setting forth in general terms the substance of such supplemental indenture. Any
failure of the Indenture Trustee to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture.
Section 13.03. 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 Company, and the 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 any and all purposes.
Section 13.04. Documents to Be Given to Indenture Trustee. The Indenture
Trustee, subject to the provisions of Sections 9.02 and 9.03, may receive an
Officer's Certificate and an Opinion of Counsel as conclusive evidence that any
such supplemental indenture complies with the applicable provisions of this
Indenture.
Section 13.05. Notation on Equipment 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 may bear a
notation in form approved by the Indenture Trustee as to any matter provided for
by such supplemental indenture. If the Company or the Indenture Trustee shall so
determine, new Equipment Notes so modified as to conform, in the opinion of the
Company and the Indenture Trustee, to any modification of this Indenture
contained in any such supplemental indenture may be prepared by the Company,
authenticated by the Indenture Trustee and delivered in exchange for the
Outstanding Equipment Notes.
Section 13.06. No Request Necessary for Indenture Supplement.
Notwithstanding anything contained in Section 13.02 hereof, no written request
or consent of the Indenture Trustee or any Holder pursuant to Section 13.02
hereof shall be required to enable the Company to enter into any supplement to
this Indenture in
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accordance with the terms and conditions hereof to subject a Replacement
Airframe or Replacement Engine hereto.
Section 13.07. Notices to Liquidity Providers. Any request made to any
Holder for consent to any amendment, supplement or waiver pursuant to Section
7.11, 8.01 or this Article XIII shall be promptly furnished by the Indenture
Trustee to each Liquidity Provider.
ARTICLE XIV
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
Section 14.01. Satisfaction and Discharge of Indenture: Termination of
Indenture. If at any time after (a) the Company shall have paid or caused to be
paid the principal of and interest on all the Equipment Notes outstanding
hereunder, as and when the same shall have become due and payable and provided
that there shall be no Secured Obligations due to the Indenture Indemnitees or
(b) the Company shall have delivered to the Indenture Trustee for cancellation
all Equipment Notes theretofore authenticated (other than any Equipment Notes
which shall have been destroyed, lost or stolen and which shall have been
replaced or paid as provided in Section 2.07 hereof), then this Indenture shall
cease to be of further effect, and the Indenture Trustee, on demand of the
Company and at the cost and expense of the Company, shall execute proper
instruments acknowledging such satisfaction of and discharging this Indenture.
The Company agrees to reimburse and indemnify the Indenture Trustee for any
costs or expenses thereafter reasonably and properly incurred and to compensate
the Indenture Trustee for any services thereafter reasonably and properly
rendered by the Indenture Trustee in connection with this Indenture or the
Equipment Notes.
Upon (or at any time after) payment in full to the Indenture Trustee, as
trust funds, of the principal of and interest on and Make-Whole Premium, if any,
and all other amounts due hereunder and under all Equipment Notes, and of any
Secured Obligations owed to the Indenture Indemnitees and provided that there
shall then be no other amounts due to the Indenture Trustee hereunder or under
the Participation Agreement or otherwise secured hereby, the Company shall
direct the Indenture Trustee to execute and deliver to or as directed in writing
by the Company an appropriate instrument releasing the Aircraft from the Lien of
this Indenture and releasing the Indenture Documents from the assignment thereof
hereunder, and the Indenture Trustee shall execute and deliver such instrument
as aforesaid and, at the Company's expense, will execute and deliver such other
instruments or documents as may be reasonably requested by the Company to give
effect to such release; provided, however, that this Indenture and the trusts
created hereby shall terminate earlier and this Indenture shall be of no further
force or effect upon any sale or other final disposition by the Indenture
Trustee of all property forming a part of the Trust Indenture Estate and the
final distribution by the Indenture Trustee of all moneys or
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other property or proceeds constituting part of the Collateral 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 14.02. Application by Indenture Trustee of Funds Deposited for
Payment of Equipment Notes. Subject to Section 14.04 hereof, all moneys
deposited with the Indenture Trustee pursuant to Section 14.01 hereof shall be
held in trust and applied by it to the prompt payment, either directly or
through any Paying Agent, to the Holders of the particular Equipment Notes for
the payment or prepayment of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal,
interest and Make-Whole Premium, if any, but such money need not be segregated
from other funds except to the extent required by law.
Section 14.03. Repayment of Moneys Held by Paying Agent. Upon the
satisfaction and discharge of this Indenture all moneys then held by any Paying
Agent under the provisions of this Indenture shall, upon demand of the Company,
be repaid to it or paid to the Indenture Trustee and thereupon such Paying Agent
shall be released from all further liability with respect to such moneys.
Section 14.04. Transfer of Unclaimed Money Held by Indenture Trustee and
Paying Agent. Any moneys deposited with or paid to the Indenture Trustee or any
Paying Agent for the payment of the principal of or interest or Make-Whole
Premium on any Equipment Note and not applied but remaining unclaimed for two
years and eleven months after the date upon which such principal, interest or
Make-Whole Premium shall have become due and payable, shall, unless otherwise
required by mandatory provisions of applicable escheat or abandoned or unclaimed
property law, be paid to the Company by the Indenture Trustee or such Paying
Agent and the Holder of such Certificate, as a general unsecured creditor,
shall, unless otherwise required by mandatory provisions of applicable escheat
or abandoned or unclaimed property laws, thereafter look only to the Company for
any payment which such Holder may be entitled to collect, and all liability of
the Indenture Trustee, or any Paying Agent with respect to such moneys shall
thereupon cease.
ARTICLE XV
MISCELLANEOUS
Section 15.01. Capacity in Which Acting. FNBM acts hereunder not in its
individual capacity but solely as trustee except as expressly provided herein
and in the other Operative Agreements.
Section 15.02. No Legal Title to Trust Indenture Estate in Holders. No
Holder shall have legal title to any part of the Collateral. No transfer, by
operation of law or otherwise, of any Equipment Note or other right, title and
interest of any Holder
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in and to the Collateral or hereunder shall operate to terminate this Indenture
or entitle such 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
Collateral.
Section 15.03. Sale of Collateral by Indenture Trustee is Binding. Any
sale or other conveyance of all or any part of the Collateral by the Indenture
Trustee made pursuant to the terms of this Indenture shall bind the Company and
the Holders and shall be effective to transfer or convey all right, title and
interest of the Indenture Trustee, the Company, and such Holders therein and
thereto. 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 15.04. Indenture Trustee, FNBM, Company, Liquidity Providers and
Holders Only. Nothing in this Indenture, whether express or implied, shall be
construed to give to any person other than the Company, FNBM, the Indenture
Trustee, each Liquidity Provider and the Holders any legal or equitable right,
remedy or claim under or in respect of this Indenture. Upon termination of this
Indenture pursuant to Article XIV hereof, the Indenture Trustee in connection
with the satisfaction of the Indenture shall return to the Company all property
(and related documents and instruments) constituting or evidencing the
Collateral.
Section 15.05. No Action Contrary to Company's Rights. Notwithstanding any
of the provisions of this Indenture to the contrary, so long as no Indenture
Event of Default shall have occurred and be continuing, the Indenture Trustee
will not take any action that interferes with the peaceful and quiet possession
and enjoyment of the Aircraft by the Company or any Permitted Lessee.
Section 15.06. Notices. Unless otherwise expressly specified or permitted
by the terms hereof, all notices, requests, demands, authorizations, directions,
consents, waivers or documents provided or permitted by this Indenture to be
made, given, furnished or filed shall be in writing, and shall be given and
become effective in the manner set forth in Section 14.01 of the Participation
Agreement. 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 15.07. Officer's Certificates and Opinions of Counsel. Upon any
application or demand by the Company to the Indenture Trustee to take any action
under any of the provisions of this Indenture, the Company shall furnish to the
Indenture Trustee upon request (a) an Officer's Certificate stating that all
conditions precedent provided for in this Indenture relating to the proposed
action have been complied with and that the proposed action is in conformity
with the requirements of this Indenture, and (b) 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 demand as
to which the furnishing of such
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documents is specifically required by any provision of this Indenture relating
to such particular application or demand, no additional certificate or opinion
need be furnished.
Any certificate, statement or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of
or representations by counsel, unless such officer knows that the certificate or
opinion or representations with respect to the matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous. Any
certificate, statement or opinion of counsel may be based, insofar as it relates
to factual matters information with respect to which is in the possession of the
Company upon the certificate, statement or opinion of or representations by an
officer or officers of the Company, unless such counsel knows that the
certificate, statement or opinion or representations with respect to the matters
upon which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous.
Any certificate, statement or opinion of an officer of the Company or of
counsel thereto may be based, insofar as it relates to accounting matters, upon
a certificate or opinion of or representations by an accountant or firm of
accountants employed by the Company, as the case may be, unless such officer or
counsel, as the case may be, knows that the certificate or opinion or
representations with respect to the accounting matters upon which his
certificate, statement or opinion may be based as aforesaid are erroneous, or in
the exercise of reasonable care should know that the same are erroneous.
Any certificate or opinion of any independent firm of public accountants
filed with the Indenture Trustee shall contain a statement that such firm is
independent.
Section 15.08. 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 15.09. 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 15.10. 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
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request, notice, direction, consent, waiver or other instrument or action by any
Holder shall bind the successors and assigns of such Holder.
Section 15.11. 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 15.12. Normal Commercial Relations. Anything contained in this
Indenture to the contrary notwithstanding, the Indenture Trustee and any Holder,
or any bank or other affiliate of any such party, may conduct any banking or
other financial transactions, and have banking or other commercial
relationships, with the Company 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 Company for any purpose whatsoever, whether related
to any of the transactions contemplated hereby or otherwise.
Section 15.13. Governing Law; Counterparts. THIS INDENTURE IS BEING
DELIVERED IN THE STATE OF NEW YORK. THIS INDENTURE AND EACH 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. 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture and
Security Agreement to be executed by their respective officers thereunto duly
authorized as of the date first written above.
MIDWAY AIRLINES CORPORATION
By: ________________________________________
Name:
Title:
THE FIRST NATIONAL BANK OF MARYLAND,
as Indenture Trustee
By: ________________________________________
Name:
Title:
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Annex A
Series Principal Amount Interest Rate
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A
B
C
D
<PAGE>
[Owned Aircraft
Definitions]
APPENDIX A
DEFINITIONS [N_______]
GENERAL PROVISIONS
The following terms shall have the following meanings for all
purposes of the Operative Agreements (as defined below), unless otherwise
defined in an Operative Agreement or the context thereof shall otherwise
require. In the case of any conflict between the provisions of this Appendix and
the provisions of any Operative Agreement, the provisions of such Operative
Agreement shall control the construction of such Operative Agreement.
Unless the context otherwise requires, (i) references to agreements
shall be deemed to mean such agreements as amended and supplemented from time to
time, and (ii) references to parties to agreements shall be deemed to include
the successors and permitted assigns of such parties.
"Additional Insureds" means the Indenture Trustee (in its individual and
trust capacities) and each Liquidity Provider.
"Aeronautics Authority" means as of any time of determination, the FAA or
other governmental airworthiness authority having jurisdiction over the Aircraft
or the Airframe and Engines or engines attached thereto under the laws of the
country in which the Airframe is then registered.
"Affiliate" means, with respect to any Person, any other Person directly
or indirectly controlling 50% or more of any class of voting securities of such
Person or otherwise controlling, controlled by or under common control with such
Person. For the purposes of this definition, "control" (including "controlled
by" and "under common control with") shall mean the power, directly or
indirectly, to direct or cause the direction of the management and policies of
such Person whether through the ownership of voting securities or by contract or
otherwise.
"After Tax Basis" means a basis such that any payment to be received by a
Person shall be supplemented by a further payment to such Person so that the sum
of the two payments, after deduction of all Taxes (taking into account any
related credits or deductions) resulting from the receipt or accrual of such
payments, shall be equal to the payment to be received.
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"Aircraft" means the Airframe together with the Engines, whether or not
any of the Engines may at the time of determination be installed on the Airframe
or installed on any other airframe or on any other aircraft.
"Airframe" means (i) the Canadair Regional Jet Series 200ER aircraft
(excluding the Engines and any other engines which may from time to time be
installed thereon, but including any and all Parts which may from time to time
be incorporated in, installed on or attached to such aircraft, and including any
and all such Parts removed therefrom so long as such removed Parts remain
subject to the Lien of the Indenture) identified by national registration number
and manufacturer's serial number in the Indenture Supplement executed and
delivered on the Delivery Date, so long as a Replacement Airframe shall not have
been substituted therefor pursuant to Section 4.04 of the Indenture, and (ii) a
Replacement Airframe, so long as another Replacement Airframe shall not have
been substituted therefor pursuant to Section 4.04 of the Indenture.
"Applicable Law" means all applicable laws, treaties, judgments, decrees,
injunctions, writs and orders of any court, governmental agency or authority and
rules, regulations, orders, directives, licenses and permits of any governmental
body, instrumentality, agency or authority.
"Average Life Date" means, for any Equipment Note, the date which follows
the prepayment date by a period equal to the Remaining Weighted Average Life of
such Equipment Note.
"Bankruptcy Code" means Title 11 of the United States Code, as amended,
and any successor thereto.
"Business Day" means any day other than a Saturday or Sunday on which
commercial banks are not authorized or required to close in New York City,
Charlotte, North Carolina and the city in the United States in which the office
or agency is maintained by the Pass-Through Trustee for the payment of the
Pass-Through Certificates.
"Citizen of the United States" means a citizen of the United States as
defined in ss. 40102(a)(15) of the Transportation Code, or any analogous part of
any successor or substituted legislation or regulation at the time in effect.
"Class A Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Class B Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
"Class C Liquidity Provider" has the meaning given to such term in Section
1.01 of the Intercreditor Agreement.
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"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any similar legislation of the United States enacted to supersede,
amend, or supplement such Code (and any reference to a provision of the Code
shall refer to any successor provision(s), however designated).
"Commitment" of a Loan Participant shall have the meaning given such term
in Section 2(a) of the Participation Agreement.
"Company" means Midway Airlines Corporation, a Delaware corporation.
"Company Documents" means (x) the Operative Agreements to which the
Company is a party and (y) the Pass-Through Trust Agreements.
"DOT" means the U.S. Department of Transportation or any successor
thereto.
"Debt Rate" means the weighted average (based on Outstanding principal
amount) rate of interest on the Equipment Notes.
"Default" means any event or condition which, with the lapse of time or
the giving of notice, or both, would constitute an Indenture Event of Default.
"Delivery Date" means the date of the initial Indenture Supplement.
"Deposit Agreement" means each of the four Deposit Agreements between the
Depositary and the Escrow Agent, dated as of the Issuance Date, each of which
relates to one of the Pass-Through Trusts.
"Depositary" means First Union National Bank, as Depositary under each
Deposit Agreement.
"Dollars" means dollars in lawful currency of the United States.
"Downgrade Drawing" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Engine" means (A) one of the two CF34-3B1 Series 200 engines identified
by manufacturer's serial number in the Indenture Supplement executed and
delivered on the Delivery Date, so long as a Replacement Engine shall not have
been substituted therefor pursuant to Section 4.03(e) of the Indenture, and (B)
a Replacement Engine, so long as another Replacement Engine shall not have been
substituted therefor pursuant to Section 4.03(e) of the Indenture, whether or
not such engine or Replacement Engine, as the case may be, is from time to time
installed on the Airframe or installed on any other aircraft, and including in
each case all Parts incorporated or installed in or attached thereto and any and
all Parts removed therefrom so long as such Parts remain subject to the Lien of
the Indenture. The term "Engines" means, as of any date of determination, the
two engines each of which is an Engine on that date.
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"Equipment Notes" means the Equipment Notes issued by the Company
pursuant to the Indenture and any equipment note issued in exchange therefor or
replacement thereof pursuant to the Indenture.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Escrow Agent" means First Union Trust Company, National Association, as
Escrow Agent under each of the Escrow Agreements.
"Escrow Agreement" means each of the four Escrow and Paying Agent
Agreements, among the Escrow Agent, the Paying Agent, certain initial purchasers
of the Pass-Through Certificates named therein and one of the Pass-Through
Trustees, dated as of the Issuance Date, each of which relates to one of the
Pass-Through Trusts.
"Event of Loss" means any of the following events with respect to the
Aircraft, the Airframe or any Engine:
(i) theft or disappearance for a period in excess of 90 consecutive
days;
(ii) destruction, damage beyond economic repair or rendition of such
property permanently unfit for normal use for any reason whatsoever;
(iii) any event which results in an insurance settlement with
respect to such property on the basis of an actual, constructive or
compromised total loss;
(iv) condemnation, confiscation or seizure of, or requisition of
title to or use of such property by any foreign government (or in the case
of any such requisition of title, by the Government) or any agency or
instrumentality thereof, for a period in excess of 180 consecutive days
(or 30 consecutive days for the appropriation of title);
(v) condemnation, confiscation or seizure of, or requisition of use
of such property by the Government; and
(vi) as a result of any law, rule, regulation, order or other action
by the Aeronautics Authority, the use of the Aircraft or Airframe in the
normal course of air transportation shall have been prohibited by virtue
of a condition affecting all Canadair Regional Jet Series 200ER aircraft
equipped with engines of the same make and model as the Engines for a
period of 180 consecutive days, unless the Company, prior to the
expiration of such 180-day period, shall be diligently carrying forward
all necessary and desirable steps to permit normal use of the Aircraft and
shall within 12 months have conformed at least one Canadair Regional Jet
Series 200ER aircraft (but not necessarily the Aircraft) to the
requirements of any such law, rule, regulation, order or action, and shall
be diligently pursuing conformance of the Aircraft in a non-discriminatory
manner.
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The date of such Event of Loss shall be (aa) the 91st day following loss of such
property or its use due to theft or disappearance; (bb) the date of any
destruction, damage beyond economic repair or rendition of such property
permanently unfit for normal use; (cc) the date of any insurance settlement on
the basis of an actual, constructive or compromised total loss; (dd) the 181st
day following condemnation, confiscation, seizure or requisition of title to or
use of such property by a foreign government referred to in clause (iv) above
(or the 31st day in the case of appropriation of title; (ee) the 181st day
following requisition of title to or use of such property by the Government; and
(ff) the last day of the applicable period referred to in clause (vi) above. An
Event of Loss with respect to the Aircraft shall be deemed to have occurred if
any Event of Loss occurs with respect to the Airframe.
"Expenses" has the meaning given to such term in Section 7.01(a) of the
Participation Agreement.
"Federal Aviation Administration" or "FAA" means the United States Federal
Aviation Administration and any successor agency or agencies thereto.
"Final Drawing" has the meaning given to such term in Section 1.01 of the
Intercreditor Agreement.
"FNBM" means The First National Bank of Maryland, a national banking
association.
"Government" means the United States of America or an agency or
instrumentality thereof the obligations of which bear the full faith and credit
of the United States of America.
"Holder" means, as of any particular time, the Person in whose name a
Equipment Note shall be registered.
"Indemnitee" means each of the Subordination Agent, in its individual
capacity and in its capacity as Subordination Agent, each Liquidity Provider,
the Indenture Trustee, in its individual capacity and as trustee, the Escrow
Agent, the Paying Agent, the Pass-Through Trustees and each Affiliate, officer,
director, employee, agent and servant of any of the foregoing Persons. No holder
of a Pass-Through Certificate shall be deemed to be an Indemnitee.
"Indenture" means the Trust Indenture and Security Agreement [N_____],
dated as of ______________ __, 199_, between the Company and the Indenture
Trustee.
"Indenture Default" means any event or condition which, with the lapse of
time or the giving of notice, or both, would constitute an Indenture Event of
Default.
"Indenture Event of Default" means each of the events specified in Section
7.01 of the Indenture.
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"Indenture Indemnitee" means (i) the Indenture Trustee and each separate
or additional trustee appointed pursuant to the Indenture, (ii) the Escrow
Agent, (iii) the Subordination Agent, (iv) each Liquidity Provider, (v) the
Paying Agent, (vi) each Pass-Through Trustee and (vii) each of the respective
directors, officers, employees, agents and servants of each of the persons
described in clauses (i) through (vi).
"Indenture Supplement" means (a) the Trust Indenture and Security
Agreement Supplement No. 1, substantially in the form of Exhibit A to the
Indenture, which shall describe with particularity the Aircraft covered by the
Indenture, and which creates a first priority security interest in the Aircraft
and (b) any other supplement to the Indenture from time to time executed and
delivered.
"Indenture Trustee" means The First National Bank of Maryland, a national
banking association, as indenture trustee under the Operative Documents.
"Indenture Trustee's Liens" means any Lien against, on or with respect to
the Aircraft, any Engine, or the Trust Indenture Estate or any part thereof
resulting from (i) claims against the Indenture Trustee not related to the
administration of the Trust Indenture Estate or any transactions pursuant to the
Indenture or any document included in the Trust Indenture Estate, (ii) any act
or omission of the Indenture Trustee which is not related to the transactions
contemplated by the Operative Agreements or is in violation of any of the terms
of the Operative Agreements, or (iii) Taxes imposed against the Indenture
Trustee in its individual capacity in respect of which the Company has not
indemnified (and is not obligated to indemnify) the Indenture Trustee in such
capacity.
"Independent Investment Banker" means an independent investment banking
institution of national standing appointed by the Indenture Trustee that is
independent in fact, does not have any direct financial interests, or any
material indirect financial interest, in the Indenture Trustee or any Affiliate
of the Indenture Trustee, and is not connected with the Indenture Trustee or any
Affiliate of the Indenture Trustee, as an officer, employee, promoter,
underwriter, trustee, partner, director or Person performing similar functions;
provided, that if the Indenture Trustee shall not have received written notice
of such an appointment at least 10 days prior to the Prepayment Date,
"Independent Investment Banker" shall mean such an institution appointed by the
Indenture Trustee.
"Intercreditor Agreement" means the Intercreditor Agreement dated as of
August 13, 1998, among the Pass-Through Trustees, the Class A Liquidity
Provider, the Class B Liquidity Provider, the Class C Liquidity Provider and the
Subordination Agent.
"Interest Drawing" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Issuance Date" means August 13, 1998.
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"Lien" means any mortgage, pledge, lien, charge, encumbrance, lease,
security interest, claim, or other similar interest of any nature whatsoever.
"Liquidity Facility" means each of the three Irrevocable Revolving Credit
Agreements (consisting of a separate Revolving Credit Agreement with the
Liquidity Provider with respect to each Pass-Through Trust) between the
Subordination Agent, as borrower, and the Liquidity Provider, each dated as of
the Issuance Date.
"Liquidity Provider" has the meaning given to such term in Section 1.01 of
the Intercreditor Agreement.
"Loan Participant" means and includes each registered holder from time to
time of an Equipment Note issued under the Indenture including, so long as it
holds any Equipment Notes issued under the Indenture, the Pass-Through Trustee
under each Pass-Through Trust Agreement.
"Majority in Interest of Holders" means, as of a particular date of
determination, the Holders of more than 50% of the aggregate unpaid principal
amount of all Equipment Notes Outstanding as of such date.
"Make-Whole Premium" means with respect to any Equipment Note, an amount
determined as of the day before the applicable Prepayment Date (or date of
purchase, as the case may be) which an Independent Investment Banker determines
to be equal to the excess, if any, of (i) the present value of the remaining
scheduled payments of such principal amount or portion thereof and interest
thereon to the maturity date of such Equipment Note assuming a 360-day year
consisting of twelve 30-day months at a discount rate equal to the Treasury
Yield (in the case of the Series A Equipment Notes and Series B Equipment Notes)
and the Treasury Yield plus .50% (in the case of the Series C Equipment Notes
and the Series D Equipment Notes) over (ii) the outstanding principal amount of
such Equipment Note plus accrued interest (other than any overdue portion
thereof).
"Manufacturer" means Bombardier, Inc., a Canadian corporation.
"Minimum Liability Amount" has the meaning given to such term in Exhibit B
to the Participation Agreement.
"Moody's" means Moody's Investors Service, Inc.
"Note Purchase Agreement" means the Note Purchase Agreement, dated as of
the Issuance Date, among the Company, the Subordination Agent, the Escrow Agent,
the Paying Agent and the Pass-Through Trustee under each Pass-Through Trust
Agreement providing for, among other things, the issuance and sale of certain
equipment notes.
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"Offering Memo" means the Company's August 6, 1998 Offering Memorandum
concerning the Pass-Through Certificates.
"Officer's Certificate" means, when delivered pursuant to the Indenture, a
certificate signed by a Responsible Officer of the Company and delivered to the
Indenture Trustee. Each such certificate shall include the statements provided
for in Section 15.07 of the Indenture.
"Operative Agreements" means the Participation Agreement, the Equipment
Notes outstanding at the time of reference, the Indenture and each Indenture
Supplement.
"Opinion of Counsel" means when delivered pursuant to the Indenture, a
written opinion of legal counsel, who in the case of counsel (a) for the Company
may be (i) an attorney employed by the Company who is generally empowered to
deliver such written opinions, (ii) Fulbright & Jaworski L.L.P., or (iii) other
counsel designated by the Company and reasonably satisfactory to the Indenture
Trustee, and (b) for the Indenture Trustee, an attorney selected by such Person
and reasonably satisfactory to the Company.
"Outstanding" means, when used with respect to Equipment Notes, as of the
date of determination and subject to the provisions of Section 10.04 of the
Indenture, all Equipment Notes theretofore executed and delivered under the
Indenture, with the exception of the following:
(i) Equipment Notes theretofore canceled by the Indenture Trustee or
delivered to the Indenture Trustee for cancellation pursuant to
Section 2.08 of the Indenture or otherwise;
(ii) Equipment Notes for which prepayment money in the necessary
amount has been theretofore deposited with the Indenture Trustee in
trust for the Holders of such Equipment Notes pursuant to Section
14.01 of the Indenture; provided that if such Equipment Notes are to
be prepaid, notice of such prepayment has been duly given pursuant
to the Indenture or provision therefor satisfactory to the Indenture
Trustee has been made; and
(iii) Equipment Notes in exchange for or in lieu of which other
Equipment Notes have been executed and delivered pursuant to Article
II of the Indenture.
"Participants" means, collectively, the Pass-Through Trustee with respect
to each of the Pass-Through Trust Agreements; "Participant" means, individually,
one of the Participants.
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"Participation Agreement" the Participation Agreement [N _____], dated as
of__________ __,199__, among the Company, the Indenture Trustee, the
Pass-Through Trustees and the Subordination Agent.
"Parts" means any and all appliances, parts, instruments, appurtenances,
accessories, furnishings, seats, and other equipment of whatever nature (other
than Engines or engines and temporary replacement parts as provided in Section
4.04 of the Indenture and cargo containers) which may from time to time be
incorporated or installed in or attached to any Airframe or any Engine,
exclusive of any items leased by the Company from third parties and not required
in the navigation of the Aircraft.
"Pass-Through Certificates" means any of the Pass-Through Certificates,
1998-1A, the Pass-Through Certificates, 1998-1B, the Pass-Through Certificates,
1998-1C or the Pass-Through Certificates, 1998-1D, in each case as issued by the
related Pass-Through Trust; and "Pass-Through Certificates" means all of such
Pass-Through Certificates.
"Pass-Through Documents" means the Pass-Through Trust Agreements, the
Escrow Agreements, the Intercreditor Agreement, the Note Purchase Agreement and
the Liquidity Facilities.
"Pass-Through Trust" means the Midway Airlines 1998-1 Pass-Through Trust
Class A, Midway Airlines 1998-1 Pass-Through Trust Class B, Midway Airlines
1998-1 Pass-Through Trust Class C and Midway Airlines 1998-1 Pass-Through
Trust-Class D, in each case formed pursuant to the related Series Supplement in
accordance with the Pass-Through Trust Agreement; and "Pass-Through Trusts"
means all of such Pass-Through Trusts.
"Pass-Through Trust Agreement" means each of the four Pass-Through Trust
Agreements dated as of August 13, 1998 among the Company and the Pass-Through
Trustee (which shall include each Successor Pass-Through Trust Agreement entered
into pursuant to Section 11.01 of each thereof).
"Pass-Through Trustee" The First National Bank of Maryland, a national
banking association, in its capacity as Pass-Through Trustee under each
Pass-Through Trust Agreement.
"Past Due Rate" means in respect of any principal of or interest on or any
other amounts payable in respect of any Equipment Note that is not paid when due
to any Holder, a rate per annum during the period from and including the due
date to but excluding the date on which such amount is paid in full equal to 1%
plus the interest rate applicable to such Equipment Note.
"Payment Date" means each January 2 and July 2, commencing on _________ 2,
199__.
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"Permitted Air Carrier" means (a) any Section 1110 Person and (b) any
foreign air carrier that is principally based in any foreign country listed on
Exhibit C to the Indenture, except those that do not maintain normal diplomatic
relations with the United States.
"Permitted Investments" means (a) direct obligations of the United States
of America or any agency or instrumentality thereof, (b) obligations fully
guaranteed by the United States of America or any agency or instrumentality
thereof, (c) any mutual fund the portfolio of which is limited to obligations of
the type described in clauses (a) and (b), including any proprietary mutual fund
of The First National Bank of Maryland for which such bank or an affiliate is
investment advisor or to which such bank provides other services and receives
reasonable compensation for such services, (d) certificates of deposit issued
by, or bankers' acceptances of, or time deposits or a deposit account with, any
bank, trust company, or national banking association incorporated or doing
business under the laws of the United States of America or one of the states
thereof, having a combined capital and surplus of at least $100,000,000 and
having a rating of "A" or better from the Keefe Bank Watch Service, (e)
commercial paper issued by companies in the United States which directly issue
their own commercial paper and which are doing business under the laws of the
United States of America or one of the states thereof and in each case having a
rating assigned to such commercial paper by a nationally recognized rating
organization in the United States of America equal to the highest rating
assigned by such organization, or (f) obligations of the type described in
clauses (a), (b), (d), or (e) above, purchased from any bank, trust company, or
banking association referred to in clause (d) above pursuant to repurchase
agreements obligating such bank, trust company, or banking association to
repurchase any such obligation not later than 30 days after the purchase of any
such obligation. Unless otherwise specified in writing by the Company, all such
Permitted Investments shall mature not later than 30 days from the date of
purchase.
"Permitted Lien" has the meaning given to such term in Section 4.06 of the
Indenture.
"Permitted Lessee" means (a) any Permitted Air Carrier or (b) any airframe
or engine manufacturer, or Affiliate of such a manufacturer, who is domiciled in
the United States of America or a country listed on Exhibit C to the Indenture.
"Person" means any individual, sole proprietorship, partnership, joint
venture, joint stock company, trust, unincorporated organization, association,
corporation, institution, entity or government (federal, state, local, foreign
or any agency, instrumentality, division or body thereof).
"Placement Agents" means Morgan Stanley & Co. Incorporated and Credit
Suisse First Boston.
"Placement Agreement" means the Purchase Agreement dated August 6, 1998
among the Company and the Placement Agents.
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"Prepayment Date" has the meaning given to such term in Section 6.02(b) of
the Indenture.
"Prepayment Price" has the meaning given to such term in Section 6.02(b)
of the Indenture.
"Purchase Agreement" means Bombardier Regional Aircraft Division Purchase
Agreement No. PA-0393 dated September 17, 1997, as amended, between the Company
and the Manufacturer (including all exhibits thereto, together with all letter
agreements entered into that by their terms constitute part of any such Purchase
Agreement).
"Rating Agency" means Moody's or S&P, as the context requires.
"Record Date" means, with respect to Payment Dates under the Indenture
(except a date for payment of defaulted interest), December 15 for January 2
Payment Dates and June 15 for July 2 Payment Dates, whether or not such date is
a Business Day.
"Register" has the meaning given to such term in Section 3.02 of the
Indenture.
"Registrar" has the meaning given to such term in Section 3.02 of the
Indenture.
"Registration Rights Agreement" means the Exchange and Registration Rights
Agreement, dated as of August 13, 1998, among the Placement Agents, FNBM, as
Pass-Through Trustee, and the Company.
"Registration Rights Event" has the meaning given to such term in the
Registration Rights Agreement.
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System (or any successor), as the same may be modified and supplemented
and in effect from time to time.
"Remaining Weighted Average Life" means on a given date with respect to
any Equipment Note the number of days equal to the quotient obtained by dividing
(i) the sum of each of the products obtained by multiplying (a) the amount of
each then remaining scheduled payment of principal of such Equipment Note by (b)
the number of days from and including such prepayment date to but excluding the
dates on which each such payment of principal is scheduled to be made; by (ii)
the then outstanding principal amount of such Equipment Note.
"Replacement Aircraft" means any Aircraft of which a Replacement Airframe
is part.
"Replacement Airframe" means a Canadair Regional Jet Series 200ER series
aircraft or a comparable or improved model of such aircraft of the Manufacturer
(except
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Engines or engines from time to time installed thereon) which shall have become
subject to the Indenture pursuant to Section 4.04 thereof.
"Replacement Engine" means a CF34-3B1 Series 200 engine (or engine of the
same or another manufacturer of a comparable or an improved model and suitable
for installation and use on the Airframe), and which shall have become subject
to the Indenture pursuant to Section 4.03(e) thereof.
"Responsible Officer" means, with respect to the Indenture Trustee, any
officer in its Corporate Trust Administration, as the case may be, designated by
such Person to perform obligations under the Operative Agreements, and with
respect to any other party, any corporate officer of a party who, in the normal
performance of his or her operational responsibilities, with respect to the
subject matter of any covenant, agreement or obligation of such party pursuant
to any Operative Agreement, would have responsibility for and knowledge of such
matter and the requirements of any Operative Agreement with respect thereto.
"S&P" means Standard & Poor's Ratings Group.
"SEC" means the Securities and Exchange Commission of the United States
and any successor agencies or authorities.
"Section 1110 Person" means a Citizen of the United States who is an air
carrier holding a valid air carrier operating certificate issued pursuant to 49
U.S.C. ch. 447 for aircraft capable of carrying 10 or more individuals.
"Secured Obligations" has the meaning specified in the Granting Clause of
the Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
"Series "A" or "Series A Equipment Notes" means the Equipment Notes issued
and designated as "Series A" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series A".
"Series "B" or "Series B Equipment Notes" means the Equipment Notes issued
and designated as "Series B" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series B".
"Series "C" or "Series C Equipment Notes" means the Equipment Notes issued
and designated as "Series C" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series C".
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"Series "D" or "Series D Equipment Notes" means the Equipment Notes issued
and designated as "Series D" under the Indenture, in the principal amount and
maturities and bearing interest as specified in Exhibit B to the Indenture under
the heading "Series D".
"Specified Default" means (a) an event or condition described in Section
7.01(i), (iv), (v) and (vi) of the Indenture that, after the giving of notice or
lapse of time, or both, would mature into an Indenture Event of Default, or (b)
any Indenture Event of Default.
"Specified Investments" means (a) direct obligations of the United States
of America or obligations fully guaranteed by the United States of America; (b)
any mutual fund the portfolio of which is limited to obligations of the type
described in clause (a), including any proprietary mutual fund of The First
National Bank of Maryland for which such bank or an affiliate is investment
advisor or to which such bank provides other services and receives reasonable
compensation for such services; (c) commercial paper rated A-1/P-1 by S&P and
Moody's, respectively or, if such ratings are unavailable, rated by any
nationally recognized rating organization in the United States equal to the
highest rating assigned by such rating organization; (d) investments in
negotiable certificates of deposit, time deposits, banker's acceptances,
commercial paper or other direct obligations of, or obligations guaranteed by,
commercial banks organized under the laws of the United States or of any
political subdivision thereof (or any U.S. branch of a foreign bank) with issuer
ratings of at least B/C by Thomson Bankwatch, having maturities no later than 90
days following the date of such investment; (e) overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers; or (f) overnight repurchase agreements with respect to the
securities described in clause (a) above entered into with an office of a bank
or trust company which is located in the United States of America or any bank or
trust company which is organized under the laws of the United States or any
state thereof and has capital, surplus and undivided profits aggregating at
least $500 million.
"Subordination Agent" means The First National Bank of Maryland, a
national banking association, in its capacity as Subordination Agent.
"Transaction Costs" means those costs and expenses set forth in Section
8.01(a) of the Participation Agreement to be borne by the Company.
"Transportation Code" means Title 49 of the United States Code, subtitle
VII, as amended and in effect on the date of the Indenture or as subsequently
amended, or any successor or substituted legislation at the time in effect and
applicable, and the regulations promulgated pursuant thereto.
"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
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<PAGE>
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
on 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 public
securities markets, (i) one maturing as close as possible to, but earlier than,
the Average Life Date of such Certificate and (ii) 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 Premium will be the third Business Day
prior to the applicable prepayment 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 prepayment date.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Trust Indenture Estate" means all estate, right, title and interest of
the Indenture Trustee in and to any of the property, rights, interest, and
privileges granted to the Indenture Trustee pursuant to the Granting Clause of
the Indenture, other than Excepted Payments.
"United States", "U.S." or "US" means the United States of America.
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<PAGE>
Annex B
Amortization Schedule
Series A Series B Series C Series D
Payment Equipment Equipment Equipment Equipment
Date Notes Notes Notes Notes
- - ---- ----- ----- ----- -----
<PAGE>
Exhibit A to
Trust Indenture and
Security Agreement
Indenture Supplement No. __
This Indenture Supplement No. __ dated ____________, 199_, of Midway
Airlines Corporation, a Delaware Corporation.
WITNESSETH:
WHEREAS, the Indenture provides for the execution and delivery of this
Indenture Supplement which shall particularly describe the Aircraft included in
the property covered by the Indenture.
WHEREAS, the Trust Indenture and Security Agreement [N_____] dated as of
__________ (the "Indenture") between the Company and The First National Bank of
Maryland (herein called the "Indenture Trustee") provides for the execution and
delivery of an Indenture Supplement substantially in the form of this Indenture
Supplement No. __, which Supplement shall particularly describe the Aircraft
included in the Collateral, and shall specifically mortgage such Aircraft to the
Indenture Trustee.
WHEREAS, the Indenture relates to the Aircraft and the Engines described
in the following paragraph and a counterpart of the Indenture is attached to and
made a part of this Indenture Supplement No. __, and this Indenture Supplement
No. __, together with such attachment, is being filed for recordation on or
promptly after the date of this Supplement No. __ with the Federal Aviation
Administration as one document.
NOW, THEREFORE, to secure the prompt payment of the principal of and
Make-Whole Premium, if any, and interest on, and all other amounts due with
respect to, all Outstanding Equipment Notes under the Indenture and all other
amounts due hereunder and the performance and observance by the Company of all
the agreements, covenants and provisions for the benefit of the Holders
contained in the Indenture, the Participation Agreement and the Equipment Notes,
and the prompt payment of any and all amounts from time to time owing under the
Participation Agreement by the Company to the Holders and the Indenture
Indemnitees and for the uses and purposes and subject to the terms and
provisions of the Indenture and the Equipment Notes, and in consideration of the
premises and of the covenants contained in the Indenture, and of the purchase of
the Equipment Notes by the Holders, and of the sum of $1 paid to the Company by
the Indenture Trustee at or before the delivery of the Indenture, the receipt of
which is hereby acknowledged, the Company has granted, bargained, sold,
assigned, transferred, conveyed, mortgaged, pledged, granted a security interest
in, and
<PAGE>
confirmed, and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge, grant a security interest in, and confirm, unto the Indenture
Trustee, its successors and assigns, in trust for the equal and ratable security
and benefit of the Holders, in the trust created by the Indenture, and subject
to all of the terms, conditions, provisions and limitations set forth in the
Indenture, a first priority security interest in and mortgage lien on all
estate, right, title and interest of the Company in, to and under the following
described property:
AIRFRAME
One Airframe identified as follows:
FAA Manufacturer's
Registration Serial
Manufacturer Model Number Number
- - ------------ ----- ------ ------
Canadair CL-600-2B19 N___ ____________
together with all appliances, equipment, instruments and accessories (including,
without limitation, radio and radar) from time to time belonging thereto, owned
by the Company and installed in or appurtenant to said aircraft.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more rated takeoff
horsepower or the equivalent thereof, identified as follows:
Manufacturer's
Serial
Manufacturer Model Number
- - ------------ ----- ------
General Electric CF34-3B1 ______________
______________
together with all equipment and accessories belonging thereto, by whomsoever
manufactured, owned by the Company and installed in or appurtenant to such
aircraft engines.
Together with all substitutions, replacements and renewals of the property
described above, and all property owned by the Company which shall hereafter
become physically attached to or incorporated in the property described above,
whether the same are now owned by the Company or shall hereafter be acquired by
it.
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<PAGE>
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 Holders 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 thereof, 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.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Indenture Supplement No. 1
to be duly executed as of the date first written above by one of its officers
thereunto duly authorized.
MIDWAY AIRLINES CORPORATION
By:______________________________________
Name:
Title:
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<PAGE>
Exhibit B
to
Trust Indenture and
Security Agreement
[Form of Certificate]
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.
No. _________ $____________
EQUIPMENT NOTE [N_____] OF MIDWAY AIRLINES CORPORATION
SERIES _____
Interest Rate Maturity
___% ____________, 2___
MIDWAY AIRLINES CORPORATION, a Delaware corporation, (herein in such
capacity called the "Company") hereby promises to pay to The First National Bank
of Maryland, as Subordination Agent, or its registered assigns, the principal
sum of ______________________ ________________ Dollars, together with interest
on the principal outstanding from time to time, semiannually on each January 2
and July 2, on such principal sum at the rate per annum set forth above;
provided that, in the event a Registration Event (as defined in the Indenture
referred to below) does not occur on or prior to the date(the "Increase Date")
required pursuant to the Registration Rights Agreement (as defined in the
Indenture referred to below), such interest rate shall be increased by 0.5% from
and including the Increase Date to but excluding the date such Registration
Event does occur. The principal amount of this Equipment Note shall be payable
in installments on the dates and hereto in amounts set forth in Schedule I
hereto. Notwithstanding the foregoing, the final payment made on this Equipment
Note shall be in an amount sufficient to discharge in the full the unpaid
principal amount and all accrued and unpaid interest on, and any other amounts
due under, this Equipment Note. Notwithstanding anything to the contrary
contained herein, if any date on which a payment under this
<PAGE>
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 ont he 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.
This Equipment Note shall bear interest at the Past Due Rate on any
principal hereof and on any other amount payable hereunder or under the
Indenture which shall not be paid in full when due (whether at stated maturity,
by acceleration, by mandatory prepayment or otherwise), for the period from and
including the date thereof to but excluding the date the same is paid in full,
payable from time to time on demand of the Indenture Trustee.
Principal and interest and other amounts due hereunder shall be payable at
the office or agency of The First National Bank of Maryland (the "Indenture
Trustee") maintained for such purpose in immediately available funds prior to
12:00 noon. (New York time) on the due date thereof and the Indenture Trustee
shall remit all such amounts received by it to the Holders at such account or
accounts at such financial institution or institutions as the Holders shall have
designated to the Indenture Trustee in writing, in immediately available funds,
such payment to be made if the payment was received prior to 12:00 noon, New
York time by the Indenture Trustee on any Business Day, by 1 p.m. New York time
on such Business Day; otherwise, the Indenture Trustee shall make payment
promptly, but not later than 11:00 A.M. New York time on the next succeeding
Business Day; provided that, at the option of the Indenture Trustee or its
Paying Agent, interest may be paid by mailing a check therefor payable to or
upon the written order of the registered holder entitled thereto at his last
address as it appears on the Register. If any amount payable under this
Certificate, or under the Indenture, falls due on a day that is not a Business
Day, then such sum shall be payable on the next succeeding Business Day, without
(provided that payment is made on such next succeeding Business Day) additional
interest thereon for the period of such extension.
The First National Bank of Maryland is not acting individually hereunder,
but solely as Indenture Trustee.
Any Person, other than the Subordination Agent and any Pass-Through
Trustee, who is acquiring the Equipment Notes will be deemed to represent and
warrant that (i) no assets of an employee benefit plan subject to Title I of
ERISA or an individual retirement account or plan subject to Section 4975 of the
Code, or any trust established under any such plan or account, have been used to
acquire or hold any of the Equipment Notes, or (ii) that one or more
administrative or statutory exemptions from the prohibited transaction rules
under Section 406 of ERISA and Section 4975 of the Code applies to its purchase
and holding of the Equipment Notes such that its purchase and holding of the
Equipment Notes will not result in a non-exempt prohibited transaction under
Section 406 of ERISA and Section 4975 of the Code.
-2-
<PAGE>
This Equipment Note is one of a duly authorized issue of Equipment Notes
issued under the Trust Indenture and Security Agreement [N______] dated as of
___________ (the "Indenture") between the Company and the Indenture Trustee.
Capitalized terms not otherwise defined herein shall have the meanings given to
them in the Indenture. Reference is made to the Indenture and all supplements
and amendments thereto (a copy of which is on file with the Indenture Trustee at
its principal corporate trust office) for a more complete statement of the terms
and provisions thereof, including a statement of the properties conveyed,
pledged and assigned thereby, the nature and extent of the security, the
respective rights of the Company, the Indenture Trustee and the Holders, and the
terms upon which the Equipment Notes are, and are to be, executed and delivered,
to all of which terms and conditions in the Indenture each Holder hereof agrees
by its acceptance of this Equipment Note.
This Equipment Note is subject to redemption as provided in Section 6.02
of the Indenture but not otherwise. In addition, this Equipment Note may be
accelerated as provided in Section 7.02 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 A and Series
B Equipment Notes](2) [Series A, Series B, and Series C Equipment Notes](3) and
this Equipment Note is issued subject to such provisions. The Holder of this
Certificate, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Indenture Trustee on such Holder's
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 such Holder's attorney-in-fact for such purpose.*
This Equipment Notes shall be construed in accordance with and governed by
the laws of the State of New York.
This Equipment Note shall not be secured by or be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose unless
authenticated by the Indenture Trustee as evidenced by the manual signature of
one of its authorized officers on the certificate below.
- - ----------
(1) To be inserted in the case of a Series B Certificate.
(2) To be inserted in the case of a Series C Certificate.
(3) To be inserted in the case of a Series D Certificate.
* To be inserted for each Equipment Note other than any Series A
Certificate.
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<PAGE>
IN WITNESS WHEREOF, the Company has caused this Equipment Note to be duly
executed in its corporate name by its officer thereunto duly authorized.
Dated: _________________ Midway Airlines Corporation
By______________________________________
Name:
Title:
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<PAGE>
[FORM OF INDENTURE TRUSTEE'S
EQUIPMENT NOTE OF AUTHENTICATION]
This is one of the Equipment Notes referred to in the within mentioned
Indenture.
Dated: _______________ THE FIRST NATIONAL BANK OF
MARYLAND, as Indenture Trustee
By______________________________________
Name:
Title:
<PAGE>
Schedule I to Certificate
Principal Amortization
Payment Date Principal Amount
- - ------------ ----------------
<PAGE>
Exhibit C
Lists of Countries
Exhibit C-1 - Permitted for Re-Registration
Australia Italy
Austria Japan
Belgium Luxembourg
Canada Netherlands
New Zealand
Denmark
Finland Spain
France Sweden
Germany Switzerland
Greece United Kingdom
Iceland
Ireland
Exhibit C-2 - Permitted for Leasing
Argentina Iceland
Australia Ireland
Austria Italy
Belgium Jamaica
Bermuda Japan
Brazil Liechtenstein
Canada Netherlands
Chile Norway
Denmark Portugal
Finland Singapore
France Spain
Germany Sweden
Switzerland
Taiwan
United Kingdom
- - ------------------------------------------------------------------------------
DEPOSIT AGREEMENT
(Class A)
Dated as of August 13, 1998
between
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
as Escrow Agent
and
FIRST UNION NATIONAL BANK
as Depositary
- - --------------------------------------------------------------------------------
<PAGE>
DEPOSIT AGREEMENT (Class A) dated as of August 13, 1998 (as amended,
modified or supplemented from time to time, this "Agreement") between FIRST
UNION TRUST COMPANY, NATIONAL ASSOCIATION, as Escrow Agent under the Escrow and
Paying Agent Agreement referred to below (in such capacity, together with its
successors in such capacity, the "Escrow Agent"), and FIRST UNION NATIONAL BANK,
as depositary bank (the "Depositary").
In consideration of the obligations contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1.1 Acceptance of Depositary. The Depositary hereby agrees
to act as depositary bank as provided herein and in connection therewith to
accept all amounts to be delivered to or held by the Depositary pursuant to the
terms of this Agreement. The Depositary further agrees to hold, maintain and
safeguard the Deposit and the Account (as defined below) during the term of this
Agreement in accordance with the provisions of this Agreement. The Escrow Agent
shall not have any right to withdraw, assign or otherwise transfer moneys held
in the Account except as permitted by this Agreement.
SECTION 1.2 Establishment of Accounts. The Escrow Agent hereby
instructs the Depositary, and the Depositary agrees, to establish the separate
deposit account number 2080000623007 (the "Account"), in the name of the Escrow
Agent and all on the terms and conditions set forth in this Agreement.
SECTION 2.1 Deposit. The Escrow Agent shall direct Morgan Stanley &
Co. Incorporated and Credit Suisse First Boston Corporation (the "Initial
Purchasers") to deposit with the Depositary on the date of this Agreement (the
"Deposit Date") in Federal (same day) funds by wire or other transfer to: First
Union National Bank, Reference: Midway 1998-1, and the Depositary shall accept
from the Initial Purchasers, on behalf of the Escrow Agent, the sum of
US$58,426,000, which amount represents the proceeds of the Midway 1998-1 Pass
Through Certificate offering. Upon acceptance of such sum, the Depositary shall
credit such amount (the "Deposit") to the Account. No amount shall be deposited
in the Account other than the Deposit.
SECTION 2.2 Interest. (a) The Deposit shall bear interest from and
including the date of deposit to but excluding the date of withdrawal at the
Applicable Rate (as defined below) (computed on the basis of a year of twelve
30-day months) payable to the Paying Agent on behalf of the Escrow Agent
semi-annually in arrears on each January 2 and July 2, and on the date of the
Final Withdrawal (as defined below), commencing on January 2, 1999 (each, an
"Interest Payment Date"), all in accordance with the terms of this Agreement
(whether or not the Deposit is withdrawn on an Interest Payment Date). Interest
accrued on the Deposit that is withdrawn pursuant to a Notice of Purchase
Withdrawal (as defined below) shall be paid on the next Interest Payment Date,
notwithstanding any intervening Final Withdrawal (as defined below). If the date
on which any payment due on the Deposit would otherwise
<PAGE>
fall on a day which is not a Business Day (as defined below), such payment shall
be made on the next succeeding Business Day, and no additional interest shall
accrue in respect of such extension.
(b) For purposes of this Agreement:
"Applicable Rate" means 7.14% per annum plus, in the event the
Depositary receives an Increase Notice (as defined below) and until such
time, if any, as the Depositary receives the Rescission Notice (as defined
below), .50% per annum, effective on the date specified in such Increase
Notice to and including such date, if any, specified in such Rescission
Notice.
"Increase Notice" means a notice in the form attached hereto as
Exhibit C, signed by the Escrow Agent, which shall be delivered in the
event that any increase in interest rate is required to be effected
pursuant to the terms of a certain registration rights agreement (the
"Registration Agreement") dated as of the date hereof between Midway,
Morgan Stanley & Co. Incorporated, Credit Suisse First Boston and The
First National Bank of Maryland, as Trustee.
"Rescission Notice" means a notice in the form attached hereto as
Exhibit D, signed by the Escrow Agent, which shall be delivered in the
event that any increase in the interest rate referred to in the definition
of "Increase Notice" is no longer required pursuant to the Registration
Agreement (as defined above).
SECTION 2.3 Withdrawals. (a) On and after the date of the
establishment of the Deposit, the Escrow Agent may, by providing at least one
Business Day's prior notice of withdrawal to the Depositary in the form of
Exhibit A hereto (a "Notice of Purchase Withdrawal"), withdraw all or a portion
of the Deposit, except that at any time prior to the any such withdrawal, the
Escrow Agent or the Pass Through Trustee may, by notice to the Depositary,
cancel such withdrawal (including on the scheduled date therefor), and
thereafter the Deposit shall continue to be maintained by the Depositary in
accordance with the original terms thereof. As used herein, "Business Day" means
any day, other than a Saturday, Sunday or other day on which commercial banks
are authorized or required by law to close in New York, New York, Charlotte,
North Carolina, Wilmington, Delaware or Baltimore, Maryland.
(b) The Escrow Agent may, by providing at least 15 days' prior
notice of withdrawal to the Depositary in the form of Exhibit B hereto (a
"Notice of Final Withdrawal"), withdraw the entire amount of the remaining
Deposit together with the payment by the Depositary of all accrued and unpaid
interest on the Deposit to but excluding the specified date of withdrawal (a
"Final Withdrawal"), on such date as shall be specified in such Notice of Final
Withdrawal. If a Notice of Final Withdrawal has not been given to the Depositary
on or before October 7, 1999 (provided that, if a labor strike occurs at
Bombardier Inc. prior to October 1, 1999 (a "Labor Strike"), such date shall be
extended by adding thereto the number of days that such strike continued in
effect (the "Additional Days")) and any portion of the Deposit is unwithdrawn on
such
-2-
<PAGE>
date, the Depositary shall pay the amount of the Final Withdrawal to the Paying
Agent on October 31, 1999 (provided that if a Labor Strike occurs, such date
shall be extended by the Additional Days).
(c) If the Depositary receives a duly completed Notice of Purchase
Withdrawal or Notice of Final Withdrawal complying with the provisions of this
Agreement, it shall make the payments specified therein in accordance with the
provisions of this Agreement.
SECTION 3. Termination. This Agreement shall terminate on the fifth
Business Day after the later of the date on which (i) the entire amount of the
Deposit shall have been withdrawn and paid as provided herein and (ii) all
accrued and unpaid interest on the Deposit shall have been paid as provided
herein, but in no event prior to the date on which the Depositary shall have
performed in full its obligations hereunder.
SECTION 4. Payments. All payments made by the Depositary hereunder
shall be paid in United States Dollars and immediately available funds by wire
transfer (i) in the case of accrued interest on the Deposit payable under
Section 2.2 hereof or any Final Withdrawal, directly to the Paying Agent at The
First National Bank of Maryland, ABA# 052000113, Account No. 090-02-764,
Attention: Credit Trust Receipts, Reference: Midway EETC, or to such other
account as the Paying Agent may direct from time to time in writing to the
Depositary and the Escrow Agent and (ii) in the case of any withdrawal of any
portion of the Deposit pursuant to a Notice of Purchase Withdrawal, directly to
or as directed by the Pass Through Trustee as specified and in the manner
provided in such Notice of Purchase Withdrawal. The Depositary hereby waives any
and all rights of set-off, combination of accounts, right of retention or
similar right (whether arising under applicable law, contract or otherwise) it
may have against the Deposit howsoever arising.
SECTION 5. Representation and Warranties. Each of the Depositary and
the Escrow Agent hereby represents and warrants (as to itself only) to Midway,
the Subordination Agent, the Pass Through Trustee, the Paying Agent and to each
other that:
(a) it is a bank duly organized and validly existing in good
standing under the laws of its jurisdiction of organization and is duly
qualified to conduct banking business in the United States and the State
of North Carolina (in the case of the Depositary) and the State of
Delaware (in the case of the Escrow Agent);
(b) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
-3-
<PAGE>
(c) the execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action on the part of it
and do not require any stockholder approval, or approval or consent of any
trustee or holder of any indebtedness or obligations of it, and such
document has been duly executed and delivered by it and constitutes its
legal, valid and binding obligations enforceable against it in accordance
with the terms hereof;
(d) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(e) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts
or will conflict with or results or will result in a breach or violation
of any of the terms, conditions or provisions of, or will require any
consent or approval under, any law, governmental rule or regulation or the
charter documents, as amended, or bylaws, as amended, of it or any similar
instrument binding on it or any order, writ, injunction or decree of any
court or governmental authority against it or by which it or any of its
properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which it is a party or by which it or any of
its properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any lien upon
any of its properties; and
(f) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (i) would
adversely affect the ability of it to perform its obligations under this
Agreement or (ii) would call into question or challenge the validity of
this Agreement or the enforceability hereof in accordance with the terms
hereof, nor is the Depositary or the Escrow Agent in default with respect
to any order of any court, governmental authority, arbitration board or
administrative agency so as to adversely affect its ability to perform its
obligations under this Agreement.
SECTION 6. Transfer. Neither party hereto shall be entitled to
assign or otherwise transfer this Agreement (or any interest herein) and any
purported assignment in violation thereof shall be void. This Agreement shall be
binding upon the parties hereto and their respective successors.
SECTION 7. Amendment, Etc. This Agreement may not be amended, waived
or otherwise modified except by an instrument in writing signed by the party
against whom the amendment, waiver or other modification is sought to be
enforced and by the Pass Through Trustee.
-4-
<PAGE>
SECTION 8. Notices. Unless otherwise expressly provided herein, any
notice or other communication under this Agreement shall be in writing
(including by facsimile) and shall be deemed to be given and effective upon
receipt thereof. All notices shall be sent to (x) in the case of the Depositary,
to First Union Capital Markets Group, One First Union Center, 301 South College
Street, Charlotte, North Carolina, 28288 Attention: Peter J. Lancos, Telecopier:
704-383-9139 or (y) in the case of the Escrow Agent, to First Union Trust
Company, National Association, One Rodney Square, 920 King Street, Suite 102,
Wilmington, Delaware 19801, Attention: Corporate Trust Administration,
Telecopier: 302-888-7544, in each case, with a copy to the Pass Through Trustee,
The First National Bank of Maryland, 25 South Charles Street, Mail Code 101-591,
Baltimore, Maryland 21201, Attention: Corporate Trust Department (Telecopier:
(410) 244-4236) and to Midway, Midway Airlines Corporation, 300 W. Morgan
Street, Suite 1200, Durham, North Carolina 27701, Attention: General Counsel
(Telecopier: (919) 956-7568) (or at such other address as any such party may
specify from time to time in a written notice to the parties hereto). On or
prior to the execution of this Agreement, the Escrow Agent has delivered to the
Depositary a certificate containing specimen signatures of the representatives
of the Escrow Agent who are authorized to give notices and instructions with
respect to this Agreement. The Depositary may conclusively rely on such
certificate until the Depositary receives written notice from the Escrow Agent
to the contrary.
SECTION 9. Obligations Unconditional. The Depositary hereby
acknowledges and agrees that its obligation to repay the Deposit together with
interest thereon as provided herein is absolute, irrevocable and unconditional
and constitutes a full recourse obligation of the Depositary enforceable against
it to the full extent of all of its assets and properties.
SECTION 10. Entire Agreement. This Agreement (including all
attachments hereto) sets forth all of the promises, covenants, agreements,
conditions and understandings between the Depositary and the Escrow Agent with
respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 11. Governing Law. This Agreement, and the rights and
obligations of the Depositary and the Escrow Agent with respect to the Deposits,
shall be governed by, and construed in accordance with, the laws of the State of
New York and subject to the provisions of Regulation D of the Board of Governors
of the Federal Reserve System (or any successor), as the same may be modified
and supplemented and in effect from time to time.
SECTION 12. Waiver of Jury Trial Right. EACH OF THE DEPOSITARY AND
THE ESCROW AGENT ACKNOWLEDGES AND ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS
RIGHT TO A TRIAL BY JURY.
SECTION 13. Counterparts. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.
-5-
<PAGE>
IN WITNESS WHEREOF, the Escrow Agent and the Depositary have caused
this Deposit Agreement to be duly executed as of the day and year first above
written.
FIRST UNION TRUST COMPANY
as Escrow Agent
By: /s/ Edward L. Truitt, Jr.
----------------------------------
Name: Edward L. Truitt, Jr.
Title: Vice President
FIRST UNION NATIONAL BANK
By: /s/ Bruce M. Young
----------------------------------
Name: Bruce M. Young
Title: Vice President
-6-
<PAGE>
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
First Union National Bank
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Peter J. Lancos
Telecopier: 704-383-9139
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class A) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary") and to Account No. 2080000623007 (the "Account").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of $________________ from the
Account.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to The First National Bank of Maryland, ABA No. 052000113, Account
No. 090-02-764, Attention: Credit Trust Receipts, Reference: Midway EETC on
__________, 199_, upon the telephonic request of a representative of the Pass
Through Trustee.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
as Escrow Agent
By____________________________________
Name:
Title:
Dated: _______ __, 199_
<PAGE>
EXHIBIT B
NOTICE OF FINAL WITHDRAWAL
First Union National Bank
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Peter J. Lancos
Telecopier: 704-383-9139
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class A) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary").
In accordance with Section 2.3(b) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of the Deposit.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit and accrued interest thereon to the Paying Agent at The First
National Bank of Maryland, ABA No. 052000113, Account No. 040-02-764, Attention:
Credit Trust Receipts, Reference: Midway EETC.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
as Escrow Agent
By____________________________________
Name:
Title:
Dated: _________, 199_
<PAGE>
EXHIBIT C
INCREASE NOTICE
First Union National Bank
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Peter J. Lancos
Telecopier: 704-383-9139
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class A) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary").
The undersigned hereby notifies the Depositary that the Applicable
Rate shall increase by .50% per annum, effective __________, 199__.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
as Escrow Agent
By____________________________________
Name:
Title:
Dated: _________, 199_
<PAGE>
EXHIBIT D
RESCISSION NOTICE
First Union National Bank
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Peter J. Lancos
Telecopier: 704-383-9139
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class A) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary").
The undersigned hereby notifies the Depositary that the Applicable
Rate shall decrease by .50% per annum, effective __________, 199__.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
as Escrow Agent
By____________________________________
Name:
Title:
Dated: _________, 199_
- - --------------------------------------------------------------------------------
DEPOSIT AGREEMENT
(Class B)
Dated as of August 13, 1998
between
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
as Escrow Agent
and
FIRST UNION NATIONAL BANK
as Depositary
- - --------------------------------------------------------------------------------
<PAGE>
DEPOSIT AGREEMENT (Class B) dated as of August 13, 1998 (as amended,
modified or supplemented from time to time, this "Agreement") between FIRST
UNION TRUST COMPANY, NATIONAL ASSOCIATION, as Escrow Agent under the Escrow and
Paying Agent Agreement referred to below (in such capacity, together with its
successors in such capacity, the "Escrow Agent"), and FIRST UNION NATIONAL BANK,
as depositary bank (the "Depositary").
In consideration of the obligations contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1.1 Acceptance of Depositary. The Depositary hereby agrees
to act as depositary bank as provided herein and in connection therewith to
accept all amounts to be delivered to or held by the Depositary pursuant to the
terms of this Agreement. The Depositary further agrees to hold, maintain and
safeguard the Deposit and the Account (as defined below) during the term of this
Agreement in accordance with the provisions of this Agreement. The Escrow Agent
shall not have any right to withdraw, assign or otherwise transfer moneys held
in the Account except as permitted by this Agreement.
SECTION 1.2 Establishment of Accounts. The Escrow Agent hereby
instructs the Depositary, and the Depositary agrees, to establish the separate
deposit account number 2080000623010 (the "Account"), in the name of the Escrow
Agent and all on the terms and conditions set forth in this Agreement.
SECTION 2.1 Deposit. The Escrow Agent shall direct Morgan Stanley &
Co. Incorporated and Credit Suisse First Boston Corporation (the "Initial
Purchasers") to deposit with the Depositary on the date of this Agreement (the
"Deposit Date") in Federal (same day) funds by wire or other transfer to: First
Union National Bank, Reference: Midway 1998-1, and the Depositary shall accept
from the Initial Purchasers, on behalf of the Escrow Agent, the sum of
US$25,266,000, which amount represents the proceeds of the Midway 1998-1 Pass
Through Certificate offering. Upon acceptance of such sum, the Depositary shall
credit such amount (the "Deposit") to the Account. No amount shall be deposited
in the Account other than the Deposit.
SECTION 2.2 Interest. (a) The Deposit shall bear interest from and
including the date of deposit to but excluding the date of withdrawal at the
Applicable Rate (as defined below) computed on the basis of a year of twelve
30-day months) payable to the Paying Agent on behalf of the Escrow Agent
semi-annually in arrears on each January 2 and July 2, and on the date of the
Final Withdrawal (as defined below), commencing on January 2, 1999 (each, an
"Interest Payment Date"), all in accordance with the terms of this Agreement
(whether or not the Deposit is withdrawn on an Interest Payment Date). Interest
accrued on the Deposit that is withdrawn pursuant to a Notice of Purchase
Withdrawal (as defined below) shall be paid on the next Interest Payment Date,
notwithstanding any intervening Final Withdrawal (as defined below). If the date
on which any payment due on the Deposit would otherwise
<PAGE>
fall on a day which is not a Business Day (as defined below), such payment shall
be made on the next succeeding Business Day, and no additional interest shall
accrue in respect of such extension.
(b) For purposes of this Agreement:
"Applicable Rate" means 8.14% per annum plus, in the event the
Depositary receives an Increase Notice (as defined below) and until such
time, if any, as the Depositary receives the Rescission Notice (as defined
below), .50% per annum, effective on the date specified in such Increase
Notice to and including such date, if any, specified in such Rescission
Notice.
"Increase Notice" means a notice in the form attached hereto as
Exhibit C, signed by the Escrow Agent, which shall be delivered in the
event that any increase in interest rate is required to be effected
pursuant to the terms of a certain registration rights agreement (the
"Registration Agreement") dated as of the date hereof between Midway,
Morgan Stanley & Co. Incorporated, Credit Suisse First Boston and The
First National Bank of Maryland, as Trustee.
"Rescission Notice" means a notice in the form attached hereto as
Exhibit D, signed by the Escrow Agent, which shall be delivered in the
event that any increase in the interest rate referred to in the definition
of "Increase Notice" is no longer required pursuant to the Registration
Agreement (as defined above).
SECTION 2.3 Withdrawals. (a) On and after the date of the
establishment of the Deposit, the Escrow Agent may, by providing at least one
Business Day's prior notice of withdrawal to the Depositary in the form of
Exhibit A hereto (a "Notice of Purchase Withdrawal"), withdraw all or a portion
of the Deposit, except that at any time prior to the any such withdrawal, the
Escrow Agent or the Pass Through Trustee may, by notice to the Depositary,
cancel such withdrawal (including on the scheduled date therefor), and
thereafter the Deposit shall continue to be maintained by the Depositary in
accordance with the original terms thereof. As used herein, "Business Day" means
any day, other than a Saturday, Sunday or other day on which commercial banks
are authorized or required by law to close in New York, New York, Charlotte,
North Carolina, Wilmington, Delaware or Baltimore, Maryland.
(b) The Escrow Agent may, by providing at least 15 days' prior
notice of withdrawal to the Depositary in the form of Exhibit B hereto (a
"Notice of Final Withdrawal"), withdraw the entire amount of the remaining
Deposit together with the payment by the Depositary of all accrued and unpaid
interest on the Deposit to but excluding the specified date of withdrawal (a
"Final Withdrawal"), on such date as shall be specified in such Notice of Final
Withdrawal. If a Notice of Final Withdrawal has not been given to the Depositary
on or before October 7, 1999 (provided that, if a labor strike occurs at
Bombardier Inc. prior to October 1, 1999 (a "Labor Strike"), such date shall be
extended by adding thereto the number of days that such strike continued in
effect (the "Additional Days")) and any portion of the Deposit is unwithdrawn on
such
-2-
<PAGE>
date, the Depositary shall pay the amount of the Final Withdrawal to the Paying
Agent on October 31, 1999 (provided that if a Labor Strike occurs, such date
shall be extended by the Additional Days).
(c) If the Depositary receives a duly completed Notice of Purchase
Withdrawal or Notice of Final Withdrawal complying with the provisions of this
Agreement, it shall make the payments specified therein in accordance with the
provisions of this Agreement.
SECTION 3. Termination. This Agreement shall terminate on the fifth
Business Day after the later of the date on which (i) the entire amount of the
Deposit shall have been withdrawn and paid as provided herein and (ii) all
accrued and unpaid interest on the Deposit shall have been paid as provided
herein, but in no event prior to the date on which the Depositary shall have
performed in full its obligations hereunder.
SECTION 4. Payments. All payments made by the Depositary hereunder
shall be paid in United States Dollars and immediately available funds by wire
transfer (i) in the case of accrued interest on the Deposit payable under
Section 2.2 hereof or any Final Withdrawal, directly to the Paying Agent at The
First National Bank of Maryland, ABA# 052000113, Account No. 090-02-764,
Attention: Credit Trust Receipts, Reference: Midway EETC, or to such other
account as the Paying Agent may direct from time to time in writing to the
Depositary and the Escrow Agent and (ii) in the case of any withdrawal of any
portion of the Deposit pursuant to a Notice of Purchase Withdrawal, directly to
or as directed by the Pass Through Trustee as specified and in the manner
provided in such Notice of Purchase Withdrawal. The Depositary hereby waives any
and all rights of set-off, combination of accounts, right of retention or
similar right (whether arising under applicable law, contract or otherwise) it
may have against the Deposit howsoever arising.
SECTION 5. Representation and Warranties. Each of the Depositary and
the Escrow Agent hereby represents and warrants (as to itself only) to Midway,
the Subordination Agent, the Pass Through Trustee, the Paying Agent and to each
other that:
(a) it is a bank duly organized and validly existing in good
standing under the laws of its jurisdiction of organization and is duly
qualified to conduct banking business in the United States and the State
of North Carolina (in the case of the Depositary) and the State of
Delaware (in the case of the Escrow Agent);
(b) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
-3-
<PAGE>
(c) the execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action on the part of it
and do not require any stockholder approval, or approval or consent of any
trustee or holder of any indebtedness or obligations of it, and such
document has been duly executed and delivered by it and constitutes its
legal, valid and binding obligations enforceable against it in accordance
with the terms hereof;
(d) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(e) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts
or will conflict with or results or will result in a breach or violation
of any of the terms, conditions or provisions of, or will require any
consent or approval under, any law, governmental rule or regulation or the
charter documents, as amended, or bylaws, as amended, of it or any similar
instrument binding on it or any order, writ, injunction or decree of any
court or governmental authority against it or by which it or any of its
properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which it is a party or by which it or any of
its properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any lien upon
any of its properties; and
(f) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (i) would
adversely affect the ability of it to perform its obligations under this
Agreement or (ii) would call into question or challenge the validity of
this Agreement or the enforceability hereof in accordance with the terms
hereof, nor is the Depositary or the Escrow Agent in default with respect
to any order of any court, governmental authority, arbitration board or
administrative agency so as to adversely affect its ability to perform its
obligations under this Agreement.
SECTION 6. Transfer. Neither party hereto shall be entitled to
assign or otherwise transfer this Agreement (or any interest herein) and any
purported assignment in violation thereof shall be void. This Agreement shall be
binding upon the parties hereto and their respective successors.
SECTION 7. Amendment, Etc. This Agreement may not be amended, waived
or otherwise modified except by an instrument in writing signed by the party
against whom the amendment, waiver or other modification is sought to be
enforced and by the Pass Through Trustee.
-4-
<PAGE>
SECTION 8. Notices. Unless otherwise expressly provided herein, any
notice or other communication under this Agreement shall be in writing
(including by facsimile) and shall be deemed to be given and effective upon
receipt thereof. All notices shall be sent to (x) in the case of the Depositary,
to First Union Capital Markets Group, One First Union Center, 301 South College
Street, Charlotte, North Carolina, 28288 Attention: Peter J. Lancos, Telecopier:
704-383-9139 or (y) in the case of the Escrow Agent, to First Union Trust
Company, National Association, One Rodney Square, 920 King Street, Suite 102,
Wilmington, Delaware 19801, Attention: Corporate Trust Administration,
Telecopier: 302-888-7544, in each case, with a copy to the Pass Through Trustee,
The First National Bank of Maryland, 25 South Charles Street, Mail Code 101-591,
Baltimore, Maryland 21201, Attention: Corporate Trust Department (Telecopier:
(410) 244-4236) and to Midway, Midway Airlines Corporation, 300 W. Morgan
Street, Suite 1200, Durham, North Carolina 27701, Attention: General Counsel
(Telecopier: (919) 956-7568) (or at such other address as any such party may
specify from time to time in a written notice to the parties hereto). On or
prior to the execution of this Agreement, the Escrow Agent has delivered to the
Depositary a certificate containing specimen signatures of the representatives
of the Escrow Agent who are authorized to give notices and instructions with
respect to this Agreement. The Depositary may conclusively rely on such
certificate until the Depositary receives written notice from the Escrow Agent
to the contrary.
SECTION 9. Obligations Unconditional. The Depositary hereby
acknowledges and agrees that its obligation to repay the Deposit together with
interest thereon as provided herein is absolute, irrevocable and unconditional
and constitutes a full recourse obligation of the Depositary enforceable against
it to the full extent of all of its assets and properties.
SECTION 10. Entire Agreement. This Agreement (including all
attachments hereto) sets forth all of the promises, covenants, agreements,
conditions and understandings between the Depositary and the Escrow Agent with
respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 11. Governing Law. This Agreement, and the rights and
obligations of the Depositary and the Escrow Agent with respect to the Deposits,
shall be governed by, and construed in accordance with, the laws of the State of
New York and subject to the provisions of Regulation D of the Board of Governors
of the Federal Reserve System (or any successor), as the same may be modified
and supplemented and in effect from time to time.
SECTION 12. Waiver of Jury Trial Right. EACH OF THE DEPOSITARY AND
THE ESCROW AGENT ACKNOWLEDGES AND ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS
RIGHT TO A TRIAL BY JURY.
SECTION 13. Counterparts. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.
-5-
<PAGE>
IN WITNESS WHEREOF, the Escrow Agent and the Depositary have caused
this Deposit Agreement to be duly executed as of the day and year first above
written.
FIRST UNION TRUST COMPANY
as Escrow Agent
By: /s/ Edward L. Truitt, Jr.
----------------------------------
Name: Edward L. Truitt, Jr.
Title: Vice President
FIRST UNION NATIONAL BANK
By: /s/ Bruce M. Young
----------------------------------
Name: Bruce M. Young
Title: Vice President
-6-
<PAGE>
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
First Union National Bank
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Peter J. Lancos
Telecopier: 704-383-9139
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class B) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary") and to Account No. 2080000623010 (the "Account").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of $________________ from the
Account.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to The First National Bank of Maryland, ABA No. 052000113, Account
No. 090-02-764, Attention: Credit Trust Receipts, Reference: Midway EETC on
__________, 199_, upon the telephonic request of a representative of the Pass
Through Trustee.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
as Escrow Agent
By ______________________________________
Name:
Title:
Dated: _______ __, 199_
<PAGE>
EXHIBIT B
NOTICE OF FINAL WITHDRAWAL
First Union National Bank
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Peter J. Lancos
Telecopier: 704-383-9139
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class B) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary").
In accordance with Section 2.3(b) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of the Deposit.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit and accrued interest thereon to the Paying Agent at The First
National Bank of Maryland, ABA No. 052000113, Account No. 040-02-764, Attention:
Credit Trust Receipts, Reference: Midway EETC.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
as Escrow Agent
By ______________________________________
Name:
Title:
Dated: _________, 199_
<PAGE>
EXHIBIT C
INCREASE NOTICE
First Union National Bank
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Peter J. Lancos
Telecopier: 704-383-9139
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class B) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary").
The undersigned hereby notifies the Depositary that the Applicable
Rate shall increase by .50% per annum, effective __________, 199__.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
as Escrow Agent
By ______________________________________
Name:
Title:
Dated: _________, 199_
<PAGE>
EXHIBIT D
RESCISSION NOTICE
First Union National Bank
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Peter J. Lancos
Telecopier: 704-383-9139
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class B) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary").
The undersigned hereby notifies the Depositary that the Applicable
Rate shall decrease by .50% per annum, effective __________, 199__.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
as Escrow Agent
By ______________________________________
Name:
Title:
Dated: _________, 199_
- - --------------------------------------------------------------------------------
DEPOSIT AGREEMENT
(Class C)
Dated as of August 13, 1998
between
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
as Escrow Agent
and
FIRST UNION NATIONAL BANK
as Depositary
- - --------------------------------------------------------------------------------
<PAGE>
DEPOSIT AGREEMENT (Class C) dated as of August 13, 1998 (as amended,
modified or supplemented from time to time, this "Agreement") between FIRST
UNION TRUST COMPANY, NATIONAL ASSOCIATION, as Escrow Agent under the Escrow and
Paying Agent Agreement referred to below (in such capacity, together with its
successors in such capacity, the "Escrow Agent"), and FIRST UNION NATIONAL BANK,
as depositary bank (the "Depositary").
In consideration of the obligations contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1.1 Acceptance of Depositary. The Depositary hereby agrees
to act as depositary bank as provided herein and in connection therewith to
accept all amounts to be delivered to or held by the Depositary pursuant to the
terms of this Agreement. The Depositary further agrees to hold, maintain and
safeguard the Deposit and the Account (as defined below) during the term of this
Agreement in accordance with the provisions of this Agreement. The Escrow Agent
shall not have any right to withdraw, assign or otherwise transfer moneys held
in the Account except as permitted by this Agreement.
SECTION 1.2 Establishment of Accounts. The Escrow Agent hereby
instructs the Depositary, and the Depositary agrees, to establish the separate
deposit account number 2080000623023 (the "Account"), in the name of the Escrow
Agent and all on the terms and conditions set forth in this Agreement.
SECTION 2.1 Deposit. The Escrow Agent shall direct Morgan Stanley &
Co. Incorporated and Credit Suisse First Boston Corporation (the "Initial
Purchasers") to deposit with the Depositary on the date of this Agreement (the
"Deposit Date") in Federal (same day) funds by wire or other transfer to: First
Union National Bank, Reference: Midway 1998-1, and the Depositary shall accept
from the Initial Purchasers, on behalf of the Escrow Agent, the sum of
US$20,528,000, which amount represents the proceeds of the Midway 1998-1 Pass
Through Certificate offering. Upon acceptance of such sum, the Depositary shall
credit such amount (the "Deposit") to the Account. No amount shall be deposited
in the Account other than the Deposit.
SECTION 2.2 Interest. (a) The Deposit shall bear interest from and
including the date of deposit to but excluding the date of withdrawal at the
Applicable Rate (as defined below) (computed on the basis of a year of twelve
30-day months) payable to the Paying Agent on behalf of the Escrow Agent
semi-annually in arrears on each January 2 and July 2, and on the date of the
Final Withdrawal (as defined below), commencing on January 2, 1999 (each, an
"Interest Payment Date"), all in accordance with the terms of this Agreement
(whether or not the Deposit is withdrawn on an Interest Payment Date). Interest
accrued on the Deposit that is withdrawn pursuant to a Notice of Purchase
Withdrawal (as defined below) shall be paid on the next Interest Payment Date,
notwithstanding any intervening Final Withdrawal (as defined below). If the date
on which any payment due on the Deposit would otherwise
<PAGE>
fall on a day which is not a Business Day (as defined below), such payment shall
be made on the next succeeding Business Day, and no additional interest shall
accrue in respect of such extension.
(b) For purposes of this Agreement:
"Applicable Rate" means 8.92% per annum plus, in the event the
Depositary receives an Increase Notice (as defined below) and until such
time, if any, as the Depositary receives the Rescission Notice (as defined
below), .50% per annum, effective on the date specified in such Increase
Notice to and including such date, if any, specified in such Rescission
Notice.
"Increase Notice" means a notice in the form attached hereto as
Exhibit C, signed by the Escrow Agent, which shall be delivered in the
event that any increase in interest rate is required to be effected
pursuant to the terms of a certain registration rights agreement (the
"Registration Agreement") dated as of the date hereof between Midway,
Morgan Stanley & Co. Incorporated, Credit Suisse First Boston and The
First National Bank of Maryland, as Trustee.
"Rescission Notice" means a notice in the form attached hereto as
Exhibit D, signed by the Escrow Agent, which shall be delivered in the
event that any increase in the interest rate referred to in the definition
of "Increase Notice" is no longer required pursuant to the Registration
Agreement (as defined above).
SECTION 2.3 Withdrawals. (a) On and after the date of the
establishment of the Deposit, the Escrow Agent may, by providing at least one
Business Day's prior notice of withdrawal to the Depositary in the form of
Exhibit A hereto (a "Notice of Purchase Withdrawal"), withdraw all or a portion
of the Deposit, except that at any time prior to the any such withdrawal, the
Escrow Agent or the Pass Through Trustee may, by notice to the Depositary,
cancel such withdrawal (including on the scheduled date therefor), and
thereafter the Deposit shall continue to be maintained by the Depositary in
accordance with the original terms thereof. As used herein, "Business Day" means
any day, other than a Saturday, Sunday or other day on which commercial banks
are authorized or required by law to close in New York, New York, Charlotte,
North Carolina, Wilmington, Delaware or Baltimore, Maryland.
(b) The Escrow Agent may, by providing at least 15 days' prior
notice of withdrawal to the Depositary in the form of Exhibit B hereto (a
"Notice of Final Withdrawal"), withdraw the entire amount of the remaining
Deposit together with the payment by the Depositary of all accrued and unpaid
interest on the Deposit to but excluding the specified date of withdrawal (a
"Final Withdrawal"), on such date as shall be specified in such Notice of Final
Withdrawal. If a Notice of Final Withdrawal has not been given to the Depositary
on or before October 7, 1999 (provided that, if a labor strike occurs at
Bombardier Inc. prior to October 1, 1999 (a "Labor Strike"), such date shall be
extended by adding thereto the number of days that such strike continued in
effect (the "Additional Days")) and any portion of the Deposit is unwithdrawn on
such
-2-
<PAGE>
date, the Depositary shall pay the amount of the Final Withdrawal to the Paying
Agent on October 31, 1999 (provided that if a Labor Strike occurs, such date
shall be extended by the Additional Days).
(c) If the Depositary receives a duly completed Notice of Purchase
Withdrawal or Notice of Final Withdrawal complying with the provisions of this
Agreement, it shall make the payments specified therein in accordance with the
provisions of this Agreement.
SECTION 3. Termination. This Agreement shall terminate on the fifth
Business Day after the later of the date on which (i) the entire amount of the
Deposit shall have been withdrawn and paid as provided herein and (ii) all
accrued and unpaid interest on the Deposit shall have been paid as provided
herein, but in no event prior to the date on which the Depositary shall have
performed in full its obligations hereunder.
SECTION 4. Payments. All payments made by the Depositary hereunder
shall be paid in United States Dollars and immediately available funds by wire
transfer (i) in the case of accrued interest on the Deposit payable under
Section 2.2 hereof or any Final Withdrawal, directly to the Paying Agent at The
First National Bank of Maryland, ABA# 052000113, Account No. 090-02-764,
Attention: Credit Trust Receipts, Reference: Midway EETC, or to such other
account as the Paying Agent may direct from time to time in writing to the
Depositary and the Escrow Agent and (ii) in the case of any withdrawal of any
portion of the Deposit pursuant to a Notice of Purchase Withdrawal, directly to
or as directed by the Pass Through Trustee as specified and in the manner
provided in such Notice of Purchase Withdrawal. The Depositary hereby waives any
and all rights of set-off, combination of accounts, right of retention or
similar right (whether arising under applicable law, contract or otherwise) it
may have against the Deposit howsoever arising.
SECTION 5. Representation and Warranties. Each of the Depositary and
the Escrow Agent hereby represents and warrants (as to itself only) to Midway,
the Subordination Agent, the Pass Through Trustee, the Paying Agent and to each
other that:
(a) it is a bank duly organized and validly existing in good
standing under the laws of its jurisdiction of organization and is duly
qualified to conduct banking business in the United States and the State
of North Carolina (in the case of the Depositary) and the State of
Delaware (in the case of the Escrow Agent);
(b) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
-3-
<PAGE>
(c) the execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action on the part of it
and do not require any stockholder approval, or approval or consent of any
trustee or holder of any indebtedness or obligations of it, and such
document has been duly executed and delivered by it and constitutes its
legal, valid and binding obligations enforceable against it in accordance
with the terms hereof;
(d) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(e) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts
or will conflict with or results or will result in a breach or violation
of any of the terms, conditions or provisions of, or will require any
consent or approval under, any law, governmental rule or regulation or the
charter documents, as amended, or bylaws, as amended, of it or any similar
instrument binding on it or any order, writ, injunction or decree of any
court or governmental authority against it or by which it or any of its
properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which it is a party or by which it or any of
its properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any lien upon
any of its properties; and
(f) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (i) would
adversely affect the ability of it to perform its obligations under this
Agreement or (ii) would call into question or challenge the validity of
this Agreement or the enforceability hereof in accordance with the terms
hereof, nor is the Depositary or the Escrow Agent in default with respect
to any order of any court, governmental authority, arbitration board or
administrative agency so as to adversely affect its ability to perform its
obligations under this Agreement.
SECTION 6. Transfer. Neither party hereto shall be entitled to
assign or otherwise transfer this Agreement (or any interest herein) and any
purported assignment in violation thereof shall be void. This Agreement shall be
binding upon the parties hereto and their respective successors.
SECTION 7. Amendment, Etc. This Agreement may not be amended, waived
or otherwise modified except by an instrument in writing signed by the party
against whom the amendment, waiver or other modification is sought to be
enforced and by the Pass Through Trustee.
-4-
<PAGE>
SECTION 8. Notices. Unless otherwise expressly provided herein, any
notice or other communication under this Agreement shall be in writing
(including by facsimile) and shall be deemed to be given and effective upon
receipt thereof. All notices shall be sent to (x) in the case of the Depositary,
to First Union Capital Markets Group, One First Union Center, 301 South College
Street, Charlotte, North Carolina, 28288 Attention: Peter J. Lancos, Telecopier:
704-383-9139 or (y) in the case of the Escrow Agent, to First Union Trust
Company, National Association, One Rodney Square, 920 King Street, Suite 102,
Wilmington, Delaware 19801, Attention: Corporate Trust Administration,
Telecopier: 302-888-7544, in each case, with a copy to the Pass Through Trustee,
The First National Bank of Maryland, 25 South Charles Street, Mail Code 101-591,
Baltimore, Maryland 21201, Attention: Corporate Trust Department (Telecopier:
(410) 244-4236) and to Midway, Midway Airlines Corporation, 300 W. Morgan
Street, Suite 1200, Durham, North Carolina 27701, Attention: General Counsel
(Telecopier: (919) 956-7568) (or at such other address as any such party may
specify from time to time in a written notice to the parties hereto). On or
prior to the execution of this Agreement, the Escrow Agent has delivered to the
Depositary a certificate containing specimen signatures of the representatives
of the Escrow Agent who are authorized to give notices and instructions with
respect to this Agreement. The Depositary may conclusively rely on such
certificate until the Depositary receives written notice from the Escrow Agent
to the contrary.
SECTION 9. Obligations Unconditional. The Depositary hereby
acknowledges and agrees that its obligation to repay the Deposit together with
interest thereon as provided herein is absolute, irrevocable and unconditional
and constitutes a full recourse obligation of the Depositary enforceable against
it to the full extent of all of its assets and properties.
SECTION 10. Entire Agreement. This Agreement (including all
attachments hereto) sets forth all of the promises, covenants, agreements,
conditions and understandings between the Depositary and the Escrow Agent with
respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 11. Governing Law. This Agreement, and the rights and
obligations of the Depositary and the Escrow Agent with respect to the Deposits,
shall be governed by, and construed in accordance with, the laws of the State of
New York and subject to the provisions of Regulation D of the Board of Governors
of the Federal Reserve System (or any successor), as the same may be modified
and supplemented and in effect from time to time.
SECTION 12. Waiver of Jury Trial Right. EACH OF THE DEPOSITARY AND
THE ESCROW AGENT ACKNOWLEDGES AND ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS
RIGHT TO A TRIAL BY JURY.
SECTION 13. Counterparts. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.
-5-
<PAGE>
IN WITNESS WHEREOF, the Escrow Agent and the Depositary have caused
this Deposit Agreement to be duly executed as of the day and year first above
written.
FIRST UNION TRUST COMPANY
as Escrow Agent
By: /s/ Edward L. Truitt, Jr.
----------------------------------
Name: Edward L. Truitt, Jr.
Title: Vice President
FIRST UNION NATIONAL BANK
By: /s/ Bruce M. Young
----------------------------------
Name: Bruce M. Young
Title: Vice President
-6-
<PAGE>
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
First Union National Bank
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Peter J. Lancos
Telecopier: 704-383-9139
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary") and to Account No. 2080000623023 (the "Account").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of $________________ from the
Account.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to The First National Bank of Maryland, ABA No. 052000113, Account
No. 090-02-764, Attention: Credit Trust Receipts, Reference: Midway EETC on
__________, 199_, upon the telephonic request of a representative of the Pass
Through Trustee.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
as Escrow Agent
By ______________________________________
Name:
Title:
Dated: _______ __, 199_
<PAGE>
EXHIBIT B
NOTICE OF FINAL WITHDRAWAL
First Union National Bank
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Peter J. Lancos
Telecopier: 704-383-9139
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary").
In accordance with Section 2.3(b) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of the Deposit.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit and accrued interest thereon to the Paying Agent at The First
National Bank of Maryland, ABA No. 052000113, Account No. 040-02-764, Attention:
Credit Trust Receipts, Reference: Midway EETC.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
as Escrow Agent
By ______________________________________
Name:
Title:
Dated: _________, 199_
<PAGE>
EXHIBIT C
INCREASE NOTICE
First Union National Bank
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Peter J. Lancos
Telecopier: 704-383-9139
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary").
The undersigned hereby notifies the Depositary that the Applicable
Rate shall increase by .50% per annum, effective __________, 199__.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
as Escrow Agent
By ______________________________________
Name:
Title:
Dated: _________, 199_
<PAGE>
EXHIBIT D
RESCISSION NOTICE
First Union National Bank
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Peter J. Lancos
Telecopier: 704-383-9139
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class C) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary").
The undersigned hereby notifies the Depositary that the Applicable
Rate shall decrease by .50% per annum, effective __________, 199__.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
as Escrow Agent
By ______________________________________
Name:
Title:
Dated: _________, 199_
- - --------------------------------------------------------------------------------
DEPOSIT AGREEMENT
(Class D)
Dated as of August 13, 1998
between
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
as Escrow Agent
and
FIRST UNION NATIONAL BANK
as Depositary
- - --------------------------------------------------------------------------------
<PAGE>
DEPOSIT AGREEMENT (Class D) dated as of August 13, 1998 (as amended,
modified or supplemented from time to time, this "Agreement") between FIRST
UNION TRUST COMPANY, NATIONAL ASSOCIATION, as Escrow Agent under the Escrow and
Paying Agent Agreement referred to below (in such capacity, together with its
successors in such capacity, the "Escrow Agent"), and FIRST UNION NATIONAL BANK,
as depositary bank (the "Depositary").
In consideration of the obligations contained herein, and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1.1 Acceptance of Depositary. The Depositary hereby agrees
to act as depositary bank as provided herein and in connection therewith to
accept all amounts to be delivered to or held by the Depositary pursuant to the
terms of this Agreement. The Depositary further agrees to hold, maintain and
safeguard the Deposit and the Account (as defined below) during the term of this
Agreement in accordance with the provisions of this Agreement. The Escrow Agent
shall not have any right to withdraw, assign or otherwise transfer moneys held
in the Account except as permitted by this Agreement.
SECTION 1.2 Establishment of Accounts. The Escrow Agent hereby
instructs the Depositary, and the Depositary agrees, to establish the separate
deposit account number 2080000623036 (the "Account"), in the name of the Escrow
Agent and all on the terms and conditions set forth in this Agreement.
SECTION 2.1 Deposit. The Escrow Agent shall direct Morgan Stanley &
Co. Incorporated and Credit Suisse First Boston Corporation (the "Initial
Purchasers") to deposit with the Depositary on the date of this Agreement (the
"Deposit Date") in Federal (same day) funds by wire or other transfer to: First
Union National Bank, Reference: Midway 1998-1, and the Depositary shall accept
from the Initial Purchasers, on behalf of the Escrow Agent, the sum of
US$5,502,000, which amount represents the proceeds of the Midway 1998-1 Pass
Through Certificate offering. Upon acceptance of such sum, the Depositary shall
credit such amount (the "Deposit") to the Account. No amount shall be deposited
in the Account other than the Deposit.
SECTION 2.2 Interest. (a) The Deposit shall bear interest from and
including the date of deposit to but excluding the date of withdrawal at the
Applicable Rate (as defined below) (computed on the basis of a year of twelve
30-day months) payable to the Paying Agent on behalf of the Escrow Agent
semi-annually in arrears on each January 2 and July 2, and on the date of the
Final Withdrawal (as defined below), commencing on January 2, 1999 (each, an
"Interest Payment Date"), all in accordance with the terms of this Agreement
(whether or not the Deposit is withdrawn on an Interest Payment Date). Interest
accrued on the Deposit that is withdrawn pursuant to a Notice of Purchase
Withdrawal (as defined below) shall be paid on the next Interest Payment Date,
notwithstanding any intervening Final Withdrawal (as defined below). If the date
on which any payment due on the Deposit would otherwise
<PAGE>
fall on a day which is not a Business Day (as defined below), such payment shall
be made on the next succeeding Business Day, and no additional interest shall
accrue in respect of such extension.
(b) For purposes of this Agreement:
"Applicable Rate" means 8.86% per annum plus, in the event the
Depositary receives an Increase Notice (as defined below) and until such
time, if any, as the Depositary receives the Rescission Notice (as defined
below), .50% per annum, effective on the date specified in such Increase
Notice to and including such date, if any, specified in such Rescission
Notice.
"Increase Notice" means a notice in the form attached hereto as
Exhibit C, signed by the Escrow Agent, which shall be delivered in the
event that any increase in interest rate is required to be effected
pursuant to the terms of a certain registration rights agreement (the
"Registration Agreement") dated as of the date hereof between Midway,
Morgan Stanley & Co. Incorporated, Credit Suisse First Boston and The
First National Bank of Maryland, as Trustee.
"Rescission Notice" means a notice in the form attached hereto as
Exhibit D, signed by the Escrow Agent, which shall be delivered in the
event that any increase in the interest rate referred to in the definition
of "Increase Notice" is no longer required pursuant to the Registration
Agreement (as defined above).
SECTION 2.3 Withdrawals. (a) On and after the date of the
establishment of the Deposit, the Escrow Agent may, by providing at least one
Business Day's prior notice of withdrawal to the Depositary in the form of
Exhibit A hereto (a "Notice of Purchase Withdrawal"), withdraw all or a portion
of the Deposit, except that at any time prior to the any such withdrawal, the
Escrow Agent or the Pass Through Trustee may, by notice to the Depositary,
cancel such withdrawal (including on the scheduled date therefor), and
thereafter the Deposit shall continue to be maintained by the Depositary in
accordance with the original terms thereof. As used herein, "Business Day" means
any day, other than a Saturday, Sunday or other day on which commercial banks
are authorized or required by law to close in New York, New York, Charlotte,
North Carolina, Wilmington, Delaware or Baltimore, Maryland.
(b) The Escrow Agent may, by providing at least 15 days' prior
notice of withdrawal to the Depositary in the form of Exhibit B hereto (a
"Notice of Final Withdrawal"), withdraw the entire amount of the remaining
Deposit together with the payment by the Depositary of all accrued and unpaid
interest on the Deposit to but excluding the specified date of withdrawal (a
"Final Withdrawal"), on such date as shall be specified in such Notice of Final
Withdrawal. If a Notice of Final Withdrawal has not been given to the Depositary
on or before October 7, 1999 (provided that, if a labor strike occurs at
Bombardier Inc. prior to October 1, 1999 (a "Labor Strike"), such date shall be
extended by adding thereto the number of days that such strike continued in
effect (the "Additional Days")) and any portion of the Deposit is unwithdrawn on
such
-2-
<PAGE>
date, the Depositary shall pay the amount of the Final Withdrawal to the Paying
Agent on October 31, 1999 (provided that if a Labor Strike occurs, such date
shall be extended by the Additional Days).
(c) If the Depositary receives a duly completed Notice of Purchase
Withdrawal or Notice of Final Withdrawal complying with the provisions of this
Agreement, it shall make the payments specified therein in accordance with the
provisions of this Agreement.
SECTION 3. Termination. This Agreement shall terminate on the fifth
Business Day after the later of the date on which (i) the entire amount of the
Deposit shall have been withdrawn and paid as provided herein and (ii) all
accrued and unpaid interest on the Deposit shall have been paid as provided
herein, but in no event prior to the date on which the Depositary shall have
performed in full its obligations hereunder.
SECTION 4. Payments. All payments made by the Depositary hereunder
shall be paid in United States Dollars and immediately available funds by wire
transfer (i) in the case of accrued interest on the Deposit payable under
Section 2.2 hereof or any Final Withdrawal, directly to the Paying Agent at The
First National Bank of Maryland, ABA# 052000113, Account No. 090-02-764,
Attention: Credit Trust Receipts, Reference: Midway EETC, or to such other
account as the Paying Agent may direct from time to time in writing to the
Depositary and the Escrow Agent and (ii) in the case of any withdrawal of any
portion of the Deposit pursuant to a Notice of Purchase Withdrawal, directly to
or as directed by the Pass Through Trustee as specified and in the manner
provided in such Notice of Purchase Withdrawal. The Depositary hereby waives any
and all rights of set-off, combination of accounts, right of retention or
similar right (whether arising under applicable law, contract or otherwise) it
may have against the Deposit howsoever arising.
SECTION 5. Representation and Warranties. Each of the Depositary and
the Escrow Agent hereby represents and warrants (as to itself only) to Midway,
the Subordination Agent, the Pass Through Trustee, the Paying Agent and to each
other that:
(a) it is a bank duly organized and validly existing in good
standing under the laws of its jurisdiction of organization and is duly
qualified to conduct banking business in the United States and the State
of North Carolina (in the case of the Depositary) and the State of
Delaware (in the case of the Escrow Agent);
(b) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
-3-
<PAGE>
(c) the execution, delivery and performance of this Agreement have
been duly authorized by all necessary corporate action on the part of it
and do not require any stockholder approval, or approval or consent of any
trustee or holder of any indebtedness or obligations of it, and such
document has been duly executed and delivered by it and constitutes its
legal, valid and binding obligations enforceable against it in accordance
with the terms hereof;
(d) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(e) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts
or will conflict with or results or will result in a breach or violation
of any of the terms, conditions or provisions of, or will require any
consent or approval under, any law, governmental rule or regulation or the
charter documents, as amended, or bylaws, as amended, of it or any similar
instrument binding on it or any order, writ, injunction or decree of any
court or governmental authority against it or by which it or any of its
properties is bound or any indenture, mortgage or contract or other
agreement or instrument to which it is a party or by which it or any of
its properties is bound, or constitutes or will constitute a default
thereunder or results or will result in the imposition of any lien upon
any of its properties; and
(f) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (i) would
adversely affect the ability of it to perform its obligations under this
Agreement or (ii) would call into question or challenge the validity of
this Agreement or the enforceability hereof in accordance with the terms
hereof, nor is the Depositary or the Escrow Agent in default with respect
to any order of any court, governmental authority, arbitration board or
administrative agency so as to adversely affect its ability to perform its
obligations under this Agreement.
SECTION 6. Transfer. Neither party hereto shall be entitled to
assign or otherwise transfer this Agreement (or any interest herein) and any
purported assignment in violation thereof shall be void. This Agreement shall be
binding upon the parties hereto and their respective successors.
SECTION 7. Amendment, Etc. This Agreement may not be amended, waived
or otherwise modified except by an instrument in writing signed by the party
against whom the amendment, waiver or other modification is sought to be
enforced and by the Pass Through Trustee.
-4-
<PAGE>
SECTION 8. Notices. Unless otherwise expressly provided herein, any
notice or other communication under this Agreement shall be in writing
(including by facsimile) and shall be deemed to be given and effective upon
receipt thereof. All notices shall be sent to (x) in the case of the Depositary,
to First Union Capital Markets Group, One First Union Center, 301 South College
Street, Charlotte, North Carolina, 28288 Attention: Peter J. Lancos, Telecopier:
704-383-9139 or (y) in the case of the Escrow Agent, to First Union Trust
Company, National Association, One Rodney Square, 920 King Street, Suite 102,
Wilmington, Delaware 19801, Attention: Corporate Trust Administration,
Telecopier: 302-888-7544, in each case, with a copy to the Pass Through Trustee,
The First National Bank of Maryland, 25 South Charles Street, Mail Code 101-591,
Baltimore, Maryland 21201, Attention: Corporate Trust Department (Telecopier:
(410) 244-4236) and to Midway, Midway Airlines Corporation, 300 W. Morgan
Street, Suite 1200, Durham, North Carolina 27701, Attention: General Counsel
(Telecopier: (919) 956-7568) (or at such other address as any such party may
specify from time to time in a written notice to the parties hereto). On or
prior to the execution of this Agreement, the Escrow Agent has delivered to the
Depositary a certificate containing specimen signatures of the representatives
of the Escrow Agent who are authorized to give notices and instructions with
respect to this Agreement. The Depositary may conclusively rely on such
certificate until the Depositary receives written notice from the Escrow Agent
to the contrary.
SECTION 9. Obligations Unconditional. The Depositary hereby
acknowledges and agrees that its obligation to repay the Deposit together with
interest thereon as provided herein is absolute, irrevocable and unconditional
and constitutes a full recourse obligation of the Depositary enforceable against
it to the full extent of all of its assets and properties.
SECTION 10. Entire Agreement. This Agreement (including all
attachments hereto) sets forth all of the promises, covenants, agreements,
conditions and understandings between the Depositary and the Escrow Agent with
respect to the subject matter hereof and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 11. Governing Law. This Agreement, and the rights and
obligations of the Depositary and the Escrow Agent with respect to the Deposits,
shall be governed by, and construed in accordance with, the laws of the State of
New York and subject to the provisions of Regulation D of the Board of Governors
of the Federal Reserve System (or any successor), as the same may be modified
and supplemented and in effect from time to time.
SECTION 12. Waiver of Jury Trial Right. EACH OF THE DEPOSITARY AND
THE ESCROW AGENT ACKNOWLEDGES AND ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS
RIGHT TO A TRIAL BY JURY.
SECTION 13. Counterparts. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.
-5-
<PAGE>
IN WITNESS WHEREOF, the Escrow Agent and the Depositary have caused
this Deposit Agreement to be duly executed as of the day and year first above
written.
FIRST UNION TRUST COMPANY
as Escrow Agent
By: /s/ Edward L. Truitt, Jr.
-------------------------------------
Name: Edward L. Truitt, Jr.
Title: Vice President
FIRST UNION NATIONAL BANK
By: /s/ Bruce M. Young
-------------------------------------
Name: Bruce M. Young
Title: Vice President
-6-
<PAGE>
EXHIBIT A
NOTICE OF PURCHASE WITHDRAWAL
First Union National Bank
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Peter J. Lancos
Telecopier: 704-383-9139
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class D) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary") and to Account No. 2080000623036 (the "Account").
In accordance with Section 2.3(a) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of $________________ from the
Account.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit to The First National Bank of Maryland, ABA No. 052000113, Account
No. 090-02-764, Attention: Credit Trust Receipts, Reference: Midway EETC on
__________, 199_, upon the telephonic request of a representative of the Pass
Through Trustee.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
as Escrow Agent
By ______________________________________
Name:
Title:
Dated: _______ __, 199_
<PAGE>
EXHIBIT B
NOTICE OF FINAL WITHDRAWAL
First Union National Bank
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Peter J. Lancos
Telecopier: 704-383-9139
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class D) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary").
In accordance with Section 2.3(b) of the Deposit Agreement, the
undersigned hereby requests the withdrawal of the entire amount of the Deposit.
The undersigned hereby directs the Depositary to pay the proceeds of
the Deposit and accrued interest thereon to the Paying Agent at The First
National Bank of Maryland, ABA No. 052000113, Account No. 040-02-764, Attention:
Credit Trust Receipts, Reference: Midway EETC.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
as Escrow Agent
By ______________________________________
Name:
Title:
Dated: _________, 199_
<PAGE>
EXHIBIT C
INCREASE NOTICE
First Union National Bank
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Peter J. Lancos
Telecopier: 704-383-9139
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class D) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary").
The undersigned hereby notifies the Depositary that the Applicable
Rate shall increase by .50% per annum, effective __________, 199__.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
as Escrow Agent
By ______________________________________
Name:
Title:
Dated: _________, 199_
<PAGE>
EXHIBIT D
RESCISSION NOTICE
First Union National Bank
One First Union Center
301 South College Street
Charlotte, NC 28288
Attention: Peter J. Lancos
Telecopier: 704-383-9139
Ladies and Gentlemen:
Reference is made to the Deposit Agreement (Class D) dated as of
August 13, 1998 (the "Deposit Agreement") between First Union Trust Company,
National Association, as Escrow Agent, and First Union National Bank, as
Depositary (the "Depositary").
The undersigned hereby notifies the Depositary that the Applicable
Rate shall decrease by .50% per annum, effective __________, 199__.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
as Escrow Agent
By ______________________________________
Name:
Title:
Dated: _________, 199_
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS A CERTIFICATES
Dated as of August 13, 1998
between
THE FIRST NATIONAL BANK OF MARYLAND
not in its individual capacity but solely as Subordination Agent,
as agent and trustee for the
Midway Airlines 1998-1A Pass Through Trust,
as Borrower
and
ABN AMRO BANK N.V., CHICAGO BRANCH
as Liquidity Provider
Relating to
Midway Airlines 1998-1A Pass Through Trust
7.14% Midway Airlines Pass Through Certificates,
Series 1998-1A
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms.................................... 1
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.1 The Advances............................................. 7
Section 2.2 Making the Advances...................................... 8
Section 2.3 Fees..................................................... 9
Section 2.4 Reduction or Termination of the Commitment............... 10
Section 2.5 Repayments of Interest Advances or the Final Advance..... 10
Section 2.6 Repayments of Downgrade Advances and Non-Extension
Advances................................................. 11
Section 2.7 Payments to the Liquidity Provider Under the
Intercreditor Agreement.................................. 12
Section 2.8 Book Entries............................................. 12
Section 2.9 Payments from Available Funds Only....................... 12
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.1 Increased Costs.......................................... 13
Section 3.2 Capital Adequacy......................................... 14
Section 3.3 Payments Free of Deductions.............................. 15
Section 3.4 Payments................................................. 16
Section 3.5 Computations............................................. 16
Section 3.6 Payment on Non-Business Days............................. 16
Section 3.7 Interest................................................. 16
Section 3.8 Replacement of Borrower.................................. 17
Section 3.9 Funding Loss Indemnification............................. 18
Section 3.10 Illegality............................................... 18
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Effectiveness of Section 2.1..... 18
Section 4.2 Conditions Precedent to Borrowing........................ 20
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ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of the Borrower.................... 20
Section 5.2 Negative Covenants of the Borrower....................... 21
ARTICLE VI
FINAL ADVANCE
Section 6.1 Final Advance............................................ 21
ARTICLE VII
MISCELLANEOUS
Section 7.1 Amendments, Etc.......................................... 22
Section 7.2 Notices, Etc............................................. 22
Section 7.3 No Waiver; Remedies...................................... 23
Section 7.4 Further Assurances....................................... 23
Section 7.5 Indemnification; Survival of Certain Provisions.......... 23
Section 7.6 Liability of the Liquidity Provider...................... 23
Section 7.7 Costs, Expenses and Taxes................................ 24
Section 7.8 Binding Effect; Participation............................ 25
Section 7.9 Severability............................................. 26
Section 7.10 GOVERNING LAW............................................ 26
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity....................................... 26
Section 7.12 Execution in Counterparts................................ 27
Section 7.13 Entirety................................................. 27
Section 7.14 Headings; Section References............................. 27
Section 7.16 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE
ADVANCES................................................. 28
ANNEX I - Interest Advance Notice of Borrowing
ANNEX II - Downgrade Advance Notice of Borrowing
ANNEX III - Notice of Replacement Borrower
ANNEX IV - Notice of Automatic Reduction of Commitment
ANNEX V - Non-Extension Advance Notice of Borrowing
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IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS A CERTIFICATES
IRREVOCABLE REVOLVING CREDIT AGREEMENT, CLASS A CERTIFICATES, dated
as of August 13, 1998 between THE FIRST NATIONAL BANK OF MARYLAND, a national
bank 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 ABN AMRO
BANK N.V., acting through its Chicago 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, a Downgrade
Advance, a Non-Extension Advance or an Unpaid Advance, as the case may be.
"Applicable Liquidity Rate" has the meaning assigned to such term in
3.7(g).
"Applicable Margin" means (x) with respect to any Downgrade Advance
(other than an Applied Downgrade Advance) or Non-Extension Advance (other
than an Applied Non-Extension Advance), .60% per annum and (y) with
respect
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to any other Advance (including without limitation, an Applied Downgrade
Advance and an Applied Non-Extension Advance) 3.00% per annum.
"Applied Downgrade Advance" has the meaning assigned to such term in
Section 2.6(a).
"Applied Non-Extension Advance" has the meaning assigned to such
term in Section 2.6(a).
"Assignment and Assumption Agreement" means the Assignment and
Assumption to be entered into between the Borrower and the trustee of the
Successor Trust, substantially in the form of Exhibit E to the Pass
Through Trust Agreement 1998-1A-O, dated as of the date hereof, relating
to the Class A Trust.
"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, a Non-Extension 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 (a)
the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New
York, or if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day for such transactions
received by the Liquidity Provider from three Federal funds brokers of
recognized standing selected by it, plus (b) one-quarter of one percent
(1/4 of 1%).
"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
Charlotte, North Carolina, Chicago, Illinois, New York, New York or, so
long as any Class A Certificate is outstanding, the city and state in
which the Class A
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Trustee maintains its Corporate Trust Office or receives or disburses
funds, 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, $6,695,620, 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.
"Excluded Taxes" means (i) taxes imposed on the overall net income
of the Liquidity Provider or of its Lending Office by the jurisdiction
where such Liquidity Provider's principal office or such Lending Office is
located, and (ii) Excluded Withholding Taxes.
"Excluded Withholding Taxes" means (i) withholding Taxes imposed by
the United States except to the extent that such United States withholding
Taxes are imposed as a result of any change in applicable law (excluding
from change in applicable law for this purpose a change in an applicable
treaty or other change in law affecting the applicability of a treaty)
after the date hereof, or in the case of a successor Liquidity Provider
(including a transferee of an Advance) or Lending Office, after the date
on which such successor Liquidity Provider obtains its interest or on
which the Lending Office is changed, and (ii) any withholding Taxes
imposed by the United States which are imposed or increased as a result of
the Liquidity Provider failing to deliver to the Borrower any certificate
or document (which certificate or document in the good faith judgment of
the Liquidity Provider it is legally entitled to provide) which is
reasonably requested by the Borrower to establish that payments under this
Agreement are exempt from (or entitled to a reduced rate of) withholding
Tax.
"Expenses" means liabilities, obligations, damages, settlements,
penalties, claims, actions, suits, costs, expenses and disbursements
(including, without limitation, reasonable fees and disbursements of legal
counsel and costs of investigation), provided that Expenses shall not
include any Taxes.
"Expiry Date" means August 12, 1999, initially, or any date to which
the Expiry Date is extended pursuant to Section 2.10.
"Final Advance" means an Advance made pursuant to Sections 2.2(c).
"Intercreditor Agreement" means the Intercreditor Agreement dated
the date hereof, among the Trustees, the Liquidity Provider, the liquidity
provider
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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 third Business Day following
either (x) the Liquidity Provider's receipt of the Notice of
Borrowing for such LIBOR Advance (or, in the case of an
Non-Applied Downgrade Advance, the period beginning on the
Expiry Date) or (y) the withdrawal of funds from the Class A
Cash Collateral Account for the purpose of paying interest on
the Class A Certificates as contemplated by Section 2.6(a)
hereof and, in either case, ending on the next Regular
Distribution Date (or ending, in the case of an Interest
Period applicable to any Non-Applied Downgrade Advance or
Non-Applied Non-Extension Advance, on the numerically
corresponding day in the sixth calendar month after the first
day of the applicable Interest Period and/or on the next
Regular Distribution Date, as Midway may select by providing
notice thereof to the Borrower and the Liquidity Provider no
later than three Business Days prior to the commencement of
such Interest Period, provided that if Midway shall not
provide such a notice at least three Business Days prior to
the commencement of such Interest Period, then Midway shall be
deemed to have selected and Interest Period 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 (or ending, in the case of an
Interest Period applicable to any Non-Applied Downgrade
Advance or Non-Applied Non-Extension Advance, on the
numerically corresponding day in the sixth calendar month
after the first day of the applicable Interest Period and/or
on the next Regular Distribution Date, as Midway may select by
providing notice thereof to the Borrower and the Liquidity
Provider no later than three Business Days prior to the
commencement of such Interest Period, provided that if Midway
shall not provide such a notice at least three Business Days
prior to the commencement of such Interest Period, then Midway
shall be deemed to have selected an Interest Period ending on
the next Regular Distribution Date;
provided, however, that (I) if a Non-Applied Advance which is a LIBOR
Advance becomes an Applied Downgrade Advance or Applied Non-Extension
Advance, as
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the case may be, the Interest Period then applicable to such Non-Applied
Advance shall be applicable to such Applied Downgrade Advance or Applied
Non-Extension Advance, as the case may be, and (II), if (x) the Final
Advance shall have been made, or (y) other outstanding Advances shall have
been converted into the Final Advance, then the Interest Periods shall be
successive periods of one month beginning on the third Business Day
following the Liquidity Provider's receipt of the Notice of Borrowing for
such Final Advance (in the case of clause (x) above) or the Regular
Distribution Date following such conversion (in the case of clause (y)
above).
"Lending Office" means the lending office of the Liquidity Provider,
presently located at 135 South LaSalle Street, Chicago, Illinois 60674, or
such other lending office as the Liquidity Provider from time to time
shall notify the Borrower as its lending office hereunder; provided that
the Liquidity Provider shall not change its Lending Office to a Lending
Office outside the United States of America except in accordance with
Section 3.1, 3.2 or 3.3 hereof.
"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 average
(rounded upward, if necessary, to the next higher 1/16 of 1%) of the rates
per annum at which deposits in dollars are offered to major 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 an amount
approximately equal to 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.
"Liquidity Event of Default" means the occurrence of either the
following: (a) 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 or (b) a Midway 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
Preamble to this Agreement.
"Non-Applied Advance" means any Non-Applied Non-Extension Advance or
Non-Applied Downgrade Advance.
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"Non-Applied Downgrade Advance" means any Downgrade Advance, other
than an Applied Downgrade Advance.
"Non-Applied Non-Extension Advance" means any Non-Extension Advance,
other than an Applied Non-Extension Advance.
"Non-Excluded Tax" has the meaning specified in Section 3.3.
"Non-Extension Advance" means an Advance made pursuant to Section
2.2(d).
"Notice of Borrowing" has the meaning specified in Section 2.2(e).
"Notice of Replacement Borrower" has the meaning specified in
Section 3.8.
"Offering Memorandum" means the Offering Memorandum dated August 6,
1998 of Midway relating to the Certificates, as such Offering Memorandum
may be amended or supplemented.
"Participant" has the meaning assigned to such term in Section
7.8(b).
"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.
"Related Indemnitee" means, with respect to any Liquidity
Indemnitee, its director, officer, employee, agent, affiliate or employer.
"Replenishment Amount" has the meaning assigned to such term in
Section 2.6(b).
"Required Amount" means, for any day, the sum of the aggregate
amount of interest, calculated at the rate per annum equal to the Stated
Interest Rate for the Class A Certificates (taking into account the
possible increase in the Stated Rate as a result of a failure of a
Registration Event failing to occur), that would be payable on the Class A
Certificates on each of the three successive semi-annual Regular
Distribution Dates immediately following such day or, if such day is a
Regular Distribution Date, on such day and the succeeding two semi-annual
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.
"Successor Trust" means Midway Airlines Pass Through Trust
1998-1A-S.
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"Termination Date" means the earliest to occur of the following: (i)
the Expiry Date; (ii) the date on which the Borrower delivers to the
Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that all of the Class A Certificates have been paid
in full (or provision has been made for such payment in accordance with
the Intercreditor Agreement and the Trust Agreements) or are otherwise no
longer entitled to the benefits of this Agreement; (iii) the date on which
the Borrower delivers to the Liquidity Provider a certificate, signed by a
Responsible Officer of the Borrower, certifying that a Replacement
Liquidity Facility has been substituted for this Agreement in full
pursuant to Section 3.6(e) of the Intercreditor Agreement; (iv) the date
on which the Liquidity Provider makes the Final Advance; and (v) the date
on which no Advance is or may (including by reason of reinstatement as
herein provided) become available for a Borrowing hereunder.
"Unpaid Advance" has the meaning assigned to such term in Section
2.5.
(b) Terms Defined in the Intercreditor Agreement. For all purposes
of this Agreement, the following terms shall have the respective meanings
assigned to such terms in the Intercreditor Agreement:
"ABN AMRO Fee Letter", "Certificates", "Class A Certificate", "Class A
Certificateholder", "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", "Corporate Trust Office", "Deposits", "Distribution
Date", "Equipment Notes", "Indenture", "Initial Purchaser", "Investment
Earnings", "Liquidity Facility", "Midway", "Midway Bankruptcy Event",
"Moody's", "Note Purchase Agreement", "Operative Agreements",
"Participation Agreements", "Performing Equipment Note", "Person", "Pool
Balance", "Purchase Agreement", "Rating Agencies", "Registration Event",
"Regular Distribution Dates", "Replacement Liquidity Facility",
"Responsible Officer", "Scheduled Payment", "Special Payment", "Standard &
Poor's", "Stated Interest Rate", "Subordination Agent", "Taxes",
"Threshold Rating", "Transfer", "Triggering Event", "Trust Agreement",
"Trustee" and "Written Notice".
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.1 The Advances. The Liquidity Provider hereby irrevocably
agrees, on the terms and conditions hereinafter set forth, to make Advances to
the Borrower from time to time on any Business Day during the period from the
Effective Date until 12:00 Noon (New York City time) on the Expiry Date (unless
the obligations of the Liquidity Provider shall be earlier terminated in
accordance with the terms of Section 2.4(b)) in an aggregate amount at any time
outstanding not to exceed the Commitment.
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Section 2.2 Making the Advances. (a) Interest Advances shall be made
in one or more Borrowings by delivery to the Liquidity Provider of one or more
written and completed Notices of Borrowing in substantially the form of Annex I
attached hereto, signed by a Responsible Officer of the Borrower, in an amount
not exceeding the Available Commitment at such time and shall be used solely for
the payment when due of interest on the Class A Certificates at the Stated
Interest Rate therefor in accordance with Section 3.6(a) of the Intercreditor
Agreement. Each Interest Advance made hereunder shall automatically reduce the
Available Commitment and the amount available to be borrowed hereunder by
subsequent Advances by the amount of such Interest Advance (subject to
reinstatement as provided in the next sentence). Upon repayment to the Liquidity
Provider in full of the amount of any Interest Advance made pursuant to this
Section 2.2(a), together with accrued interest thereon (as provided herein), the
Available Commitment shall be reinstated by the amount of such repaid Interest
Advance; provided, however, that the Available Commitment shall not be so
reinstated at any time after (i) the acceleration of all the outstanding
Equipment Notes or (ii)(A) a Triggering Event shall have occurred and (B) there
exists a Performing Note Deficiency.
(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 previously 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 equal to 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) and Section 3.6(f) of
the Intercreditor Agreement.
(c) A Final Advance may 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 in an amount equal to the
Available Commitment at such time, and shall be used to fund the Class A Cash
Collateral Account (in accordance with Section 3.6(f) of the Intercreditor
Agreement).
(d) A Non-Extension Advance shall be made in a single Borrowing if
this Agreement is not extended in accordance with Section 3.6(d) of the
Intercreditor Agreement (unless a Replacement Liquidity Facility to replace this
Agreement shall have been delivered to the Borrower in accordance with said
Section 3.6(d) within the time period specified in such Section) by delivery to
the Liquidity Provider of a written and completed Notice of Borrowing in
substantially the form of Annex V attached hereto, signed by a Responsible
Officer of the Borrower, in an amount equal to 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(d) and Section 3.6(f) of the Intercreditor
Agreement.
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(e) Each Borrowing (other than the making of a Final Advance) shall
be made on notice in writing (a "Notice of Borrowing") in substantially the form
required by Section 2.2(a), 2.2(b) or 2.2(d), as the case may be, given by the
Borrower to the Liquidity Provider not later than 1 p.m. (New York City time) on
the second Business Day prior to the day of the proposed Borrowing; provided
that, a Borrowing in respect of an Interest Advance pursuant to Section 2.2(a)
shall be made on such notice to the Liquidity Provider given not later than 1
p.m. (New York City time) on the Business Day of such Borrowing. Upon
satisfaction of the conditions precedent set forth in Section 4.2 with respect
to a requested Borrowing, the Liquidity Provider shall, before 12:00 Noon (New
York City time) on the date of such Borrowing (or, in the case of a Borrowing in
respect of an Interest Advance pursuant to Section 2.2(a), before 3 p.m. (New
York Cite time) on the date of such Borrowing) or on such later Business Day
specified by the Borrower in such Notice of Borrowing, make available to the
Borrower, in U.S. dollars and in immediately available funds, the amount of such
Borrowing to be paid to the Borrower in accordance with its payment
instructions. If a Notice of Borrowing is delivered by the Borrower in respect
of any Borrowing after 1 p.m. (New York City time) on a Business Day, the
Liquidity Provider shall, before 12:00 Noon (New York City time) on the third
Business Day following the day of receipt of such Notice of Borrowing (or, in
the case of a Borrowing in respect of an Interest Advance pursuant to Section
2.2(a), on the next Business Day following receipt of such notice) or on such
later Business Day specified by the Borrower in such Notice of Borrowing, make
available to the Borrower, in U.S. dollars and in immediately available funds,
the amount of such Borrowing to be paid to the Borrower in accordance with its
payment instructions. Payments of proceeds of a Borrowing shall be made by wire
transfer of immediately available funds to the Borrower in accordance with such
wire transfer instructions as the Borrower shall furnish from time to time to
the Liquidity Provider for such purpose. Each Notice of Borrowing shall be
irrevocable and binding on the Borrower.
(f) 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) Subject to the provisions of Section 2.9, the
Borrower agrees to pay to the Liquidity Provider an advisory fee in the amount
set forth in the ABN AMRO Fee Letter. Such fee shall be payable on the Effective
Date. Nothing contained in this Section 2.3(a) shall require the Borrower to pay
any amount
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under this Section 2.3(a) other than to the extent the Borrower shall have funds
available therefor.
(b) Subject to the provisions of Section 2.9, the Borrower shall
pay, or shall cause to be paid, to the Liquidity Provider, a fee per annum, as
set forth in the ABN AMRO Fee Letter on the average daily Available Commitment
from the Effective Date to the earlier of the date on which a Downgrade Advance
or Non-Extension Advance is made and the date on which the Commitment
terminates. Such fee shall be payable in arrears on each Regular Distribution
Date. Nothing contained in this Section 2.3(b) shall require the Borrower to pay
any amount under this Section 2.3(b) other than to the extent the Borrower shall
have funds available therefor.
Section 2.4 Reduction or Termination of the Commitment. (a)
Automatic Reductions. Promptly following each date on which the Required Amount
is reduced as a result of a reduction in the Pool Balance of the Class A
Certificates or otherwise, the Commitment shall automatically be reduced to an
amount equal to such reduced Required Amount (as calculated by the Borrower).
The Borrower shall give notice of any such automatic reduction of the Commitment
(substantially in the form of Annex IV hereto) to the Liquidity Provider (with a
copy to Midway) 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,
Non-Extension 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 2.6, 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 in accordance with Section 2.6 hereof. The Borrower and the Liquidity
Provider agree that the repayment in full of each Interest Advance and the Final
Advance on the date such Interest Advance or the Final Advance is made and each
Applied Downgrade Advance on the date it becomes an Applied Downgrade Advance is
intended to be a contemporaneous exchange for new value given to the Borrower by
the Liquidity Provider.
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Section 2.6 Repayments of Downgrade Advances and Non-Extension
Advances. (a) Amounts advanced hereunder in respect of a Downgrade Advance or a
Non-Extension Advance shall be deposited in the Class A Cash Collateral Account,
and invested and withdrawn from the Class A Cash Collateral Account, as set
forth in Sections 3.6(c), (d) and (f) of the Intercreditor Agreement. Subject to
Section 2.9, 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 or a Non-Extension Advance, interest on
the principal amount of any such Downgrade Advance or a Non-Extension Advance as
provided in Section 3.7; provided, however, that amounts in respect of a (i) any
distribution to the Liquidity Provider of Investment Earnings pursuant to
Section 3.6(f) of the Intercreditor Agreement shall constitute a payment of
interest due on such Downgrade Advance or Non-Extension Advance in the amount of
such Investment Earnings and (ii) amounts in respect of a Downgrade Advance or
Non-Extension Advance withdrawn from the Class A Cash Account for the purpose of
paying interest on the Class A Pass Through Certificates in accordance with
Section 3.6(f) of the Intercreditor Agreement (the amount of any such withdrawal
being an "Applied Downgrade Advance" or "Applied Non-Extension Advance,"
respectively), shall be treated as an Interest Advance under this Agreement for
purposes of determining the Applicable Liquidity Rate for interest payable
thereon; provided further, however, that if following the making of a Downgrade
Advance or Non-Extension Advance, the Liquidity Provider elects by notice to the
Borrower to convert such Advance into a Final Advance, such Downgrade Advance or
Non-Extension Advance, as the case may be, shall thereafter be treated as a
Final Advance under this Agreement for purposes of determining the Applicable
Liquidity Rate for interest payable thereon. 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 or
Non-Extension 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) At any time when an Applied Downgrade Advance or Applied
Non-Extension Advance (or any portion thereof) is outstanding, upon the deposit
in the Class A Cash Collateral Account of any amount pursuant to clause "third"
of Section 2.4(b)(i), clause "third" of Section 3.2 or clause "fourth" of
Section 3.3 of the Intercreditor Agreement (any such amount being a
"Replenishment Amount") for the purpose of replenishing the balance thereof up
to the Required Amount at such time, (i) the aggregate outstanding principal
amount of all Applied Downgrade Advances or Applied Non-Extension Advances, as
the case may be, shall be automatically reduced by the amount of such
Replenishment Amount and (ii) the principal amount of the outstanding Downgrade
Advance or Non-Extension Advance, as the case may be, shall be automatically
increased by the amount of such Replenishment Amount.
(c) 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
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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, including but not limited to payments
pursuant to Sections 2.3, 2.5, 2.6, 3.1, 3.2, 3.9, 7.5 and 7.7 hereof, shall be
made only from amounts received by it that constitute Scheduled Payments or
Special Payments or payments under Sections 6.01 and 7.01 of the Participation
Agreements 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 incurred under this Agreement except as expressly
provided in Article VI of the Intercreditor 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.
Section 2.10 Extension of the Expiry Date; Non-Extension Advance. No
earlier than the 60th day and no later than the 40th day prior to the then
effective Expiry Date (unless such Expiry Date is on or after the date that is
15 days after the Final Maturity Date for the Class A Certificates), the
Borrower shall request that the Liquidity Provider extend the Expiry Date for a
period of 364 days after the then effective Expiry Date(unless the obligations
of the Liquidity Provider are earlier
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terminated in accordance with the terms hereof). The Liquidity Provider shall
advise the Borrower, no earlier than 40 days and no later then 25 days prior to
the then effective Expiry Date, whether, in its sole discretion, it agrees to so
extend the Expiry Date. If the Liquidity Provider advises the Borrower on or
before the 25th day prior to the Expiry Date then in effect that such Expiry
Date shall not be so extended, or fails to irrevocably and unconditionally
advise the Borrower on or before the 25th day prior to the Expiry Date then in
effect that such Expiry Date shall be so extended (and, in each case, if the
Liquidity Provider shall not have been replaced in accordance with Section
3.6(e) of the Intercreditor Agreement), the Borrower shall be entitled on and
after such 25th day (but prior to the then effective Expiry Date) to request a
Non-Extension Advance in accordance with Section 2.2(d) hereof and Section
3.6(d) of the Intercreditor Agreement.
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.1 Increased Costs. If the Liquidity Provider shall
reasonably determine that (a) any change, after the Effective Date, 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 or loan commitments made by, the Liquidity Provider or (ii) impose on the
Liquidity Provider any other condition regarding this Agreement or any Advance
and (b) the result of any event referred to in the preceding clause (i) or (ii)
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 among similarly
effected credit and funding facilities), or to reduce the amount of any sum
received or receivable by the Liquidity Provider under this Agreement with
respect thereto, then, upon demand by the Liquidity Provider (such demand to be
made as soon as practicable, but not later than 30 days after a Responsible
Officer of the Liquidity Provider obtains or reasonably should have obtained
knowledge of any event referred to in clause (i) or (ii) above), and subject to
Section 2.9, 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; provided that if such demand for payment is made
after such 30-day period, the Borrower shall be obligated to pay such additional
amounts only with respect to such increased cost or reduction actually incurred
or effected on or after the 30th day prior to the date of such demand. A
Certificate as to such increased cost or reduction (which shall set forth in
reasonable detail the basis for such increased cost on reduction) incurred by
the Liquidity Provider as a result of any event mentioned in clause (i) or
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(ii) above, prepared in reasonable detail and submitted by the Liquidity
Provider to the Borrower, shall be conclusive, absent manifest error, as to the
amount thereof.
The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory 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. The Liquidity Provider agrees that if it shall make a demand for
payment of additional amounts under this Section the Borrower shall have the
right to obtain a Replacement Liquidity Facility in replacement of this
Agreement in accordance with Section 3.6(e) of the Intercreditor Agreement
provided that such replacement would eliminate the obligation of the Borrower to
pay such additional amounts.
Section 3.2 Capital Adequacy. If the Liquidity Provider shall
reasonably determine that the adoption, after the Effective Date, of any
applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change, after the Effective Date, in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Liquidity Provider (or its head office) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has the effect of reducing the
rate of return on the Liquidity Provider's capital as a consequence of issuing
or maintaining its commitment hereunder or its funding or maintaining Advances
to a level below that which the Liquidity Provider could have achieved but for
such adoption, change or compliance (taking into consideration the Liquidity
Provider's policies with respect to capital adequacy), then, upon demand by the
Liquidity Provider (such demand to be made as soon as is practicable, but not
later than 30 days after a Responsible Officer of the Liquidity Provider obtains
or should reasonably have obtained knowledge of any event referred to above in
this Section 3.2), and subject to Section 2.9, the Borrower shall pay to the
Liquidity Provider, from time to time as specified by the Liquidity Provider,
additional amounts (which amounts shall be determined by the Liquidity
Provider's reasonable allocations of the aggregate of such amounts resulting
from such event among similarly effected credit and funding facilities) 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; provided that, if such demand for payment is made after
such 30 day period, the Borrower shall be obligated to pay such amounts only
with respect to such reduction actually effected on or after the 30th day prior
to the date of such demand. 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.
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The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any amount payable under this Section 3.2 that may
thereafter accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous in any material respect to the Liquidity
Provider. The Liquidity Provider agrees that if it shall make a demand for
payment of additional amounts under this Section the Borrower shall have the
right to obtain a Replacement Liquidity Facility in replacement of this
Agreement in accordance with Section 3.6(e) of the Intercreditor Agreement
provided that such replacement would eliminate the obligation of the Borrower to
pay such additional amounts.
Section 3.3 Payments Free of Deductions. (a) 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 Excluded Taxes (such non-excluded
taxes being referred to herein, collectively, as "Non-Excluded Taxes "are,
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) interest or any other such amounts payable under this
Agreement at the rates or in the amounts specified in 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 such additional amounts that may thereafter
accrue and would not, in the reasonable judgment of the Liquidity Provider, be
otherwise disadvantageous to the Liquidity Provider. From time to time upon the
reasonable request of the Borrower, the Liquidity Provider agrees to provide to
the Borrower two original Internal Revenue Service Forms 1001 or 4224, as
appropriate, or any successor or other form prescribed by the Internal Revenue
Service, certifying that the Liquidity Provider is exempt from or entitled to a
reduced rate of United States withholding tax on payments pursuant to this
Agreement.
(b) All payments (including, without limitation, Advances) made by
the Liquidity Provider under this Agreement shall be made free and clear of, and
without reduction for or on account of, any Taxes. If any Taxes are required to
be withheld or deducted from any amounts payable to the Borrower under this
Agreement, the Liquidity Provider shall (i) within the time prescribed therefor
by applicable law pay to the appropriate governmental or taxing authority the
full amount of any such Taxes (and any additional Taxes in respect of the
payment required under clause (ii) hereof) and make such reports or returns in
connection therewith at the time or times and in the manner prescribed by
applicable law, and (ii) pay to the Borrower an additional amount which (after
deduction of all such Taxes) will be sufficient to yield to the Borrower the
full amount which would have been received by it had no such
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withholding or deduction been made. Within 30 days after the date of each
payment hereunder, the Liquidity Provider shall furnish to the Borrower the
original or a certified copy of (or other documentary evidence of) the payment
of the Taxes applicable to such payment.
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 ABN AMRO BANK, New York, New
York, ABA No. 020009580, for the account of ABN AMRO BANK, Chicago Branch,
Account No. 650-001-1789-41, Attention: Midway Airlines Corporation.
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 shall be stated to be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day and no additional
interest shall be due as a result (and if so made, shall be deemed to have been
made when due). If any payment in respect of interest on an Advance is so
deferred to the next succeeding Business Day, such deferral shall not delay the
commencement of the next Interest Period for such Advance (if such Advance is a
LIBOR Advance) or reduce the number of days for which interest will be payable
on such Advance on the next interest payment date for such Advance.
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 (or, in the case of an Applied Downgrade
Advance or an Applied Non-Extension Advance, from and including the date on
which the amount thereof was withdrawn from the Class A Cash Collateral Account
to pay interest on the Class A Certificates) 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
or such other amount as in effect 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
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the maximum rate permitted by applicable law, then any subsequent reduction in
such interest rate will not reduce the rate of interest payable pursuant to this
Section 3.7 below the maximum rate permitted by applicable law until the total
amount of interest accrued equals the amount of interest that would have accrued
if such otherwise applicable interest rate as set forth in this Section 3.7 had
at all times been in effect. Nothing contained in this Section 3.7 shall require
the Borrower to pay any amount under this Section 3.7 other than to the extent
the Borrower shall have funds available therefor.
(b) Each Advance (other than Non-Applied Advances) 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 until the last day of its Interest Period
except as provided in Section 3.10.
(c) Each LIBOR Advance shall bear interest during each Interest
Period at a per annum rate equal to the LIBOR Rate for such Interest Period plus
the Applicable Margin for such LIBOR Advance, payable in arrears on the last day
of such Interest Period and, in the event of the payment of principal of such
LIBOR Advance on a day other than such last day, on the date of such payment (to
the extent of interest accrued on the amount of principal repaid).
(d) Each Base Rate Advance shall bear interest at a per annum rate
equal to the Base Rate plus the Applicable Margin for such Base Rate Advance,
payable in arrears on each Regular Distribution Date and, in the event of the
payment of principal of such Base Rate Advance on a day other than a Regular
Distribution Date, on the date of such payment (to the extent of interest
accrued on the amount of principal repaid).
(e) [Intentionally Omitted.]
(f) 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.
(g) Each change in the Base Rate shall become effective immediately.
The rates of interest specified in this Section 3.7 with respect to any Advance
or other amount shall be referred to as the "Applicable Liquidity Rate".
Section 3.8 Replacement of Borrower. Subject to Section 5.2(b), from
time to time, upon the effective date and time specified in a written and
completed Notice of Replacement Borrower in substantially the form of Annex III
attached hereto (a "Notice of Replacement Borrower") delivered to the Liquidity
Provider by the then Borrower, the successor Borrower designated therein shall
be substituted for as the Borrower for all purposes hereunder.
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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 or convert, as the case
may be, a LIBOR Advance on the date for borrowing or conversion, as the
case may be, 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 also 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 also acceptable to Midway.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Effectiveness of Section 2.1.
Section 2.1 of this Agreement shall become effective on and as of the first date
(the "Effective Date") on which the following conditions precedent have been
satisfied or waived:
(a) The Liquidity Provider shall have received on or before the
Closing Date each of the following, each dated such date (except for those
documents
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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) Fully executed copies of each of the Operative
Agreements executed and delivered on or before the Closing Date
(other than this Agreement and the Intercreditor Agreement);
(iv) A copy of the Offering Memorandum 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 Baa1, Ba1, Ba3 and B2, respectively, and
from Standard & Poor's of not lower than A-, BBB-, BB- and B,
respectively;
(vi) An executed or certified copy of each document,
instrument, certificate and opinion delivered on or before the
Closing Date pursuant to the Class A Trust Agreement, the
Intercreditor Agreement and the other Operative Agreements;
(vii) Evidence that there shall have been made and shall be in
full force and effect, all filings, recordings and/or registrations,
and there shall have been given or taken any notice or other similar
action as may be reasonably necessary or, to the extent reasonably
requested by the Liquidity Provider, reasonably advisable, in order
to establish, perfect, protect and preserve the right, title and
interest, remedies, powers, privileges, liens and security interests
of, or for the benefit of, the Trustees and the Liquidity Provider
created by the Operative Agreements executed and delivered on or
before the Closing Date;
(viii) A letter from Midway agreeing to provide to the
Liquidity Provider the periodic financial reports referred to in
Section 8.04 of the Trust Agreements; and
(ix) Such other documents, instruments, opinions and approvals
(and, if requested by the Liquidity Provider, certified duplicates
or executed copies thereof) as the Liquidity Provider shall have
reasonably requested.
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(b) The following statement shall be true on and as of the Effective
Date: 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 Initial Purchaser under the Purchase Agreement shall
have been satisfied (except for any of such conditions precedent under the
Purchase Agreement that shall have been waived by the Initial Purchaser).
(e) The Borrower shall have received a certificate, dated the date
hereof, signed by a duly authorized representative of the Liquidity
Provider, certifying that all conditions precedent to the effectiveness of
Section 2.1 have been satisfied or waived (other than this Section
4.1(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.
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(b) Reporting Requirements. Furnish to the Liquidity Provider with
reasonable promptness, such information and data with respect to the
transactions contemplated by the Operative Agreements as from time to time
may be reasonably requested by the Liquidity Provider; and permit the
Liquidity Provider, upon reasonable notice, to inspect the Borrower's
books and records with respect to such transactions and to meet with
officers and employees of the Borrower to discuss such transactions.
Section 5.2 Negative Covenants of the Borrower. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Commitment
hereunder or the Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will not, without the written consent
of the Liquidity Provider:
(a) Amendments. Modify, amend or supplement, or give any consent to
any modification, amendment or supplement or make any waiver with respect
to, any provision of the Trust Agreements or the Intercreditor Agreement,
except for any supplemental agreement to the Trust Agreements provided for
in Section 9.1 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.
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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: THE FIRST NATIONAL BANK OF MARYLAND
25 South Charles Street
Baltimore, Maryland 21201
Attention: Corporate Trust Department
Telephone: (410) 244-4626
Telecopy: (410) 244-4236
Liquidity ABN AMRO BANK N.V.
Provider: Aerospace Department
135 South LaSalle Street, #760
Chicago, IL 60674-9135
Attention: Claudia Heldring
Telephone: (312) 904-2900
Telecopy: (312) 606-8428
with copy to:
ABN AMRO BANK N.V.
135 South LaSalle Street, #625
Chicago, IL 60674-9135
Attention: Loan Operations
Telephone: (312) 904-2836
Telecopy: (312) 606-8428
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,
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<PAGE>
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 Participation
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, upon
reasonable request, 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 6.01 and 7.01 of the Participation Agreements. In
addition, the Borrower agrees, subject to Section 2.9 hereof, to indemnify,
protect, defend and hold harmless the Liquidity Provider from, against and in
respect of, and shall pay on demand, all Expenses of any kind or nature
whatsoever, whether arising before, on or after the date hereof, that may be
imposed, incurred by or asserted against any Liquidity Indemnitee, in any way
relating to, resulting from, or arising out of or in connection with, this
Agreement, the Intercreditor Agreement, the Note Purchase Agreement or any
Participation Agreement; 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 to which it is a
party. The indemnities contained in such Sections 6.01 and 7.01 of the
Participation Agreements 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, employees, affiliates or directors
shall be liable or responsible for: (i) the use which may be made of the
Advances or any acts or
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<PAGE>
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) Neither the Liquidity Provider nor any of its officers,
employees,directors or affiliates shall be liable or responsible in any respect
for (i) any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with this
Agreement or any Notice of Borrowing delivered hereunder, or (ii) any action,
inaction or omission which may be taken by it in good faith, absent willful
misconduct or negligence (in which event the extent of the Liquidity Provider's
potential liability to the Borrower shall be limited as set forth in the
immediately preceding paragraph), in connection with this Agreement or any
Notice of Borrowing.
Section 7.7 Costs, Expenses and Taxes. The Borrower agrees, subject
to Section 2.9 hereof, to pay, or cause to be paid (A) on the Effective Date and
on such later date or dates on which the Liquidity Provider shall make demand,
all reasonable out-of-pocket costs and expenses of the Liquidity Provider in
connection with the preparation, negotiation, execution, delivery, filing and
recording of this Agreement, any other Operative Agreement and any other
documents which may be delivered in connection with this Agreement, including,
without limitation, the reasonable fees and expenses of outside counsel for the
Liquidity Provider and (B) on demand, all reasonable costs and expenses of the
Liquidity Provider (including reasonable counsel fees and expenses) in
connection with (i) the enforcement of this Agreement or any other Operative
Agreement, (ii) the modification or amendment of, or supplement to, this
Agreement or any other Operative Agreement or such other documents which may be
delivered in connection herewith or therewith (whether or not the same shall
become effective) or (iii) any action or proceeding relating to any order,
injunction, or other process or decree restraining or seeking to restrain the
Liquidity Provider from paying any amount under this Agreement, the
Intercreditor Agreement or any other Operative Document or otherwise affecting
the application of funds in the Cash Collateral Accounts. In addition, subject
to Section 2.9 hereof, 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
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<PAGE>
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; Participation. (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 (including, without
limitation, funding participations and participations in rights to receive
interest payments hereunder) and under the other Operative Agreements to such
Persons as the Liquidity Provider may in its sole discretion select, subject to
the requirement of Section 7.8(b). No such participation by the Liquidity
Provider, however, will relieve the Liquidity Provider of its obligations
hereunder. In connection with any participation or any proposed participation,
the Liquidity Provider may disclose to the participant or the proposed
participant any information that the Borrower is required to deliver or to
disclose to the Liquidity Provider pursuant to this Agreement. The Borrower
acknowledges and agrees that the Liquidity Provider's source of funds may derive
in part from its participants. Accordingly, references in this Agreement and the
other Operative Agreements to determinations, reserve and capital adequacy
requirements, increased costs, reduced receipts and the like as they pertain to
the Liquidity Provider shall be deemed also to include those of each of its
participants (subject, in each case, to the maximum amount that would have been
incurred by or attributable to the Liquidity Provider directly if the Liquidity
Provider, rather than the participant, had held the interest participated).
(b) If, pursuant to subsection (a) above, the Liquidity Provider
sells any participation to any bank or other entity (each, a "Participant"),
then, concurrently with the effectiveness of such participation, the Participant
shall (i) represent to the Liquidity Provider (for the benefit of the Liquidity
Provider and the Borrower) either (A) that it is incorporated under the laws of
the United States or a state thereof or (B) that under applicable law and
treaties, no taxes 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
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<PAGE>
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 (and required by applicable law) indicating that payments
hereunder are not subject to United States federal withholding tax, the Borrower
will withhold taxes as required by law from such payments at the applicable
statutory rate without any obligation to gross-up or indemnify pursuant to
Section 3.3.
(c) Notwithstanding the other provisions of this Section 7.8, the
Liquidity Provider may assign and pledge all or any portion of the Advances
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank, provided that any payment in respect of such assigned Advances made by the
Borrower to the Liquidity Provider in accordance with the terms of this
Agreement shall satisfy the Borrower's obligations hereunder in respect of such
assigned Advance to the extent of such payment. No such assignment shall release
the Liquidity Provider from its obligations hereunder.
Section 7.9 Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization 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;
Waiver of Immunity. (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 non-exclusive 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;
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<PAGE>
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form and mail), postage
prepaid, to each party hereto at its address set forth in Section 7.2, or
at such other address of which the Liquidity Provider shall have been
notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Borrower and the Liquidity Provider each warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER CANNOT BE MODIFIED ORALLY.
(c) The Liquidity Provider hereby waives any immunity it may have
from the jurisdiction of the courts of the United States or of any State and
waives any immunity any of its properties located in the United States may have
from attachment or execution upon a judgment entered by any such court under the
United States Foreign Sovereign Immunities Act of 1976 or any similar successor
legislation.
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.
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<PAGE>
Section 7.15 Transfer. The Liquidity Provider hereby acknowledges
and consents to the Transfer contemplated by the Assignment and Assumption
Agreement.
Section 7.16 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>
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.
THE FIRST NATIONAL BANK OF
MARYLAND, not in its individual capacity
but solely as Subordination Agent, as
Borrower
By: /s/ Robert D. Brown
---------------------------------------
Name: Robert D. Brown
Title: Assistant Vice President
ABN AMRO BANK N.V., CHICAGO BRANCH,
as Liquidity Provider
By: /s/ Claudia C. Heldring
---------------------------------------
Name: Claudia C. Heldring
Title: Vice President
By: /s/ Carla S. Waggoner
---------------------------------------
Name: Carla S. Waggoner
Title: Assistant Vice President
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<PAGE>
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 ABN AMRO Bank N.V. (the "Liquidity Provider"),
with reference to the Irrevocable Revolving Credit Agreement Class A
Certificates dated as of August 13, 1998, between the Borrower and the Liquidity
Provider (the "Liquidity Agreement"; the terms defined therein and not otherwise
defined herein being used herein as therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of an Interest Advance by the Liquidity Provider to be used for the
payment of interest on the Class A Certificates which was payable on the
Distribution Date falling on _____, __________ in accordance with the
terms and provisions of the Class A Trust Agreement and the Class A
Certificates and has not been paid pursuant to clause fourth of Section
3.2 of the Intercreditor Agreement or clause sixth of Section 3.3 of the
Intercreditor Agreement, which Advance is requested to be made on
_____________.
(3) The amount of the Interest Advance requested hereby (i) is
$__________. _______, to be applied in respect of the payment of interest
which was due and payable on the Class A Certificates on such Distribution
Date, (ii) does not include any amount with respect to the payment of
principal of, or premium on, the Class A Certificates, the Class B
Certificates, the Class C Certificates or the Class D Certificates, or
interest 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.
(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
<PAGE>
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 _________________, ________.
THE FIRST NATIONAL BANK OF MARYLAND,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:________________________________________
Name:
Title:
<PAGE>
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Interest Advance Notice Of Borrowing]
<PAGE>
Annex II to Irrevocable
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
Subordination Agent, as borrower (the "Borrower"), hereby certifies to ABN AMRO
Bank N.V. (the "Liquidity Provider"), with reference to the Irrevocable
Revolving Credit Agreement Class A Certificates dated as of August 13, 1998,
between the Borrower and the Liquidity Provider (the "Liquidity Agreement"; the
terms defined therein and not otherwise defined herein being used herein as
therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of the Downgrade Advance by the Liquidity Provider to be used for
the funding of the Class A Cash Collateral Account in accordance with
Section 3.6(c) of the Intercreditor Agreement by reason of the downgrading
of the short-term unsecured debt rating of the Liquidity Provider issued
by either Rating Agency below the 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, any Class of Certificates other than the Class A
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.
(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
<PAGE>
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 _______________, ____________.
THE FIRST NATIONAL BANK OF MARYLAND,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:_______________________________________
Name:
Title:
<PAGE>
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
<PAGE>
Annex III to Irrevocable
Revolving Credit Agreement
NOTICE OF REPLACEMENT BORROWER
[Date]
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
[Name of Transferee]
[Address of Transferee]
all rights of the undersigned as Borrower under the Irrevocable Revolving Credit
Agreement Class A Certificates dated as of August 13, 1998 between the
undersigned Borrower and ABN AMRO BANK N.V., acting through its Chicago Branch
(the "Liquidity Agreement"). The transferee has succeeded the undersigned as
Subordination Agent under the Intercreditor Agreement referred to in the first
paragraph of the Liquidity Agreement pursuant to Section 8.1 of the
Intercreditor Agreement (as defined in 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 _____________,
________.
THE FIRST NATIONAL BANK OF MARYLAND,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:_______________________________________
Name:
Title:
<PAGE>
Annex IV to Irrevocable
Revolving Credit Agreement
NOTICE OF AUTOMATIC REDUCTION OF COMMITMENT
[Date]
Ladies and Gentlemen:
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby notifies ABN AMRO Bank N.V. (the
"Liquidity Provider"), with reference to the Irrevocable Revolving Credit
Agreement Class A Certificates dated as of August 13, 1998, 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 $__________ effective __________.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the _____ day of _____, ____.
THE FIRST NATIONAL BANK OF MARYLAND,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:_______________________________________
Name:
Title:
<PAGE>
Annex V to Irrevocable
Revolving Credit Agreement
NON-EXTENSION ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
Subordination Agent, as borrower (the "Borrower"), hereby certifies to ABN AMRO
Bank N.V. (the "Liquidity Provider"), with reference to the Irrevocable
Revolving Credit Agreement Class A Certificates dated as of August 13, 1998,
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 Non-Extension Advance by the Liquidity Provider to be used
for the funding of the Class A Cash Collateral Account in accordance with
Section 3.6(d) of the Intercreditor Agreement, which Advance is requested
to be made on ______________.
(3) The amount of the Non-Extension 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(d) 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, any Class of Certificates other than the Class A
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(d) 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.
(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.
<PAGE>
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Non-Extension 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
Non-Extension 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 ________________, ______________.
THE FIRST NATIONAL BANK OF MARYLAND,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:_______________________________________
Name:
Title:
<PAGE>
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Non-Extension Advance Notice of Borrowing]
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS B CERTIFICATES
Dated as of August 13, 1998
between
THE FIRST NATIONAL BANK OF MARYLAND
not in its individual capacity but solely as Subordination Agent,
as agent and trustee for the
Midway Airlines 1998-1B Pass Through Trust,
as Borrower
and
ABN AMRO BANK N.V., CHICAGO BRANCH
as Liquidity Provider
Relating to
Midway Airlines 1998-1B Pass Through Trust
8.14% Midway Airlines Pass Through Certificates,
Series 1998-1B
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms.................................... 1
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.1 The Advances............................................. 7
Section 2.2 Making the Advances...................................... 8
Section 2.3 Fees..................................................... 9
Section 2.4 Reduction or Termination of the Commitment............... 10
Section 2.5 Repayments of Interest Advances or the Final Advance..... 10
Section 2.6 Repayments of Downgrade Advances and
Non-Extension Advances................................... 11
Section 2.7 Payments to the Liquidity Provider Under the
Intercreditor Agreement.................................. 12
Section 2.8 Book Entries............................................. 12
Section 2.9 Payments from Available Funds Only....................... 12
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.1 Increased Costs.......................................... 13
Section 3.2 Capital Adequacy......................................... 14
Section 3.3 Payments Free of Deductions.............................. 15
Section 3.4 Payments................................................. 16
Section 3.5 Computations............................................. 16
Section 3.6 Payment on Non-Business Days............................. 16
Section 3.7 Interest................................................. 16
Section 3.8 Replacement of Borrower.................................. 17
Section 3.9 Funding Loss Indemnification............................. 18
Section 3.10 Illegality............................................... 18
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Effectiveness of Section 2.1..... 18
Section 4.2 Conditions Precedent to Borrowing........................ 20
<PAGE>
ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of the Borrower.................... 20
Section 5.2 Negative Covenants of the Borrower....................... 21
ARTICLE VI
FINAL ADVANCE
Section 6.1 Final Advance............................................ 21
ARTICLE VII
MISCELLANEOUS
Section 7.1 Amendments, Etc.......................................... 22
Section 7.2 Notices, Etc............................................. 22
Section 7.3 No Waiver; Remedies...................................... 23
Section 7.4 Further Assurances....................................... 23
Section 7.5 Indemnification; Survival of Certain Provisions.......... 23
Section 7.6 Liability of the Liquidity Provider...................... 23
Section 7.7 Costs, Expenses and Taxes................................ 24
Section 7.8 Binding Effect; Participation............................ 25
Section 7.9 Severability............................................. 26
Section 7.10 GOVERNING LAW............................................ 26
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity....................................... 26
Section 7.12 Execution in Counterparts................................ 27
Section 7.13 Entirety................................................. 27
Section 7.14 Headings; Section References............................. 27
Section 7.16 LIQUIDITY PROVIDER'S OBLIGATION TO
MAKE ADVANCES............................................ 28
ANNEX I - Interest Advance Notice of Borrowing
ANNEX II - Downgrade Advance Notice of Borrowing
ANNEX III - Notice of Replacement Borrower
ANNEX IV - Notice of Automatic Reduction of Commitment
ANNEX V - Non-Extension Advance Notice of Borrowing
<PAGE>
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS B CERTIFICATES
IRREVOCABLE REVOLVING CREDIT AGREEMENT, CLASS B CERTIFICATES, dated
as of August 13, 1998 between THE FIRST NATIONAL BANK OF MARYLAND, a national
bank 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 ABN AMRO
BANK N.V., acting through its Chicago 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, a Downgrade
Advance, a Non-Extension Advance or an Unpaid Advance, as the case may be.
"Applicable Liquidity Rate" has the meaning assigned to such term in
3.7(g).
"Applicable Margin" means (x) with respect to any Downgrade Advance
(other than an Applied Downgrade Advance) or Non-Extension Advance (other
than an Applied Non-Extension Advance), .60% per annum and (y) with
respect
<PAGE>
to any other Advance (including without limitation, an Applied Downgrade
Advance and an Applied Non-Extension Advance) 3.00% per annum.
"Applied Downgrade Advance" has the meaning assigned to such term in
Section 2.6(a).
"Applied Non-Extension Advance" has the meaning assigned to such
term in Section 2.6(a).
"Assignment and Assumption Agreement" means the Assignment and
Assumption to be entered into between the Borrower and the trustee of the
Successor Trust, substantially in the form of Exhibit E to the Pass
Through Trust Agreement 1998-1B-O, dated as of the date hereof, relating
to the Class B Trust.
"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, a Non-Extension 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 (a)
the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New
York, or if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day for such transactions
received by the Liquidity Provider from three Federal funds brokers of
recognized standing selected by it, plus (b) one-quarter of one percent
(1/4 of 1%).
"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
Charlotte, North Carolina, Chicago, Illinois, New York, New York or, so
long as any Class B Certificate is outstanding, the city and state in
which the Class B Trustee
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<PAGE>
maintains its Corporate Trust Office or receives or disburses funds, and,
if the applicable Business Day relates to any Advance or other amount
bearing interest based on the LIBOR Rate, on which dealings are carried on
in the London interbank market.
"Commitment" means, initially, $3,274,474, 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.
"Excluded Taxes" means (i) taxes imposed on the overall net income
of the Liquidity Provider or of its Lending Office by the jurisdiction
where such Liquidity Provider's principal office or such Lending Office is
located, and (ii) Excluded Withholding Taxes.
"Excluded Withholding Taxes" means (i) withholding Taxes imposed by
the United States except to the extent that such United States withholding
Taxes are imposed as a result of any change in applicable law (excluding
from change in applicable law for this purpose a change in an applicable
treaty or other change in law affecting the applicability of a treaty)
after the date hereof, or in the case of a successor Liquidity Provider
(including a transferee of an Advance) or Lending Office, after the date
on which such successor Liquidity Provider obtains its interest or on
which the Lending Office is changed, and (ii) any withholding Taxes
imposed by the United States which are imposed or increased as a result of
the Liquidity Provider failing to deliver to the Borrower any certificate
or document (which certificate or document in the good faith judgment of
the Liquidity Provider it is legally entitled to provide) which is
reasonably requested by the Borrower to establish that payments under this
Agreement are exempt from (or entitled to a reduced rate of) withholding
Tax.
"Expenses" means liabilities, obligations, damages, settlements,
penalties, claims, actions, suits, costs, expenses and disbursements
(including, without limitation, reasonable fees and disbursements of legal
counsel and costs of investigation), provided that Expenses shall not
include any Taxes.
"Expiry Date" means August 12, 1999, initially, or any date to which
the Expiry Date is extended pursuant to Section 2.10.
"Final Advance" means an Advance made pursuant to Sections 2.2(c).
"Intercreditor Agreement" means the Intercreditor Agreement dated
the date hereof, among the Trustees, the Liquidity Provider, the liquidity
provider
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<PAGE>
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 third Business Day following
either (x) the Liquidity Provider's receipt of the Notice of
Borrowing for such LIBOR Advance (or, in the case of an
Non-Applied Downgrade Advance, the period beginning on the
Expiry Date) or (y) the withdrawal of funds from the Class B
Cash Collateral Account for the purpose of paying interest on
the Class B Certificates as contemplated by Section 2.6(a)
hereof and, in either case, ending on the next Regular
Distribution Date (or ending, in the case of an Interest
Period applicable to any Non-Applied Downgrade Advance or
Non-Applied Non-Extension Advance, on the numerically
corresponding day in the sixth calendar month after the first
day of the applicable Interest Period and/or on the next
Regular Distribution Date, as Midway may select by providing
notice thereof to the Borrower and the Liquidity Provider no
later than three Business Days prior to the commencement of
such Interest Period, provided that if Midway shall not
provide such a notice at least three Business Days prior to
the commencement of such Interest Period, then Midway shall be
deemed to have selected and Interest Period 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 (or ending, in the case of an
Interest Period applicable to any Non-Applied Downgrade
Advance or Non- Applied Non-Extension Advance, on the
numerically corresponding day in the sixth calendar month
after the first day of the applicable Interest Period and/or
on the next Regular Distribution Date, as Midway may select by
providing notice thereof to the Borrower and the Liquidity
Provider no later than three Business Days prior to the
commencement of such Interest Period, provided that if Midway
shall not provide such a notice at least three Business Days
prior to the commencement of such Interest Period, then Midway
shall be deemed to have selected an Interest Period ending on
the next Regular Distribution Date;
provided, however, that (I) if a Non-Applied Advance which is a LIBOR
Advance becomes an Applied Downgrade Advance or Applied Non-Extension
Advance, as
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<PAGE>
the case may be, the Interest Period then applicable to such Non-Applied
Advance shall be applicable to such Applied Downgrade Advance or Applied
Non-Extension Advance, as the case may be, and (II), if (x) the Final
Advance shall have been made, or (y) other outstanding Advances shall have
been converted into the Final Advance, then the Interest Periods shall be
successive periods of one month beginning on the third Business Day
following the Liquidity Provider's receipt of the Notice of Borrowing for
such Final Advance (in the case of clause (x) above) or the Regular
Distribution Date following such conversion (in the case of clause (y)
above).
"Lending Office" means the lending office of the Liquidity Provider,
presently located at 135 South LaSalle Street, Chicago, Illinois 60674, or
such other lending office as the Liquidity Provider from time to time
shall notify the Borrower as its lending office hereunder; provided that
the Liquidity Provider shall not change its Lending Office to a Lending
Office outside the United States of America except in accordance with
Section 3.1, 3.2 or 3.3 hereof.
"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 average
(rounded upward, if necessary, to the next higher 1/16 of 1%) of the rates
per annum at which deposits in dollars are offered to major 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 an amount
approximately equal to 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.
"Liquidity Event of Default" means the occurrence of either the
following: (a) 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 or (b) a Midway 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
Preamble to this Agreement.
"Non-Applied Advance" means any Non-Applied Non-Extension Advance or
Non-Applied Downgrade Advance.
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<PAGE>
"Non-Applied Downgrade Advance" means any Downgrade Advance, other
than an Applied Downgrade Advance.
"Non-Applied Non-Extension Advance" means any Non-Extension Advance,
other than an Applied Non-Extension Advance.
"Non-Excluded Tax" has the meaning specified in Section 3.3.
"Non-Extension Advance" means an Advance made pursuant to Section
2.2(d).
"Notice of Borrowing" has the meaning specified in Section 2.2(e).
"Notice of Replacement Borrower" has the meaning specified in
Section 3.8.
"Offering Memorandum" means the Offering Memorandum dated August 6,
1998 of Midway relating to the Certificates, as such Offering Memorandum
may be amended or supplemented.
"Participant" has the meaning assigned to such term in Section
7.8(b).
"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.
"Related Indemnitee" means, with respect to any Liquidity
Indemnitee, its director, officer, employee, agent, affiliate or employer.
"Replenishment Amount" has the meaning assigned to such term in
Section 2.6(b).
"Required Amount" means, for any day, the sum of the aggregate
amount of interest, calculated at the rate per annum equal to the Stated
Interest Rate for the Class B Certificates (taking into account the
possible increase in the Stated Rate as a result of a failure of a
Registration Event failing to occur), that would be payable on the Class B
Certificates on each of the three successive semi-annual Regular
Distribution Dates immediately following such day or, if such day is a
Regular Distribution Date, on such day and the succeeding two semi-annual
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.
"Successor Trust" means Midway Airlines Pass Through Trust
1998-1B-S.
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<PAGE>
"Termination Date" means the earliest to occur of the following: (i)
the Expiry Date; (ii) the date on which the Borrower delivers to the
Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that all of the Class B Certificates have been paid
in full (or provision has been made for such payment in accordance with
the Intercreditor Agreement and the Trust Agreements) or are otherwise no
longer entitled to the benefits of this Agreement; (iii) the date on which
the Borrower delivers to the Liquidity Provider a certificate, signed by a
Responsible Officer of the Borrower, certifying that a Replacement
Liquidity Facility has been substituted for this Agreement in full
pursuant to Section 3.6(e) of the Intercreditor Agreement; (iv) the date
on which the Liquidity Provider makes the Final Advance; and (v) the date
on which no Advance is or may (including by reason of reinstatement as
herein provided) become available for a Borrowing hereunder.
"Unpaid Advance" has the meaning assigned to such term in Section
2.5.
(b) Terms Defined in the Intercreditor Agreement. For all purposes
of this Agreement, the following terms shall have the respective meanings
assigned to such terms in the Intercreditor Agreement:
"ABN AMRO Fee Letter", "Certificates", "Class B Certificate", "Class B
Certificateholder", "Class B Cash Collateral Account", "Class B Trust",
"Class B Trust Agreement", "Class B Trustee", "Class A Certificates",
"Class C Certificates", "Class D Certificates", "Closing Date",
"Controlling Party", "Corporate Trust Office", "Deposits", "Distribution
Date", "Equipment Notes", "Indenture", "Initial Purchaser", "Investment
Earnings", "Liquidity Facility", "Midway", "Midway Bankruptcy Event",
"Moody's", "Note Purchase Agreement", "Operative Agreements",
"Participation Agreements", "Performing Equipment Note", "Person", "Pool
Balance", "Purchase Agreement", "Rating Agencies", "Registration Event",
"Regular Distribution Dates", "Replacement Liquidity Facility",
"Responsible Officer", "Scheduled Payment", "Special Payment", "Standard &
Poor's", "Stated Interest Rate", "Subordination Agent", "Taxes",
"Threshold Rating", "Transfer", "Triggering Event", "Trust Agreement",
"Trustee" and "Written Notice".
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.1 The Advances. The Liquidity Provider hereby irrevocably
agrees, on the terms and conditions hereinafter set forth, to make Advances to
the Borrower from time to time on any Business Day during the period from the
Effective Date until 12:00 Noon (New York City time) on the Expiry Date (unless
the obligations of the Liquidity Provider shall be earlier terminated in
accordance with the terms of Section 2.4(b)) in an aggregate amount at any time
outstanding not to exceed the Commitment.
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<PAGE>
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 after (i) the acceleration of all the outstanding
Equipment Notes or (ii)(A) a Triggering Event shall have occurred and (B) there
exists a Performing Note Deficiency.
(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 previously 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 equal to 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) and Section 3.6(f) of
the Intercreditor Agreement.
(c) A Final Advance may 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 in an amount equal to the
Available Commitment at such time, and shall be used to fund the Class B Cash
Collateral Account (in accordance with Section 3.6(f) of the Intercreditor
Agreement).
(d) A Non-Extension Advance shall be made in a single Borrowing if
this Agreement is not extended in accordance with Section 3.6(d) of the
Intercreditor Agreement (unless a Replacement Liquidity Facility to replace this
Agreement shall have been delivered to the Borrower in accordance with said
Section 3.6(d) within the time period specified in such Section) by delivery to
the Liquidity Provider of a written and completed Notice of Borrowing in
substantially the form of Annex V attached hereto, signed by a Responsible
Officer of the Borrower, in an amount equal to 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(d) and Section 3.6(f) of the Intercreditor
Agreement.
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<PAGE>
(e) Each Borrowing (other than the making of a Final Advance) shall
be made on notice in writing (a "Notice of Borrowing") in substantially the form
required by Section 2.2(a), 2.2(b) or 2.2(d), as the case may be, given by the
Borrower to the Liquidity Provider not later than 1 p.m. (New York City time) on
the second Business Day prior to the day of the proposed Borrowing; provided
that, a Borrowing in respect of an Interest Advance pursuant to Section 2.2(a)
shall be made on such notice to the Liquidity Provider given not later than 1
p.m. (New York City time) on the Business Day of such Borrowing. Upon
satisfaction of the conditions precedent set forth in Section 4.2 with respect
to a requested Borrowing, the Liquidity Provider shall, before 12:00 Noon (New
York City time) on the date of such Borrowing (or, in the case of a Borrowing in
respect of an Interest Advance pursuant to Section 2.2(a), before 3 p.m. (New
York Cite time) on the date of such Borrowing) or on such later Business Day
specified by the Borrower in such Notice of Borrowing, make available to the
Borrower, in U.S. dollars and in immediately available funds, the amount of such
Borrowing to be paid to the Borrower in accordance with its payment
instructions. If a Notice of Borrowing is delivered by the Borrower in respect
of any Borrowing after 1 p.m. (New York City time) on a Business Day, the
Liquidity Provider shall, before 12:00 Noon (New York City time) on the third
Business Day following the day of receipt of such Notice of Borrowing (or, in
the case of a Borrowing in respect of an Interest Advance pursuant to Section
2.2(a), on the next Business Day following receipt of such notice) or on such
later Business Day specified by the Borrower in such Notice of Borrowing, make
available to the Borrower, in U.S. dollars and in immediately available funds,
the amount of such Borrowing to be paid to the Borrower in accordance with its
payment instructions. Payments of proceeds of a Borrowing shall be made by wire
transfer of immediately available funds to the Borrower in accordance with such
wire transfer instructions as the Borrower shall furnish from time to time to
the Liquidity Provider for such purpose. Each Notice of Borrowing shall be
irrevocable and binding on the Borrower.
(f) 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) Subject to the provisions of Section 2.9, the
Borrower agrees to pay to the Liquidity Provider an advisory fee in the amount
set forth in the ABN AMRO Fee Letter. Such fee shall be payable on the Effective
Date. Nothing contained in this Section 2.3(a) shall require the Borrower to pay
any amount
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<PAGE>
under this Section 2.3(a) other than to the extent the Borrower shall have funds
available therefor.
(b) Subject to the provisions of Section 2.9, the Borrower shall
pay, or shall cause to be paid, to the Liquidity Provider, a fee per annum, as
set forth in the ABN AMRO Fee Letter on the average daily Available Commitment
from the Effective Date to the earlier of the date on which a Downgrade Advance
or Non-Extension Advance is made and the date on which the Commitment
terminates. Such fee shall be payable in arrears on each Regular Distribution
Date. Nothing contained in this Section 2.3(b) shall require the Borrower to pay
any amount under this Section 2.3(b) other than to the extent the Borrower shall
have funds available therefor.
Section 2.4 Reduction or Termination of the Commitment. (a)
Automatic Reductions. Promptly following each date on which the Required Amount
is reduced as a result of a reduction in the Pool Balance of the Class B
Certificates or otherwise, the Commitment shall automatically be reduced to an
amount equal to such reduced Required Amount (as calculated by the Borrower).
The Borrower shall give notice of any such automatic reduction of the Commitment
(substantially in the form of Annex IV hereto) to the Liquidity Provider (with a
copy to Midway) 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,
Non-Extension 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 2.6, 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 in accordance with Section 2.6 hereof. The Borrower and the Liquidity
Provider agree that the repayment in full of each Interest Advance and the Final
Advance on the date such Interest Advance or the Final Advance is made and each
Applied Downgrade Advance on the date it becomes an Applied Downgrade Advance is
intended to be a contemporaneous exchange for new value given to the Borrower by
the Liquidity Provider.
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Section 2.6 Repayments of Downgrade Advances and Non-Extension
Advances. (a) Amounts advanced hereunder in respect of a Downgrade Advance or a
Non-Extension Advance shall be deposited in the Class B Cash Collateral Account,
and invested and withdrawn from the Class B Cash Collateral Account, as set
forth in Sections 3.6(c), (d) and (f) of the Intercreditor Agreement. Subject to
Section 2.9, 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 or a Non-Extension Advance, interest on
the principal amount of any such Downgrade Advance or a Non-Extension Advance as
provided in Section 3.7; provided, however, that amounts in respect of a (i) any
distribution to the Liquidity Provider of Investment Earnings pursuant to
Section 3.6(f) of the Intercreditor Agreement shall constitute a payment of
interest due on such Downgrade Advance or Non-Extension Advance in the amount of
such Investment Earnings and (ii) amounts in respect of a Downgrade Advance or
Non-Extension Advance withdrawn from the Class B Cash Account for the purpose of
paying interest on the Class B Pass Through Certificates in accordance with
Section 3.6(f) of the Intercreditor Agreement (the amount of any such withdrawal
being an "Applied Downgrade Advance" or "Applied Non-Extension Advance,"
respectively), shall be treated as an Interest Advance under this Agreement for
purposes of determining the Applicable Liquidity Rate for interest payable
thereon; provided further, however, that if following the making of a Downgrade
Advance or Non-Extension Advance, the Liquidity Provider elects by notice to the
Borrower to convert such Advance into a Final Advance, such Downgrade Advance or
Non-Extension Advance, as the case may be, shall thereafter be treated as a
Final Advance under this Agreement for purposes of determining the Applicable
Liquidity Rate for interest payable thereon. 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 or
Non-Extension 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) At any time when an Applied Downgrade Advance or Applied
Non-Extension Advance (or any portion thereof) is outstanding, upon the deposit
in the Class B Cash Collateral Account of any amount pursuant to clause "third"
of Section 2.4(b)(i), clause "third" of Section 3.2 or clause "fourth" of
Section 3.3 of the Intercreditor Agreement (any such amount being a
"Replenishment Amount") for the purpose of replenishing the balance thereof up
to the Required Amount at such time, (i) the aggregate outstanding principal
amount of all Applied Downgrade Advances or Applied Non-Extension Advances, as
the case may be, shall be automatically reduced by the amount of such
Replenishment Amount and (ii) the principal amount of the outstanding Downgrade
Advance or Non-Extension Advance, as the case may be, shall be automatically
increased by the amount of such Replenishment Amount.
(c) 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
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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, including but not limited to payments
pursuant to Sections 2.3, 2.5, 2.6, 3.1, 3.2, 3.9, 7.5 and 7.7 hereof, shall be
made only from amounts received by it that constitute Scheduled Payments or
Special Payments or payments under Sections 6.01 and 7.01 of the Participation
Agreements 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 incurred under this Agreement except as expressly
provided in Article VI of the Intercreditor 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.
Section 2.10 Extension of the Expiry Date; Non-Extension Advance. No
earlier than the 60th day and no later than the 40th day prior to the then
effective Expiry Date (unless such Expiry Date is on or after the date that is
15 days after the Final Maturity Date for the Class B Certificates), the
Borrower shall request that the Liquidity Provider extend the Expiry Date for a
period of 364 days after the then effective Expiry Date(unless the obligations
of the Liquidity Provider are earlier
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terminated in accordance with the terms hereof). The Liquidity Provider shall
advise the Borrower, no earlier than 40 days and no later then 25 days prior to
the then effective Expiry Date, whether, in its sole discretion, it agrees to so
extend the Expiry Date. If the Liquidity Provider advises the Borrower on or
before the 25th day prior to the Expiry Date then in effect that such Expiry
Date shall not be so extended, or fails to irrevocably and unconditionally
advise the Borrower on or before the 25th day prior to the Expiry Date then in
effect that such Expiry Date shall be so extended (and, in each case, if the
Liquidity Provider shall not have been replaced in accordance with Section
3.6(e) of the Intercreditor Agreement), the Borrower shall be entitled on and
after such 25th day (but prior to the then effective Expiry Date) to request a
Non-Extension Advance in accordance with Section 2.2(d) hereof and Section
3.6(d) of the Intercreditor Agreement.
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.1 Increased Costs. If the Liquidity Provider shall
reasonably determine that (a) any change, after the Effective Date, 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 or loan commitments made by, the Liquidity Provider or (ii) impose on the
Liquidity Provider any other condition regarding this Agreement or any Advance
and (b) the result of any event referred to in the preceding clause (i) or (ii)
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 among similarly
effected credit and funding facilities), or to reduce the amount of any sum
received or receivable by the Liquidity Provider under this Agreement with
respect thereto, then, upon demand by the Liquidity Provider (such demand to be
made as soon as practicable, but not later than 30 days after a Responsible
Officer of the Liquidity Provider obtains or reasonably should have obtained
knowledge of any event referred to in clause (i) or (ii) above), and subject to
Section 2.9, 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; provided that if such demand for payment is made
after such 30-day period, the Borrower shall be obligated to pay such additional
amounts only with respect to such increased cost or reduction actually incurred
or effected on or after the 30th day prior to the date of such demand. A
Certificate as to such increased cost or reduction (which shall set forth in
reasonable detail the basis for such increased cost on reduction) incurred by
the Liquidity Provider as a result of any event mentioned in clause (i) or
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(ii) above, prepared in reasonable detail and submitted by the Liquidity
Provider to the Borrower, shall be conclusive, absent manifest error, as to the
amount thereof.
The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory 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. The Liquidity Provider agrees that if it shall make a demand for
payment of additional amounts under this Section the Borrower shall have the
right to obtain a Replacement Liquidity Facility in replacement of this
Agreement in accordance with Section 3.6(e) of the Intercreditor Agreement
provided that such replacement would eliminate the obligation of the Borrower to
pay such additional amounts.
Section 3.2 Capital Adequacy. If the Liquidity Provider shall
reasonably determine that the adoption, after the Effective Date, of any
applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change, after the Effective Date, in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Liquidity Provider (or its head office) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has the effect of reducing the
rate of return on the Liquidity Provider's capital as a consequence of issuing
or maintaining its commitment hereunder or its funding or maintaining Advances
to a level below that which the Liquidity Provider could have achieved but for
such adoption, change or compliance (taking into consideration the Liquidity
Provider's policies with respect to capital adequacy), then, upon demand by the
Liquidity Provider (such demand to be made as soon as is practicable, but not
later than 30 days after a Responsible Officer of the Liquidity Provider obtains
or should reasonably have obtained knowledge of any event referred to above in
this Section 3.2), and subject to Section 2.9, the Borrower shall pay to the
Liquidity Provider, from time to time as specified by the Liquidity Provider,
additional amounts (which amounts shall be determined by the Liquidity
Provider's reasonable allocations of the aggregate of such amounts resulting
from such event among similarly effected credit and funding facilities) 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; provided that, if such demand for payment is made after
such 30 day period, the Borrower shall be obligated to pay such amounts only
with respect to such reduction actually effected on or after the 30th day prior
to the date of such demand. 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.
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The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Lending Office if making such change would avoid the need
for, or reduce the amount of, any amount payable under this Section 3.2 that may
thereafter accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous in any material respect to the Liquidity
Provider. The Liquidity Provider agrees that if it shall make a demand for
payment of additional amounts under this Section the Borrower shall have the
right to obtain a Replacement Liquidity Facility in replacement of this
Agreement in accordance with Section 3.6(e) of the Intercreditor Agreement
provided that such replacement would eliminate the obligation of the Borrower to
pay such additional amounts.
Section 3.3 Payments Free of Deductions. (a) 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 Excluded Taxes (such non-excluded
taxes being referred to herein, collectively, as "Non-Excluded Taxes "are,
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) interest or any other such amounts payable under this
Agreement at the rates or in the amounts specified in 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 such additional amounts that may thereafter
accrue and would not, in the reasonable judgment of the Liquidity Provider, be
otherwise disadvantageous to the Liquidity Provider. From time to time upon the
reasonable request of the Borrower, the Liquidity Provider agrees to provide to
the Borrower two original Internal Revenue Service Forms 1001 or 4224, as
appropriate, or any successor or other form prescribed by the Internal Revenue
Service, certifying that the Liquidity Provider is exempt from or entitled to a
reduced rate of United States withholding tax on payments pursuant to this
Agreement.
(b) All payments (including, without limitation, Advances) made by
the Liquidity Provider under this Agreement shall be made free and clear of, and
without reduction for or on account of, any Taxes. If any Taxes are required to
be withheld or deducted from any amounts payable to the Borrower under this
Agreement, the Liquidity Provider shall (i) within the time prescribed therefor
by applicable law pay to the appropriate governmental or taxing authority the
full amount of any such Taxes (and any additional Taxes in respect of the
payment required under clause (ii) hereof) and make such reports or returns in
connection therewith at the time or times and in the manner prescribed by
applicable law, and (ii) pay to the Borrower an additional amount which (after
deduction of all such Taxes) will be sufficient to yield to the Borrower the
full amount which would have been received by it had no such
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withholding or deduction been made. Within 30 days after the date of each
payment hereunder, the Liquidity Provider shall furnish to the Borrower the
original or a certified copy of (or other documentary evidence of) the payment
of the Taxes applicable to such payment.
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 ABN AMRO BANK, New York, New
York, ABA No. 020009580, for the account of ABN AMRO BANK, Chicago Branch,
Account No. 650-001-1789-41, Attention: Midway Airlines Corporation.
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 shall be stated to be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day and no additional
interest shall be due as a result (and if so made, shall be deemed to have been
made when due). If any payment in respect of interest on an Advance is so
deferred to the next succeeding Business Day, such deferral shall not delay the
commencement of the next Interest Period for such Advance (if such Advance is a
LIBOR Advance) or reduce the number of days for which interest will be payable
on such Advance on the next interest payment date for such Advance.
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 (or, in the case of an Applied Downgrade
Advance or an Applied Non-Extension Advance, from and including the date on
which the amount thereof was withdrawn from the Class B Cash Collateral Account
to pay interest on the Class B Certificates) 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
or such other amount as in effect 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
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the maximum rate permitted by applicable law, then any subsequent reduction in
such interest rate will not reduce the rate of interest payable pursuant to this
Section 3.7 below the maximum rate permitted by applicable law until the total
amount of interest accrued equals the amount of interest that would have accrued
if such otherwise applicable interest rate as set forth in this Section 3.7 had
at all times been in effect. Nothing contained in this Section 3.7 shall require
the Borrower to pay any amount under this Section 3.7 other than to the extent
the Borrower shall have funds available therefor.
(b) Each Advance (other than Non-Applied Advances) 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 until the last day of its Interest Period
except as provided in Section 3.10.
(c) Each LIBOR Advance shall bear interest during each Interest
Period at a per annum rate equal to the LIBOR Rate for such Interest Period plus
the Applicable Margin for such LIBOR Advance, payable in arrears on the last day
of such Interest Period and, in the event of the payment of principal of such
LIBOR Advance on a day other than such last day, on the date of such payment (to
the extent of interest accrued on the amount of principal repaid).
(d) Each Base Rate Advance shall bear interest at a per annum rate
equal to the Base Rate plus the Applicable Margin for such Base Rate Advance,
payable in arrears on each Regular Distribution Date and, in the event of the
payment of principal of such Base Rate Advance on a day other than a Regular
Distribution Date, on the date of such payment (to the extent of interest
accrued on the amount of principal repaid).
(e) [Intentionally Omitted.]
(f) 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.
(g) Each change in the Base Rate shall become effective immediately.
The rates of interest specified in this Section 3.7 with respect to any Advance
or other amount shall be referred to as the "Applicable Liquidity Rate".
Section 3.8 Replacement of Borrower. Subject to Section 5.2(b), from
time to time, upon the effective date and time specified in a written and
completed Notice of Replacement Borrower in substantially the form of Annex III
attached hereto (a "Notice of Replacement Borrower") delivered to the Liquidity
Provider by the then Borrower, the successor Borrower designated therein shall
be substituted for as the Borrower for all purposes hereunder.
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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 or convert, as the case
may be, a LIBOR Advance on the date for borrowing or conversion, as the
case may be, 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 also 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 also acceptable to Midway.
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Effectiveness of Section 2.1.
Section 2.1 of this Agreement shall become effective on and as of the first date
(the "Effective Date") on which the following conditions precedent have been
satisfied or waived:
(a) The Liquidity Provider shall have received on or before the
Closing Date each of the following, each dated such date (except for those
documents
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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) Fully executed copies of each of the Operative
Agreements executed and delivered on or before the Closing Date
(other than this Agreement and the Intercreditor Agreement);
(iv) A copy of the Offering Memorandum 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 Baa1, Ba1, Ba3 and B2, respectively, and
from Standard & Poor's of not lower than A-, BBB-, BB- and B,
respectively;
(vi) An executed or certified copy of each document,
instrument, certificate and opinion delivered on or before the
Closing Date pursuant to the Class B Trust Agreement, the
Intercreditor Agreement and the other Operative Agreements;
(vii) Evidence that there shall have been made and shall be in
full force and effect, all filings, recordings and/or registrations,
and there shall have been given or taken any notice or other similar
action as may be reasonably necessary or, to the extent reasonably
requested by the Liquidity Provider, reasonably advisable, in order
to establish, perfect, protect and preserve the right, title and
interest, remedies, powers, privileges, liens and security interests
of, or for the benefit of, the Trustees and the Liquidity Provider
created by the Operative Agreements executed and delivered on or
before the Closing Date;
(viii) A letter from Midway agreeing to provide to the
Liquidity Provider the periodic financial reports referred to in
Section 8.04 of the Trust Agreements; and
(ix) Such other documents, instruments, opinions and approvals
(and, if requested by the Liquidity Provider, certified duplicates
or executed copies thereof) as the Liquidity Provider shall have
reasonably requested.
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(b) The following statement shall be true on and as of the Effective
Date: 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 Initial Purchaser under the Purchase Agreement shall
have been satisfied (except for any of such conditions precedent under the
Purchase Agreement that shall have been waived by the Initial Purchaser).
(e) The Borrower shall have received a certificate, dated the date
hereof, signed by a duly authorized representative of the Liquidity
Provider, certifying that all conditions precedent to the effectiveness of
Section 2.1 have been satisfied or waived (other than this Section
4.1(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.
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(b) Reporting Requirements. Furnish to the Liquidity Provider with
reasonable promptness, such information and data with respect to the
transactions contemplated by the Operative Agreements as from time to time
may be reasonably requested by the Liquidity Provider; and permit the
Liquidity Provider, upon reasonable notice, to inspect the Borrower's
books and records with respect to such transactions and to meet with
officers and employees of the Borrower to discuss such transactions.
Section 5.2 Negative Covenants of the Borrower. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Commitment
hereunder or the Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will not, without the written consent
of the Liquidity Provider:
(a) Amendments. Modify, amend or supplement, or give any consent to
any modification, amendment or supplement or make any waiver with respect
to, any provision of the Trust Agreements or the Intercreditor Agreement,
except for any supplemental agreement to the Trust Agreements provided for
in Section 9.1 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.
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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: THE FIRST NATIONAL BANK OF MARYLAND
25 South Charles Street
Baltimore, Maryland 21201
Attention: Corporate Trust Department
Telephone: (410) 244-4626
Telecopy: (410) 244-4236
Liquidity ABN AMRO BANK N.V.
Provider: Aerospace Department
135 South LaSalle Street, #760
Chicago, IL 60674-9135
Attention: Claudia Heldring
Telephone: (312) 904-2900
Telecopy: (312) 606-8428
with copy to:
ABN AMRO BANK N.V.
135 South LaSalle Street, #625
Chicago, IL 60674-9135
Attention: Loan Operations
Telephone: (312) 904-2836
Telecopy: (312) 606-8428
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,
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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 Participation
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, upon
reasonable request, 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 6.01 and 7.01 of the Participation Agreements. In
addition, the Borrower agrees, subject to Section 2.9 hereof, to indemnify,
protect, defend and hold harmless the Liquidity Provider from, against and in
respect of, and shall pay on demand, all Expenses of any kind or nature
whatsoever, whether arising before, on or after the date hereof, that may be
imposed, incurred by or asserted against any Liquidity Indemnitee, in any way
relating to, resulting from, or arising out of or in connection with, this
Agreement, the Intercreditor Agreement, the Note Purchase Agreement or any
Participation Agreement; 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 to which it is a
party. The indemnities contained in such Sections 6.01 and 7.01 of the
Participation Agreements 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, employees, affiliates or directors
shall be liable or responsible for: (i) the use which may be made of the
Advances or any acts or
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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) Neither the Liquidity Provider nor any of its officers,
employees,directors or affiliates shall be liable or responsible in any respect
for (i) any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with this
Agreement or any Notice of Borrowing delivered hereunder, or (ii) any action,
inaction or omission which may be taken by it in good faith, absent willful
misconduct or negligence (in which event the extent of the Liquidity Provider's
potential liability to the Borrower shall be limited as set forth in the
immediately preceding paragraph), in connection with this Agreement or any
Notice of Borrowing.
Section 7.7 Costs, Expenses and Taxes. The Borrower agrees, subject
to Section 2.9 hereof, to pay, or cause to be paid (A) on the Effective Date and
on such later date or dates on which the Liquidity Provider shall make demand,
all reasonable out-of-pocket costs and expenses of the Liquidity Provider in
connection with the preparation, negotiation, execution, delivery, filing and
recording of this Agreement, any other Operative Agreement and any other
documents which may be delivered in connection with this Agreement, including,
without limitation, the reasonable fees and expenses of outside counsel for the
Liquidity Provider and (B) on demand, all reasonable costs and expenses of the
Liquidity Provider (including reasonable counsel fees and expenses) in
connection with (i) the enforcement of this Agreement or any other Operative
Agreement, (ii) the modification or amendment of, or supplement to, this
Agreement or any other Operative Agreement or such other documents which may be
delivered in connection herewith or therewith (whether or not the same shall
become effective) or (iii) any action or proceeding relating to any order,
injunction, or other process or decree restraining or seeking to restrain the
Liquidity Provider from paying any amount under this Agreement, the
Intercreditor Agreement or any other Operative Document or otherwise affecting
the application of funds in the Cash Collateral Accounts. In addition, subject
to Section 2.9 hereof, 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
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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; Participation. (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 (including, without
limitation, funding participations and participations in rights to receive
interest payments hereunder) and under the other Operative Agreements to such
Persons as the Liquidity Provider may in its sole discretion select, subject to
the requirement of Section 7.8(b). No such participation by the Liquidity
Provider, however, will relieve the Liquidity Provider of its obligations
hereunder. In connection with any participation or any proposed participation,
the Liquidity Provider may disclose to the participant or the proposed
participant any information that the Borrower is required to deliver or to
disclose to the Liquidity Provider pursuant to this Agreement. The Borrower
acknowledges and agrees that the Liquidity Provider's source of funds may derive
in part from its participants. Accordingly, references in this Agreement and the
other Operative Agreements to determinations, reserve and capital adequacy
requirements, increased costs, reduced receipts and the like as they pertain to
the Liquidity Provider shall be deemed also to include those of each of its
participants (subject, in each case, to the maximum amount that would have been
incurred by or attributable to the Liquidity Provider directly if the Liquidity
Provider, rather than the participant, had held the interest participated).
(b) If, pursuant to subsection (a) above, the Liquidity Provider
sells any participation to any bank or other entity (each, a "Participant"),
then, concurrently with the effectiveness of such participation, the Participant
shall (i) represent to the Liquidity Provider (for the benefit of the Liquidity
Provider and the Borrower) either (A) that it is incorporated under the laws of
the United States or a state thereof or (B) that under applicable law and
treaties, no taxes 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
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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 (and required by applicable law) indicating that payments
hereunder are not subject to United States federal withholding tax, the Borrower
will withhold taxes as required by law from such payments at the applicable
statutory rate without any obligation to gross-up or indemnify pursuant to
Section 3.3.
(c) Notwithstanding the other provisions of this Section 7.8, the
Liquidity Provider may assign and pledge all or any portion of the Advances
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank, provided that any payment in respect of such assigned Advances made by the
Borrower to the Liquidity Provider in accordance with the terms of this
Agreement shall satisfy the Borrower's obligations hereunder in respect of such
assigned Advance to the extent of such payment. No such assignment shall release
the Liquidity Provider from its obligations hereunder.
Section 7.9 Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization 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;
Waiver of Immunity. (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 non-exclusive 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;
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(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form and mail), postage
prepaid, to each party hereto at its address set forth in Section 7.2, or
at such other address of which the Liquidity Provider shall have been
notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Borrower and the Liquidity Provider each warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER CANNOT BE MODIFIED ORALLY.
(c) The Liquidity Provider hereby waives any immunity it may have
from the jurisdiction of the courts of the United States or of any State and
waives any immunity any of its properties located in the United States may have
from attachment or execution upon a judgment entered by any such court under the
United States Foreign Sovereign Immunities Act of 1976 or any similar successor
legislation.
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.
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Section 7.15 Transfer. The Liquidity Provider hereby acknowledges
and consents to the Transfer contemplated by the Assignment and Assumption
Agreement.
Section 7.16 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE ADVANCES.
EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE OBLIGATIONS OF THE
LIQUIDITY PROVIDER TO MAKE ADVANCES HEREUNDER, AND THE BORROWER'S RIGHTS TO
DELIVER NOTICES OF BORROWING REQUESTING THE MAKING OF ADVANCES HEREUNDER, SHALL
BE UNCONDITIONAL AND IRREVOCABLE, AND SHALL BE PAID OR PERFORMED, IN EACH CASE
STRICTLY IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first set forth above.
THE FIRST NATIONAL BANK OF
MARYLAND, not in its individual capacity
but solely as Subordination Agent, as
Borrower
By: /s/ Robert D. Brown
---------------------------------------
Name: Robert D. Brown
Title: Assistant Vice-President
ABN AMRO BANK N.V., CHICAGO BRANCH,
as Liquidity Provider
By: /s/ Claudia C. Heldring
---------------------------------------
Name: Claudia C. Heldring
Title: Vice President
By: /s/ Carla S. Waggoner
---------------------------------------
Name: Carla S. Waggoner
Title: Assistant Vice President
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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 ABN AMRO Bank N.V. (the
"Liquidity Provider"), with reference to the Irrevocable Revolving Credit
Agreement Class B Certificates dated as of August 13, 1998, between the Borrower
and the Liquidity Provider (the "Liquidity Agreement"; the terms defined therein
and not otherwise defined herein being used herein as therein defined or
referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of an Interest Advance by the Liquidity Provider to be used for the
payment of interest on the Class B Certificates which was payable on the
Distribution Date falling on _____, __________ in accordance with the
terms and provisions of the Class B Trust Agreement and the Class B
Certificates and has not been paid pursuant to clause fourth 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 B Certificates on such
Distribution Date, (ii) does not include any amount with respect to the
payment of principal of, or premium on, the Class A Certificates, the
Class B Certificates, the Class C Certificates or the Class D
Certificates, or interest 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>
(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 ____________, _____________.
THE FIRST NATIONAL BANK OF MARYLAND,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:______________________________________
Name:
Title:
<PAGE>
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Interest Advance Notice Of Borrowing]
<PAGE>
Annex II to Irrevocable
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
Subordination Agent, as borrower (the "Borrower"), hereby certifies to ABN AMRO
Bank N.V. (the "Liquidity Provider"), with reference to the Irrevocable
Revolving Credit Agreement Class B Certificates dated as of August 13, 1998,
between the Borrower and the Liquidity Provider (the "Liquidity Agreement"; the
terms defined therein and not otherwise defined herein being used herein as
therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of the Downgrade Advance by the Liquidity Provider to be used for
the funding of the Class B Cash Collateral Account in accordance with
Section 3.6(c) of the Intercreditor Agreement by reason of the downgrading
of the short-term unsecured debt rating of the Liquidity Provider issued
by either Rating Agency below the 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, any Class of Certificates other than the Class B
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.
(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.
<PAGE>
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 ____________, _____________.
THE FIRST NATIONAL BANK OF MARYLAND,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:______________________________________
Name:
Title:
<PAGE>
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
<PAGE>
Annex III to Irrevocable
Revolving Credit Agreement
NOTICE OF REPLACEMENT BORROWER
[Date]
Ladies and Gentlemen:
For value received, the undersigned
beneficiary hereby irrevocably transfers to:
[Name of Transferee]
[Address of Transferee]
all rights of the undersigned as Borrower under the Irrevocable Revolving Credit
Agreement Class B Certificates dated as of August 13, 1998 between the
undersigned Borrower and ABN AMRO BANK N.V., acting through its Chicago Branch
(the "Liquidity Agreement"). The transferee has succeeded the undersigned as
Subordination Agent under the Intercreditor Agreement referred to in the first
paragraph of the Liquidity Agreement pursuant to Section 8.1 of the
Intercreditor Agreement (as defined in 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 ____________, _______.
THE FIRST NATIONAL BANK OF MARYLAND,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:______________________________________
Name:
Title:
<PAGE>
Annex IV to Irrevocable
Revolving Credit Agreement
NOTICE OF AUTOMATIC REDUCTION OF COMMITMENT
[Date]
Ladies and Gentlemen:
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby notifies ABN AMRO Bank N.V. (the
"Liquidity Provider"), with reference to the Irrevocable Revolving Credit
Agreement Class B Certificates dated as of August 13, 1998, 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 $__________ effective __________.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the _____ day of _____, ____.
THE FIRST NATIONAL BANK OF MARYLAND,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:______________________________________
Name:
Title:
<PAGE>
Annex V to Irrevocable
Revolving Credit Agreement
NON-EXTENSION ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
Subordination Agent, as borrower (the "Borrower"), hereby certifies to ABN AMRO
Bank N.V. (the "Liquidity Provider"), with reference to the Irrevocable
Revolving Credit Agreement Class B Certificates dated as of August 13, 1998,
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 Non-Extension Advance by the Liquidity Provider to be used
for the funding of the Class B Cash Collateral Account in accordance with
Section 3.6(d) of the Intercreditor Agreement, which Advance is requested
to be made on _________.
(3) The amount of the Non-Extension 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(d) 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, any Class of Certificates other than the Class B
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(d) 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.
(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.
<PAGE>
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Non-Extension 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
Non-Extension 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 ____________, _____________.
THE FIRST NATIONAL BANK OF MARYLAND,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:______________________________________
Name:
Title:
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SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Non-Extension Advance Notice of Borrowing]
IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS C CERTIFICATES
Dated as of August 13, 1998
between
THE FIRST NATIONAL BANK OF MARYLAND
not in its individual capacity but solely as Subordination Agent,
as agent and trustee for the
Midway Airlines 1998-1C Pass Through Trust,
as Borrower
and
ABN AMRO BANK N.V., CHICAGO BRANCH
as Liquidity Provider
Relating to
Midway Airlines 1998-1C Pass Through Trust
8.92% Midway Airlines Pass Through Certificates,
Series 1998-1C
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms........................................... 1
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.1 The Advances.................................................... 7
Section 2.2 Making the Advances............................................. 8
Section 2.3 Fees............................................................ 10
Section 2.4 Reduction or Termination of the Commitment...................... 10
Section 2.5 Repayments of Interest Advances or the Final Advance............ 10
Section 2.6 Repayments of Downgrade Advances and
Non-Extension Advances.......................................... 11
Section 2.7 Payments to the Liquidity Provider Under the
Intercreditor Agreement......................................... 12
Section 2.8 Book Entries.................................................... 12
Section 2.9 Payments from Available Funds Only.............................. 12
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.1 Increased Costs................................................. 13
Section 3.2 Capital Adequacy................................................ 14
Section 3.3 Payments Free of Deductions..................................... 15
Section 3.4 Payments........................................................ 16
Section 3.5 Computations.................................................... 16
Section 3.6 Payment on Non-Business Days.................................... 16
Section 3.7 Interest........................................................ 16
Section 3.8 Replacement of Borrower......................................... 17
Section 3.9 Funding Loss Indemnification.................................... 18
Section 3.10 Illegality...................................................... 18
ARTICLE IV
CONDITIONS PRECEDENT
Section 4.1 Conditions Precedent to Effectiveness of Section 2.1............ 18
Section 4.2 Conditions Precedent to Borrowing............................... 20
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ARTICLE V
COVENANTS
Section 5.1 Affirmative Covenants of the Borrower........................... 20
Section 5.2 Negative Covenants of the Borrower.............................. 21
ARTICLE VI
FINAL ADVANCE
Section 6.1 Final Advance................................................... 21
ARTICLE VII
MISCELLANEOUS
Section 7.1 Amendments, Etc................................................. 22
Section 7.2 Notices, Etc.................................................... 22
Section 7.3 No Waiver; Remedies............................................. 23
Section 7.4 Further Assurances.............................................. 23
Section 7.5 Indemnification; Survival of Certain Provisions................. 23
Section 7.6 Liability of the Liquidity Provider............................. 23
Section 7.7 Costs, Expenses and Taxes....................................... 24
Section 7.8 Binding Effect; Participation................................... 25
Section 7.9 Severability.................................................... 26
Section 7.10 GOVERNING LAW................................................... 26
Section 7.11 Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity.............................................. 26
Section 7.12 Execution in Counterparts....................................... 27
Section 7.13 Entirety........................................................ 27
Section 7.14 Headings; Section References.................................... 27
Section 7.16 LIQUIDITY PROVIDER'S OBLIGATION TO MAKE
ADVANCES........................................................ 28
ANNEX I - Interest Advance Notice of Borrowing
ANNEX II - Downgrade Advance Notice of Borrowing
ANNEX III - Notice of Replacement Borrower
ANNEX IV - Notice of Automatic Reduction of Commitment
ANNEX V - Non-Extension Advance Notice of Borrowing
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IRREVOCABLE REVOLVING CREDIT AGREEMENT
CLASS C CERTIFICATES
IRREVOCABLE REVOLVING CREDIT AGREEMENT, CLASS C CERTIFICATES, dated
as of August 13, 1998 between THE FIRST NATIONAL BANK OF MARYLAND, a national
bank 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 ABN AMRO
BANK N.V., acting through its Chicago 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, a Downgrade
Advance, a Non-Extension Advance or an Unpaid Advance, as the case may be.
"Applicable Liquidity Rate" has the meaning assigned to such term in
3.7(g).
"Applicable Margin" means (x) with respect to any Downgrade Advance
(other than an Applied Downgrade Advance) or Non-Extension Advance (other
than an Applied Non-Extension Advance), .60% per annum and (y) with
respect
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to any other Advance (including without limitation, an Applied Downgrade
Advance and an Applied Non-Extension Advance) 3.00% per annum.
"Applied Downgrade Advance" has the meaning assigned to such term in
Section 2.6(a).
"Applied Non-Extension Advance" has the meaning assigned to such
term in Section 2.6(a).
"Assignment and Assumption Agreement" means the Assignment and
Assumption to be entered into between the Borrower and the trustee of the
Successor Trust, substantially in the form of Exhibit E to the Pass
Through Trust Agreement 1998-1C-O, dated as of the date hereof, relating
to the Class C Trust.
"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, a Non-Extension 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 (a)
the weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is not a Business Day,
for the next preceding Business Day) by the Federal Reserve Bank of New
York, or if such rate is not so published for any day that is a Business
Day, the average of the quotations for such day for such transactions
received by the Liquidity Provider from three Federal funds brokers of
recognized standing selected by it, plus (b) one-quarter of one percent
(1/4 of 1%).
"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
Charlotte, North Carolina, Chicago, Illinois, New York, New York or, so
long as any Class C Certificate is outstanding, the city and state in
which the Class C Trustee
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maintains its Corporate Trust Office or receives or disburses funds, 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, $2,900,606, 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.
"Excluded Taxes" means (i) taxes imposed on the overall net income
of the Liquidity Provider or of its Lending Office by the jurisdiction
where such Liquidity Provider's principal office or such Lending Office is
located, and (ii) Excluded Withholding Taxes.
"Excluded Withholding Taxes" means (i) withholding Taxes imposed by
the United States except to the extent that such United States withholding
Taxes are imposed as a result of any change in applicable law (excluding
from change in applicable law for this purpose a change in an applicable
treaty or other change in law affecting the applicability of a treaty)
after the date hereof, or in the case of a successor Liquidity Provider
(including a transferee of an Advance) or Lending Office, after the date
on which such successor Liquidity Provider obtains its interest or on
which the Lending Office is changed, and (ii) any withholding Taxes
imposed by the United States which are imposed or increased as a result of
the Liquidity Provider failing to deliver to the Borrower any certificate
or document (which certificate or document in the good faith judgment of
the Liquidity Provider it is legally entitled to provide) which is
reasonably requested by the Borrower to establish that payments under this
Agreement are exempt from (or entitled to a reduced rate of) withholding
Tax.
"Expenses" means liabilities, obligations, damages, settlements,
penalties, claims, actions, suits, costs, expenses and disbursements
(including, without limitation, reasonable fees and disbursements of legal
counsel and costs of investigation), provided that Expenses shall not
include any Taxes.
"Expiry Date" means August 12, 1999, initially, or any date to which
the Expiry Date is extended pursuant to Section 2.10.
"Final Advance" means an Advance made pursuant to Sections 2.2(c).
"Intercreditor Agreement" means the Intercreditor Agreement dated
the date hereof, among the Trustees, the Liquidity Provider, the liquidity
provider
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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 third Business Day following
either (x) the Liquidity Provider's receipt of the Notice of
Borrowing for such LIBOR Advance (or, in the case of an
Non-Applied Downgrade Advance, the period beginning on the
Expiry Date) or (y) the withdrawal of funds from the Class C
Cash Collateral Account for the purpose of paying interest on
the Class C Certificates as contemplated by Section 2.6(a)
hereof and, in either case, ending on the next Regular
Distribution Date (or ending, in the case of an Interest
Period applicable to any Non-Applied Downgrade Advance or
Non-Applied Non-Extension Advance, on the numerically
corresponding day in the sixth calendar month after the first
day of the applicable Interest Period and/or on the next
Regular Distribution Date, as Midway may select by providing
notice thereof to the Borrower and the Liquidity Provider no
later than three Business Days prior to the commencement of
such Interest Period, provided that if Midway shall not
provide such a notice at least three Business Days prior to
the commencement of such Interest Period, then Midway shall be
deemed to have selected and Interest Period 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 (or ending, in the case of an
Interest Period applicable to any Non-Applied Downgrade
Advance or Non-Applied Non-Extension Advance, on the
numerically corresponding day in the sixth calendar month
after the first day of the applicable Interest Period and/or
on the next Regular Distribution Date, as Midway may select by
providing notice thereof to the Borrower and the Liquidity
Provider no later than three Business Days prior to the
commencement of such Interest Period, provided that if Midway
shall not provide such a notice at least three Business Days
prior to the commencement of such Interest Period, then Midway
shall be deemed to have selected an Interest Period ending on
the next Regular Distribution Date;
provided, however, that (I) if a Non-Applied Advance which is a LIBOR
Advance becomes an Applied Downgrade Advance or Applied Non-Extension
Advance, as
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the case may be, the Interest Period then applicable to such Non-Applied
Advance shall be applicable to such Applied Downgrade Advance or Applied
Non-Extension Advance, as the case may be, and (II), if (x) the Final
Advance shall have been made, or (y) other outstanding Advances shall have
been converted into the Final Advance, then the Interest Periods shall be
successive periods of one month beginning on the third Business Day
following the Liquidity Provider's receipt of the Notice of Borrowing for
such Final Advance (in the case of clause (x) above) or the Regular
Distribution Date following such conversion (in the case of clause (y)
above).
"Lending Office" means the lending office of the Liquidity Provider,
presently located at 135 South LaSalle Street, Chicago, Illinois 60674, or
such other lending office as the Liquidity Provider from time to time
shall notify the Borrower as its lending office hereunder; provided that
the Liquidity Provider shall not change its Lending Office to a Lending
Office outside the United States of America except in accordance with
Section 3.1, 3.2 or 3.3 hereof.
"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 average
(rounded upward, if necessary, to the next higher 1/16 of 1%) of the rates
per annum at which deposits in dollars are offered to major 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 an amount
approximately equal to 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.
"Liquidity Event of Default" means the occurrence of either the
following: (a) 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 or (b) a Midway 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
Preamble to this Agreement.
"Non-Applied Advance" means any Non-Applied Non-Extension Advance or
Non-Applied Downgrade Advance.
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"Non-Applied Downgrade Advance" means any Downgrade Advance, other
than an Applied Downgrade Advance.
"Non-Applied Non-Extension Advance" means any Non-Extension Advance,
other than an Applied Non-Extension Advance.
"Non-Excluded Tax" has the meaning specified in Section 3.3.
"Non-Extension Advance" means an Advance made pursuant to Section
2.2(d).
"Notice of Borrowing" has the meaning specified in Section 2.2(e).
"Notice of Replacement Borrower" has the meaning specified in
Section 3.8.
"Offering Memorandum" means the Offering Memorandum dated August 6,
1998 of Midway relating to the Certificates, as such Offering Memorandum
may be amended or supplemented.
"Participant" has the meaning assigned to such term in Section
7.8(b).
"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.
"Related Indemnitee" means, with respect to any Liquidity
Indemnitee, its director, officer, employee, agent, affiliate or employer.
"Replenishment Amount" has the meaning assigned to such term in
Section 2.6(b).
"Required Amount" means, for any day, the sum of the aggregate
amount of interest, calculated at the rate per annum equal to the Stated
Interest Rate for the Class C Certificates (taking into account the
possible increase in the Stated Rate as a result of a failure of a
Registration Event failing to occur), that would be payable on the Class C
Certificates on each of the three successive semi-annual Regular
Distribution Dates immediately following such day or, if such day is a
Regular Distribution Date, on such day and the succeeding two semi-annual
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.
"Successor Trust" means Midway Airlines Pass Through Trust
1998-1C-S.
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"Termination Date" means the earliest to occur of the following: (i)
the Expiry Date; (ii) the date on which the Borrower delivers to the
Liquidity Provider a certificate, signed by a Responsible Officer of the
Borrower, certifying that all of the Class C Certificates have been paid
in full (or provision has been made for such payment in accordance with
the Intercreditor Agreement and the Trust Agreements) or are otherwise no
longer entitled to the benefits of this Agreement; (iii) the date on which
the Borrower delivers to the Liquidity Provider a certificate, signed by a
Responsible Officer of the Borrower, certifying that a Replacement
Liquidity Facility has been substituted for this Agreement in full
pursuant to Section 3.6(e) of the Intercreditor Agreement; (iv) the date
on which the Liquidity Provider makes the Final Advance; and (v) the date
on which no Advance is or may (including by reason of reinstatement as
herein provided) become available for a Borrowing hereunder.
"Unpaid Advance" has the meaning assigned to such term in Section
2.5.
(b) Terms Defined in the Intercreditor Agreement. For all purposes
of this Agreement, the following terms shall have the respective meanings
assigned to such terms in the Intercreditor Agreement:
"ABN AMRO Fee Letter", "Certificates", "Class C Certificate", "Class C
Certificateholder", "Class C Cash Collateral Account", "Class C Trust",
"Class C Trust Agreement", "Class C Trustee", "Class A Certificates",
"Class B Certificates", "Class D Certificates", "Closing Date",
"Controlling Party", "Corporate Trust Office", "Deposits", "Distribution
Date", "Equipment Notes", "Indenture", "Initial Purchaser", "Investment
Earnings", "Liquidity Facility", "Midway", "Midway Bankruptcy Event",
"Moody's", "Note Purchase Agreement", "Operative Agreements",
"Participation Agreements", "Performing Equipment Note", "Person", "Pool
Balance", "Purchase Agreement", "Rating Agencies", "Registration Event",
"Regular Distribution Dates", "Replacement Liquidity Facility",
"Responsible Officer", "Scheduled Payment", "Special Payment", "Standard &
Poor's", "Stated Interest Rate", "Subordination Agent", "Taxes",
"Threshold Rating", "Transfer", "Triggering Event", "Trust Agreement",
"Trustee" 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
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Section 2.4(b)) in an aggregate amount at any time outstanding not to exceed the
Commitment.
Section 2.2 Making the Advances. (a) Interest Advances shall be made
in one or more Borrowings by delivery to the Liquidity Provider of one or more
written and completed Notices of Borrowing in substantially the form of Annex I
attached hereto, signed by a Responsible Officer of the Borrower, in an amount
not exceeding the Available Commitment at such time and shall be used solely for
the payment when due of interest on the Class C Certificates at the Stated
Interest Rate therefor in accordance with Section 3.6(a) of the Intercreditor
Agreement. Each Interest Advance made hereunder shall automatically reduce the
Available Commitment and the amount available to be borrowed hereunder by
subsequent Advances by the amount of such Interest Advance (subject to
reinstatement as provided in the next sentence). Upon repayment to the Liquidity
Provider in full of the amount of any Interest Advance made pursuant to this
Section 2.2(a), together with accrued interest thereon (as provided herein), the
Available Commitment shall be reinstated by the amount of such repaid Interest
Advance; provided, however, that the Available Commitment shall not be so
reinstated at any time after (i) the acceleration of all the outstanding
Equipment Notes or (ii)(A) a Triggering Event shall have occurred and (B) there
exists a Performing Note Deficiency.
(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 previously 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 equal to 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) and Section 3.6(f) of
the Intercreditor Agreement.
(c) A Final Advance may 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 in an amount equal to the
Available Commitment at such time, and shall be used to fund the Class C Cash
Collateral Account (in accordance with Section 3.6(f) of the Intercreditor
Agreement).
(d) A Non-Extension Advance shall be made in a single Borrowing if
this Agreement is not extended in accordance with Section 3.6(d) of the
Intercreditor Agreement (unless a Replacement Liquidity Facility to replace this
Agreement shall have been delivered to the Borrower in accordance with said
Section 3.6(d) within the time period specified in such Section) by delivery to
the Liquidity Provider of a written and completed Notice of Borrowing in
substantially the form of Annex V attached hereto, signed by a Responsible
Officer of the Borrower, in an amount equal to the Available Commitment at such
time, and shall be used to fund the Class C Cash
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Collateral Account in accordance with said Section 3.6(d) and Section 3.6(f) of
the Intercreditor Agreement.
(e) Each Borrowing (other than the making of a Final Advance) shall
be made on notice in writing (a "Notice of Borrowing") in substantially the form
required by Section 2.2(a), 2.2(b) or 2.2(d), as the case may be, given by the
Borrower to the Liquidity Provider not later than 1 p.m. (New York City time) on
the second Business Day prior to the day of the proposed Borrowing; provided
that, a Borrowing in respect of an Interest Advance pursuant to Section 2.2(a)
shall be made on such notice to the Liquidity Provider given not later than 1
p.m. (New York City time) on the Business Day of such Borrowing. Upon
satisfaction of the conditions precedent set forth in Section 4.2 with respect
to a requested Borrowing, the Liquidity Provider shall, before 12:00 Noon (New
York City time) on the date of such Borrowing (or, in the case of a Borrowing in
respect of an Interest Advance pursuant to Section 2.2(a), before 3 p.m. (New
York Cite time) on the date of such Borrowing) or on such later Business Day
specified by the Borrower in such Notice of Borrowing, make available to the
Borrower, in U.S. dollars and in immediately available funds, the amount of such
Borrowing to be paid to the Borrower in accordance with its payment
instructions. If a Notice of Borrowing is delivered by the Borrower in respect
of any Borrowing after 1 p.m. (New York City time) on a Business Day, the
Liquidity Provider shall, before 12:00 Noon (New York City time) on the third
Business Day following the day of receipt of such Notice of Borrowing (or, in
the case of a Borrowing in respect of an Interest Advance pursuant to Section
2.2(a), on the next Business Day following receipt of such notice) or on such
later Business Day specified by the Borrower in such Notice of Borrowing, make
available to the Borrower, in U.S. dollars and in immediately available funds,
the amount of such Borrowing to be paid to the Borrower in accordance with its
payment instructions. Payments of proceeds of a Borrowing shall be made by wire
transfer of immediately available funds to the Borrower in accordance with such
wire transfer instructions as the Borrower shall furnish from time to time to
the Liquidity Provider for such purpose. Each Notice of Borrowing shall be
irrevocable and binding on the Borrower.
(f) 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.
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Section 2.3 Fees. (a) Subject to the provisions of Section 2.9, the
Borrower agrees to pay to the Liquidity Provider an advisory fee in the amount
set forth in the ABN AMRO Fee Letter. Such fee shall be payable on the Effective
Date. Nothing contained in this Section 2.3(a) shall require the Borrower to pay
any amount under this Section 2.3(a) other than to the extent the Borrower shall
have funds available therefor.
(b) Subject to the provisions of Section 2.9, the Borrower shall
pay, or shall cause to be paid, to the Liquidity Provider, a fee per annum, as
set forth in the ABN AMRO Fee Letter on the average daily Available Commitment
from the Effective Date to the earlier of the date on which a Downgrade Advance
or Non-Extension Advance is made and the date on which the Commitment
terminates. Such fee shall be payable in arrears on each Regular Distribution
Date. Nothing contained in this Section 2.3(b) shall require the Borrower to pay
any amount under this Section 2.3(b) other than to the extent the Borrower shall
have funds available therefor.
Section 2.4 Reduction or Termination of the Commitment. (a)
Automatic Reductions. Promptly following each date on which the Required Amount
is reduced as a result of a reduction in the Pool Balance of the Class C
Certificates or otherwise, the Commitment shall automatically be reduced to an
amount equal to such reduced Required Amount (as calculated by the Borrower).
The Borrower shall give notice of any such automatic reduction of the Commitment
(substantially in the form of Annex IV hereto) to the Liquidity Provider (with a
copy to Midway) 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,
Non-Extension 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 2.6, 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 in accordance with Section 2.6 hereof. The Borrower and the Liquidity
Provider agree that the repayment in full of each Interest
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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 and Non-Extension
Advances. (a) Amounts advanced hereunder in respect of a Downgrade Advance or a
Non-Extension Advance shall be deposited in the Class C Cash Collateral Account,
and invested and withdrawn from the Class C Cash Collateral Account, as set
forth in Sections 3.6(c), (d) and (f) of the Intercreditor Agreement. Subject to
Section 2.9, 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 or a Non-Extension Advance, interest on
the principal amount of any such Downgrade Advance or a Non-Extension Advance as
provided in Section 3.7; provided, however, that amounts in respect of a (i) any
distribution to the Liquidity Provider of Investment Earnings pursuant to
Section 3.6(f) of the Intercreditor Agreement shall constitute a payment of
interest due on such Downgrade Advance or Non-Extension Advance in the amount of
such Investment Earnings and (ii) amounts in respect of a Downgrade Advance or
Non-Extension Advance withdrawn from the Class C Cash Account for the purpose of
paying interest on the Class C Pass Through Certificates in accordance with
Section 3.6(f) of the Intercreditor Agreement (the amount of any such withdrawal
being an "Applied Downgrade Advance" or "Applied Non-Extension Advance,"
respectively), shall be treated as an Interest Advance under this Agreement for
purposes of determining the Applicable Liquidity Rate for interest payable
thereon; provided further, however, that if following the making of a Downgrade
Advance or Non-Extension Advance, the Liquidity Provider elects by notice to the
Borrower to convert such Advance into a Final Advance, such Downgrade Advance or
Non-Extension Advance, as the case may be, shall thereafter be treated as a
Final Advance under this Agreement for purposes of determining the Applicable
Liquidity Rate for interest payable thereon. 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 or
Non-Extension 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) At any time when an Applied Downgrade Advance or Applied
Non-Extension Advance (or any portion thereof) is outstanding, upon the deposit
in the Class C Cash Collateral Account of any amount pursuant to clause "third"
of Section 2.4(b)(i), clause "third" of Section 3.2 or clause "fourth" of
Section 3.3 of the Intercreditor Agreement (any such amount being a
"Replenishment Amount") for the purpose of replenishing the balance thereof up
to the Required Amount at such time, (i) the aggregate outstanding principal
amount of all Applied Downgrade Advances or Applied Non-Extension Advances, as
the case may be, shall be automatically reduced by the amount of such
Replenishment Amount and (ii) the principal amount of the outstanding Downgrade
Advance or Non-Extension Advance, as the case may be, shall be automatically
increased by the amount of such Replenishment Amount.
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(c) 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, including but not limited to payments
pursuant to Sections 2.3, 2.5, 2.6, 3.1, 3.2, 3.9, 7.5 and 7.7 hereof, shall be
made only from amounts received by it that constitute Scheduled Payments or
Special Payments or payments under Sections 6.01 and 7.01 of the Participation
Agreements 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 incurred under this Agreement except as expressly
provided in Article VI of the Intercreditor 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.
Section 2.10 Extension of the Expiry Date; Non-Extension Advance. No
earlier than the 60th day and no later than the 40th day prior to the then
effective
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Expiry Date (unless such Expiry Date is on or after the date that is 15 days
after the Final Maturity Date for the Class C Certificates), the Borrower shall
request that the Liquidity Provider extend the Expiry Date for a period of 364
days after the then effective Expiry Date (unless the obligations of the
Liquidity Provider are earlier terminated in accordance with the terms hereof).
The Liquidity Provider shall advise the Borrower, no earlier than 40 days and no
later then 25 days prior to the then effective Expiry Date, whether, in its sole
discretion, it agrees to so extend the Expiry Date. If the Liquidity Provider
advises the Borrower on or before the 25th day prior to the Expiry Date then in
effect that such Expiry Date shall not be so extended, or fails to irrevocably
and unconditionally advise the Borrower on or before the 25th day prior to the
Expiry Date then in effect that such Expiry Date shall be so extended (and, in
each case, if the Liquidity Provider shall not have been replaced in accordance
with Section 3.6(e) of the Intercreditor Agreement), the Borrower shall be
entitled on and after such 25th day (but prior to the then effective Expiry
Date) to request a Non-Extension Advance in accordance with Section 2.2(d)
hereof and Section 3.6(d) of the Intercreditor Agreement.
ARTICLE III
OBLIGATIONS OF THE BORROWER
Section 3.1 Increased Costs. If the Liquidity Provider shall
reasonably determine that (a) any change, after the Effective Date, 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 or loan commitments made by, the Liquidity Provider or (ii) impose on the
Liquidity Provider any other condition regarding this Agreement or any Advance
and (b) the result of any event referred to in the preceding clause (i) or (ii)
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 among similarly
effected credit and funding facilities), or to reduce the amount of any sum
received or receivable by the Liquidity Provider under this Agreement with
respect thereto, then, upon demand by the Liquidity Provider (such demand to be
made as soon as practicable, but not later than 30 days after a Responsible
Officer of the Liquidity Provider obtains or reasonably should have obtained
knowledge of any event referred to in clause (i) or (ii) above), and subject to
Section 2.9, 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; provided that if such demand for payment is made
after such 30-day period, the Borrower shall be obligated to pay such additional
amounts only with respect to such
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increased cost or reduction actually incurred or effected on or after the 30th
day prior to the date of such demand. A Certificate as to such increased cost or
reduction (which shall set forth in reasonable detail the basis for such
increased cost on reduction) incurred by the Liquidity Provider as a result of
any event mentioned in clause (i) or (ii) above, prepared in reasonable detail
and submitted by the Liquidity Provider to the Borrower, shall be conclusive,
absent manifest error, as to the amount thereof.
The Liquidity Provider agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory 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. The Liquidity Provider agrees that if it shall make a demand for
payment of additional amounts under this Section the Borrower shall have the
right to obtain a Replacement Liquidity Facility in replacement of this
Agreement in accordance with Section 3.6(e) of the Intercreditor Agreement
provided that such replacement would eliminate the obligation of the Borrower to
pay such additional amounts.
Section 3.2 Capital Adequacy. If the Liquidity Provider shall
reasonably determine that the adoption, after the Effective Date, of any
applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change, after the Effective Date, in the interpretation or
administration thereof by any governmental authority, central bank or comparable
agency charged with the interpretation or administration thereof, or compliance
by the Liquidity Provider (or its head office) with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has the effect of reducing the
rate of return on the Liquidity Provider's capital as a consequence of issuing
or maintaining its commitment hereunder or its funding or maintaining Advances
to a level below that which the Liquidity Provider could have achieved but for
such adoption, change or compliance (taking into consideration the Liquidity
Provider's policies with respect to capital adequacy), then, upon demand by the
Liquidity Provider (such demand to be made as soon as is practicable, but not
later than 30 days after a Responsible Officer of the Liquidity Provider obtains
or should reasonably have obtained knowledge of any event referred to above in
this Section 3.2), and subject to Section 2.9, the Borrower shall pay to the
Liquidity Provider, from time to time as specified by the Liquidity Provider,
additional amounts (which amounts shall be determined by the Liquidity
Provider's reasonable allocations of the aggregate of such amounts resulting
from such event among similarly effected credit and funding facilities) 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; provided that, if such demand for payment is made after
such 30 day period, the Borrower shall be obligated to pay such amounts only
with respect to such reduction actually effected on or after the 30th day prior
to the date of such demand. 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
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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 3.2 that may
thereafter accrue and would not, in the reasonable judgment of the Liquidity
Provider, be otherwise disadvantageous in any material respect to the Liquidity
Provider. The Liquidity Provider agrees that if it shall make a demand for
payment of additional amounts under this Section the Borrower shall have the
right to obtain a Replacement Liquidity Facility in replacement of this
Agreement in accordance with Section 3.6(e) of the Intercreditor Agreement
provided that such replacement would eliminate the obligation of the Borrower to
pay such additional amounts.
Section 3.3 Payments Free of Deductions. (a) 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 Excluded Taxes (such non-excluded
taxes being referred to herein, collectively, as "Non-Excluded Taxes "are,
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) interest or any other such amounts payable under this
Agreement at the rates or in the amounts specified in 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 such additional amounts that may thereafter
accrue and would not, in the reasonable judgment of the Liquidity Provider, be
otherwise disadvantageous to the Liquidity Provider. From time to time upon the
reasonable request of the Borrower, the Liquidity Provider agrees to provide to
the Borrower two original Internal Revenue Service Forms 1001 or 4224, as
appropriate, or any successor or other form prescribed by the Internal Revenue
Service, certifying that the Liquidity Provider is exempt from or entitled to a
reduced rate of United States withholding tax on payments pursuant to this
Agreement.
(b) All payments (including, without limitation, Advances) made by
the Liquidity Provider under this Agreement shall be made free and clear of, and
without reduction for or on account of, any Taxes. If any Taxes are required to
be withheld or deducted from any amounts payable to the Borrower under this
Agreement, the Liquidity Provider shall (i) within the time prescribed therefor
by applicable law pay to the appropriate governmental or taxing authority the
full amount of any such Taxes (and any additional Taxes in respect of the
payment required under clause (ii) hereof) and make such reports or returns in
connection therewith at the time or times and in
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the manner prescribed by applicable law, and (ii) pay to the Borrower an
additional amount which (after deduction of all such Taxes) will be sufficient
to yield to the Borrower the full amount which would have been received by it
had no such withholding or deduction been made. Within 30 days after the date of
each payment hereunder, the Liquidity Provider shall furnish to the Borrower the
original or a certified copy of (or other documentary evidence of) the payment
of the Taxes applicable to such payment.
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 ABN AMRO BANK, New York, New
York, ABA No. 020009580, for the account of ABN AMRO BANK, Chicago Branch,
Account No. 650-001-1789-41, Attention: Midway Airlines Corporation.
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 shall be stated to be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day and no additional
interest shall be due as a result (and if so made, shall be deemed to have been
made when due). If any payment in respect of interest on an Advance is so
deferred to the next succeeding Business Day, such deferral shall not delay the
commencement of the next Interest Period for such Advance (if such Advance is a
LIBOR Advance) or reduce the number of days for which interest will be payable
on such Advance on the next interest payment date for such Advance.
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 (or, in the case of an Applied Downgrade
Advance or an Applied Non-Extension Advance, from and including the date on
which the amount thereof was withdrawn from the Class C Cash Collateral Account
to pay interest on the Class C Certificates) 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
or such
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other amount as in effect for such day, but in no event at a rate per annum
greater than the maximum rate permitted by applicable law; provided, however,
that, if at any time the otherwise applicable interest rate as set forth in this
Section 3.7 shall exceed the maximum rate permitted by applicable law, then any
subsequent reduction in such interest rate will not reduce the rate of interest
payable pursuant to this Section 3.7 below the maximum rate permitted by
applicable law until the total amount of interest accrued equals the amount of
interest that would have accrued if such otherwise applicable interest rate as
set forth in this Section 3.7 had at all times been in effect. Nothing contained
in this Section 3.7 shall require the Borrower to pay any amount under this
Section 3.7 other than to the extent the Borrower shall have funds available
therefor.
(b) Each Advance (other than Non-Applied Advances) 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 until the last day of its Interest Period
except as provided in Section 3.10.
(c) Each LIBOR Advance shall bear interest during each Interest
Period at a per annum rate equal to the LIBOR Rate for such Interest Period plus
the Applicable Margin for such LIBOR Advance, payable in arrears on the last day
of such Interest Period and, in the event of the payment of principal of such
LIBOR Advance on a day other than such last day, on the date of such payment (to
the extent of interest accrued on the amount of principal repaid).
(d) Each Base Rate Advance shall bear interest at a per annum rate
equal to the Base Rate plus the Applicable Margin for such Base Rate Advance,
payable in arrears on each Regular Distribution Date and, in the event of the
payment of principal of such Base Rate Advance on a day other than a Regular
Distribution Date, on the date of such payment (to the extent of interest
accrued on the amount of principal repaid).
(e) [Intentionally Omitted.]
(f) 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.
(g) Each change in the Base Rate shall become effective immediately.
The rates of interest specified in this Section 3.7 with respect to any Advance
or other amount shall be referred to as the "Applicable Liquidity Rate".
Section 3.8 Replacement of Borrower. Subject to Section 5.2(b), from
time to time, upon the effective date and time specified in a written and
completed Notice of Replacement Borrower in substantially the form of Annex III
attached hereto
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(a "Notice of Replacement Borrower") delivered to the Liquidity Provider by the
then Borrower, the successor Borrower designated therein shall be substituted
for as the Borrower for all purposes hereunder.
Section 3.9 Funding Loss Indemnification. The Borrower shall pay to
the Liquidity Provider, upon the request of the Liquidity Provider, such amount
or amounts as shall be sufficient (in the reasonable opinion of the Liquidity
Provider) to compensate it for any loss, cost, or expense incurred as a result
of:
(a) Any payment or prepayment of a LIBOR Advance on a date other
than the last day of the Interest Period for such Advance; or
(b) Any failure by the Borrower to borrow or convert, as the case
may be, a LIBOR Advance on the date for borrowing or conversion, as the
case may be, 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 also 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 also acceptable to Midway.
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
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"Effective Date") on which the following conditions precedent have been
satisfied or waived:
(a) The Liquidity Provider shall have received on or before the
Closing Date each of the following, each dated such date (except for those
documents delivered pursuant to paragraphs (v) and (vii) of this Section
4.1(a)), and each in form and substance satisfactory to the Liquidity
Provider:
(i) This Agreement duly executed on behalf of the Borrower;
(ii) The Intercreditor Agreement duly executed on behalf of
each of the parties thereto;
(iii) Fully executed copies of each of the Operative
Agreements executed and delivered on or before the Closing Date
(other than this Agreement and the Intercreditor Agreement);
(iv) A copy of the Offering Memorandum 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 Baa1, Ba1, Ba3 and B2, respectively, and
from Standard & Poor's of not lower than A-, BBB-, BB- and B,
respectively;
(vi) An executed or certified copy of each document,
instrument, certificate and opinion delivered on or before the
Closing Date pursuant to the Class C Trust Agreement, the
Intercreditor Agreement and the other Operative Agreements;
(vii) Evidence that there shall have been made and shall be in
full force and effect, all filings, recordings and/or registrations,
and there shall have been given or taken any notice or other similar
action as may be reasonably necessary or, to the extent reasonably
requested by the Liquidity Provider, reasonably advisable, in order
to establish, perfect, protect and preserve the right, title and
interest, remedies, powers, privileges, liens and security interests
of, or for the benefit of, the Trustees and the Liquidity Provider
created by the Operative Agreements executed and delivered on or
before the Closing Date;
(viii) A letter from Midway agreeing to provide to the
Liquidity Provider the periodic financial reports referred to in
Section 8.04 of the Trust Agreements; and
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(ix) 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 statement shall be true on and as of the Effective
Date: 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 Initial Purchaser under the Purchase Agreement shall
have been satisfied (except for any of such conditions precedent under the
Purchase Agreement that shall have been waived by the Initial Purchaser).
(e) The Borrower shall have received a certificate, dated the date
hereof, signed by a duly authorized representative of the Liquidity
Provider, certifying that all conditions precedent to the effectiveness of
Section 2.1 have been satisfied or waived (other than this Section
4.1(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:
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(a) Performance of This and Other Agreements. Punctually pay or
cause to be paid all amounts payable by it under this Agreement and the
other Operative Agreements and observe and perform in all material
respects the conditions, covenants and requirements applicable to it
contained in this Agreement and the other Operative Agreements.
(b) Reporting Requirements. Furnish to the Liquidity Provider with
reasonable promptness, such information and data with respect to the
transactions contemplated by the Operative Agreements as from time to time
may be reasonably requested by the Liquidity Provider; and permit the
Liquidity Provider, upon reasonable notice, to inspect the Borrower's
books and records with respect to such transactions and to meet with
officers and employees of the Borrower to discuss such transactions.
Section 5.2 Negative Covenants of the Borrower. So long as any
Advance shall remain unpaid or the Liquidity Provider shall have any Commitment
hereunder or the Borrower shall have any obligation to pay any amount to the
Liquidity Provider hereunder, the Borrower will not, without the written consent
of the Liquidity Provider:
(a) Amendments. Modify, amend or supplement, or give any consent to
any modification, amendment or supplement or make any waiver with respect
to, any provision of the Trust Agreements or the Intercreditor Agreement,
except for any supplemental agreement to the Trust Agreements provided for
in Section 9.1 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.
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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: THE FIRST NATIONAL BANK OF MARYLAND
25 South Charles Street
Baltimore, Maryland 21201
Attention: Corporate Trust Department
Telephone: (410) 244-4626
Telecopy: (410) 244-4236
Liquidity ABN AMRO BANK N.V.
Provider: Aerospace Department
135 South LaSalle Street, #760
Chicago, IL 60674-9135
Attention: Claudia Heldring
Telephone: (312) 904-2900
Telecopy: (312) 606-8428
with copy to:
ABN AMRO BANK N.V.
135 South LaSalle Street, #625
Chicago, IL 60674-9135
Attention: Loan Operations
Telephone: (312) 904-2836
Telecopy: (312) 606-8428
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,
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<PAGE>
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 Participation
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, upon
reasonable request, 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 6.01 and 7.01 of the Participation Agreements. In
addition, the Borrower agrees, subject to Section 2.9 hereof, to indemnify,
protect, defend and hold harmless the Liquidity Provider from, against and in
respect of, and shall pay on demand, all Expenses of any kind or nature
whatsoever, whether arising before, on or after the date hereof, that may be
imposed, incurred by or asserted against any Liquidity Indemnitee, in any way
relating to, resulting from, or arising out of or in connection with, this
Agreement, the Intercreditor Agreement, the Note Purchase Agreement or any
Participation Agreement; 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 to which it is a
party. The indemnities contained in such Sections 6.01 and 7.01 of the
Participation Agreements 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, employees, affiliates or directors
shall be liable or responsible for: (i) the use which may be made of the
Advances or any acts or
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<PAGE>
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) Neither the Liquidity Provider nor any of its officers,
employees,directors or affiliates shall be liable or responsible in any respect
for (i) any error, omission, interruption or delay in transmission, dispatch or
delivery of any message or advice, however transmitted, in connection with this
Agreement or any Notice of Borrowing delivered hereunder, or (ii) any action,
inaction or omission which may be taken by it in good faith, absent willful
misconduct or negligence (in which event the extent of the Liquidity Provider's
potential liability to the Borrower shall be limited as set forth in the
immediately preceding paragraph), in connection with this Agreement or any
Notice of Borrowing.
Section 7.7 Costs, Expenses and Taxes. The Borrower agrees, subject
to Section 2.9 hereof, to pay, or cause to be paid (A) on the Effective Date and
on such later date or dates on which the Liquidity Provider shall make demand,
all reasonable out-of-pocket costs and expenses of the Liquidity Provider in
connection with the preparation, negotiation, execution, delivery, filing and
recording of this Agreement, any other Operative Agreement and any other
documents which may be delivered in connection with this Agreement, including,
without limitation, the reasonable fees and expenses of outside counsel for the
Liquidity Provider and (B) on demand, all reasonable costs and expenses of the
Liquidity Provider (including reasonable counsel fees and expenses) in
connection with (i) the enforcement of this Agreement or any other Operative
Agreement, (ii) the modification or amendment of, or supplement to, this
Agreement or any other Operative Agreement or such other documents which may be
delivered in connection herewith or therewith (whether or not the same shall
become effective) or (iii) any action or proceeding relating to any order,
injunction, or other process or decree restraining or seeking to restrain the
Liquidity Provider from paying any amount under this Agreement, the
Intercreditor Agreement or any other Operative Document or otherwise affecting
the application of funds in the Cash Collateral Accounts. In addition, subject
to Section 2.9 hereof, 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
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<PAGE>
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; Participation. (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 (including, without
limitation, funding participations and participations in rights to receive
interest payments hereunder) and under the other Operative Agreements to such
Persons as the Liquidity Provider may in its sole discretion select, subject to
the requirement of Section 7.8(b). No such participation by the Liquidity
Provider, however, will relieve the Liquidity Provider of its obligations
hereunder. In connection with any participation or any proposed participation,
the Liquidity Provider may disclose to the participant or the proposed
participant any information that the Borrower is required to deliver or to
disclose to the Liquidity Provider pursuant to this Agreement. The Borrower
acknowledges and agrees that the Liquidity Provider's source of funds may derive
in part from its participants. Accordingly, references in this Agreement and the
other Operative Agreements to determinations, reserve and capital adequacy
requirements, increased costs, reduced receipts and the like as they pertain to
the Liquidity Provider shall be deemed also to include those of each of its
participants (subject, in each case, to the maximum amount that would have been
incurred by or attributable to the Liquidity Provider directly if the Liquidity
Provider, rather than the participant, had held the interest participated).
(b) If, pursuant to subsection (a) above, the Liquidity Provider
sells any participation to any bank or other entity (each, a "Participant"),
then, concurrently with the effectiveness of such participation, the Participant
shall (i) represent to the Liquidity Provider (for the benefit of the Liquidity
Provider and the Borrower) either (A) that it is incorporated under the laws of
the United States or a state thereof or (B) that under applicable law and
treaties, no taxes 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
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<PAGE>
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 (and required by applicable law) indicating that payments
hereunder are not subject to United States federal withholding tax, the Borrower
will withhold taxes as required by law from such payments at the applicable
statutory rate without any obligation to gross-up or indemnify pursuant to
Section 3.3.
(c) Notwithstanding the other provisions of this Section 7.8, the
Liquidity Provider may assign and pledge all or any portion of the Advances
owing to it to any Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any Operating Circular issued by such Federal Reserve
Bank, provided that any payment in respect of such assigned Advances made by the
Borrower to the Liquidity Provider in accordance with the terms of this
Agreement shall satisfy the Borrower's obligations hereunder in respect of such
assigned Advance to the extent of such payment. No such assignment shall release
the Liquidity Provider from its obligations hereunder.
Section 7.9 Severability. Any provision of this Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization 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;
Waiver of Immunity. (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 non-exclusive 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;
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<PAGE>
(iii) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form and mail), postage
prepaid, to each party hereto at its address set forth in Section 7.2, or
at such other address of which the Liquidity Provider shall have been
notified pursuant thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
(b) THE BORROWER AND THE LIQUIDITY PROVIDER EACH HEREBY AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE RELATIONSHIP THAT IS
BEING ESTABLISHED, including, without limitation, contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. The
Borrower and the Liquidity Provider each warrant and represent that it has
reviewed this waiver with its legal counsel, and that it knowingly and
voluntarily waives its jury trial rights following consultation with such legal
counsel. THIS WAIVER CANNOT BE MODIFIED ORALLY.
(c) The Liquidity Provider hereby waives any immunity it may have
from the jurisdiction of the courts of the United States or of any State and
waives any immunity any of its properties located in the United States may have
from attachment or execution upon a judgment entered by any such court under the
United States Foreign Sovereign Immunities Act of 1976 or any similar successor
legislation.
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.
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<PAGE>
Section 7.15 Transfer. The Liquidity Provider hereby acknowledges
and consents to the Transfer contemplated by the Assignment and Assumption
Agreement.
Section 7.16 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>
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.
THE FIRST NATIONAL BANK OF
MARYLAND, not in its individual capacity but
solely as Subordination Agent, as Borrower
By: /s/ Robert D. Brown
------------------------------------------
Name: Robert D. Brown
Title: Assistant Vice President
ABN AMRO BANK N.V., CHICAGO BRANCH,
as Liquidity Provider
By: /s/ Claudia C. Heldring
------------------------------------------
Name: Claudia C. Heldring
Title: Vice President
By: /s/ Carla S. Waggoner
------------------------------------------
Name: Carla S. Waggoner
Title: Assistant Vice President
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<PAGE>
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 ABN AMRO Bank N.V. (the
"Liquidity Provider"), with reference to the Irrevocable Revolving Credit
Agreement Class C Certificates dated as of August 13, 1998, between the Borrower
and the Liquidity Provider (the "Liquidity Agreement"; the terms defined therein
and not otherwise defined herein being used herein as therein defined or
referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of an Interest Advance by the Liquidity Provider to be used for the
payment of interest on the Class C Certificates which was payable on the
Distribution Date falling on _____, __________ in accordance with the
terms and provisions of the Class C Trust Agreement and the Class C
Certificates and has not been paid pursuant to clause fourth 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 C Certificates on such Distribution Date,
(ii) does not include any amount with respect to the payment of principal
of, or premium on, the Class A Certificates, the Class B Certificates, the
Class C Certificates or the Class D Certificates, or interest 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.
(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
<PAGE>
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 _______________, _______________.
THE FIRST NATIONAL BANK OF MARYLAND,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:
-------------------------------------
Name:
Title:
<PAGE>
SCHEDULE I TO INTEREST ADVANCE NOTICE OF BORROWING
[Insert Copy of Computations in accordance with
Interest Advance Notice Of Borrowing]
<PAGE>
Annex II to Irrevocable
Revolving Credit Agreement
DOWNGRADE ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
Subordination Agent, as borrower (the "Borrower"), hereby certifies to ABN AMRO
Bank N.V. (the "Liquidity Provider"), with reference to the Irrevocable
Revolving Credit Agreement Class C Certificates dated as of August 13, 1998,
between the Borrower and the Liquidity Provider (the "Liquidity Agreement"; the
terms defined therein and not otherwise defined herein being used herein as
therein defined or referenced), that:
(1) The Borrower is the Subordination Agent under the Intercreditor
Agreement.
(2) The Borrower is delivering this Notice of Borrowing for the
making of the Downgrade Advance by the Liquidity Provider to be used for
the funding of the Class C Cash Collateral Account in accordance with
Section 3.6(c) of the Intercreditor Agreement by reason of the downgrading
of the short-term unsecured debt rating of the Liquidity Provider issued
by either Rating Agency below the 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, any Class of Certificates other than the Class C
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.
(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
<PAGE>
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 _______________, _________.
THE FIRST NATIONAL BANK OF MARYLAND,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:
-------------------------------------
Name:
Title:
<PAGE>
SCHEDULE I TO DOWNGRADE ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Downgrade Advance Notice of Borrowing]
<PAGE>
Annex III to Irrevocable
Revolving Credit Agreement
NOTICE OF REPLACEMENT BORROWER
[Date]
Ladies and Gentlemen:
For value received, the undersigned beneficiary hereby irrevocably
transfers to:
[Name of Transferee]
[Address of Transferee]
all rights of the undersigned as Borrower under the Irrevocable Revolving Credit
Agreement Class C Certificates dated as of August 13, 1998 between the
undersigned Borrower and ABN AMRO BANK N.V., acting through its Chicago Branch
(the "Liquidity Agreement"). The transferee has succeeded the undersigned as
Subordination Agent under the Intercreditor Agreement referred to in the first
paragraph of the Liquidity Agreement pursuant to Section 8.1 of the
Intercreditor Agreement (as defined in 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 _______________,
_________.
THE FIRST NATIONAL BANK OF MARYLAND,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:
-------------------------------------
Name:
Title:
<PAGE>
Annex IV to Irrevocable
Revolving Credit Agreement
NOTICE OF AUTOMATIC REDUCTION OF COMMITMENT
[Date]
Ladies and Gentlemen:
The undersigned, a duly authorized signatory of the undersigned
subordination agent (the "Borrower"), hereby notifies ABN AMRO Bank N.V. (the
"Liquidity Provider"), with reference to the Irrevocable Revolving Credit
Agreement Class C Certificates dated as of August 13, 1998, 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 $__________ effective __________.
IN WITNESS WHEREOF, the Borrower has executed and delivered this
Notice of Borrowing as of the _____ day of _____, ____.
THE FIRST NATIONAL BANK OF MARYLAND,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:
-------------------------------------
Name:
Title:
<PAGE>
Annex V to Irrevocable
Revolving Credit Agreement
NON-EXTENSION ADVANCE NOTICE OF BORROWING
The undersigned, a duly authorized signatory of the undersigned
Subordination Agent, as borrower (the "Borrower"), hereby certifies to ABN AMRO
Bank N.V. (the "Liquidity Provider"), with reference to the Irrevocable
Revolving Credit Agreement Class C Certificates dated as of August 13, 1998,
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 Non-Extension Advance by the Liquidity Provider to be used
for the funding of the Class C Cash Collateral Account in accordance with
Section 3.6(d) of the Intercreditor Agreement, which Advance is requested
to be made on _________.
(3) The amount of the Non-Extension 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(d) 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, any Class of Certificates other than the Class C
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(d) 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.
(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.
<PAGE>
The Borrower hereby acknowledges that, pursuant to the Liquidity
Agreement, (A) the making of the Non-Extension 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
Non-Extension 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 _______________, _________.
THE FIRST NATIONAL BANK OF MARYLAND,
not in its individual capacity but
solely as Subordination Agent, as
Borrower
By:
-------------------------------------
Name:
Title:
<PAGE>
SCHEDULE I TO NON-EXTENSION ADVANCE NOTICE OF BORROWING
[Insert Copy of computations in accordance with
Non-Extension Advance Notice of Borrowing]
INTERCREDITOR AGREEMENT
Dated as of
August 13, 1998
among
THE FIRST NATIONAL BANK OF MARYLAND
not in its individual capacity
but solely as Trustee under the
Midway Airlines Pass Through Trust 1998 - 1A,
Midway Airlines Pass Through Trust 1998 - 1B,
Midway Airlines Pass Through Trust 1998 - 1C and
Midway Airlines Pass Through Trust 1998 - 1D
ABN AMRO BANK, N.V., CHICAGO BRANCH
as Class A Liquidity Provider,
Class B Liquidity Provider and
Class C Liquidity Provider
and
THE FIRST NATIONAL BANK OF MARYLAND
not in its individual capacity except
as expressly set forth herein but
solely as Subordination Agent and trustee hereunder
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions................................................ 2
ARTICLE II
TRUST ACCOUNTS; CONTROLLING PARTY
SECTION 2.1 Agreement to Terms of Subordination;
Payments from Monies Received Only......................... 22
SECTION 2.2 Trust Accounts............................................. 22
SECTION 2.3 Deposits to the Collection Account and
Special Payments Account................................... 24
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
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........................................ 36
SECTION 3.6 Liquidity Facilities....................................... 36
ARTICLE IV
EXERCISE OF REMEDIES
SECTION 4.1 Directions from the Controlling Party...................... 42
SECTION 4.2 Remedies Cumulative........................................ 44
SECTION 4.3 Discontinuance of Proceedings.............................. 44
SECTION 4.4 Right of Certificateholders to Receive
Payments Not to Be Impaired................................ 44
SECTION 4.5 Undertaking for Costs...................................... 44
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Page
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ARTICLE V
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEES, ETC.
SECTION 5.1 Notice of Indenture Default or Triggering Event............ 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
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........................ 47
SECTION 6.7 Compensation............................................... 48
SECTION 6.8 May Become Certificateholder............................... 48
SECTION 6.9 Subordination Agent Required; Eligibility.................. 48
SECTION 6.10 Money to Be Held in Trust.................................. 49
ARTICLE VII
INDEMNIFICATION OF SUBORDINATION AGENT
SECTION 7.1 Scope of Indemnification................................... 49
ARTICLE VIII
SUCCESSOR SUBORDINATION AGENT
SECTION 8.1 Replacement of Subordination Agent; Appointment of
Successor.................................................. 49
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
SECTION 9.1 Amendments, Waivers, Etc................................... 51
SECTION 9.2 Subordination Agent Protected.............................. 52
SECTION 9.3 Effect of Supplemental Agreements.......................... 52
SECTION 9.4 Notice to Rating Agencies.................................. 52
ii
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Page
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ARTICLE X
MISCELLANEOUS
SECTION 10.1 Termination of Intercreditor Agreement..................... 52
SECTION 10.2 Intercreditor Agreement for Benefit of
Trustees, Liquidity Providers and
Subordination Agent........................................ 53
SECTION 10.3 Notices.................................................... 53
SECTION 10.4 Severability............................................... 54
SECTION 10.5 No Oral Modifications or Continuing Waivers................ 54
SECTION 10.6 Successors and Assigns..................................... 54
SECTION 10.7 Headings................................................... 55
SECTION 10.8 Counterpart Form........................................... 55
SECTION 10.9 Subordination.............................................. 55
SECTION 10.10 GOVERNING LAW.............................................. 56
SECTION 10.11 Submission to Jurisdiction; Waiver of Jury
Trial; Waiver of Immunity.................................. 56
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INTERCREDITOR AGREEMENT
INTERCREDITOR AGREEMENT dated as of August 13, 1998, among THE FIRST
NATIONAL BANK OF MARYLAND, a national banking association ("FNBM"), not in its
individual capacity but solely as Trustee of each Trust (each as defined below),
ABN AMRO BANK N.V., acting through its Chicago Branch, as Class A Liquidity
Provider, ABN AMRO BANK N.V., acting through its Chicago Branch, as Class B
Liquidity Provider, ABN AMRO BANK N.V., acting through its Chicago Branch, as
Class C Liquidity Provider and THE FIRST NATIONAL BANK OF MARYLAND, 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 (i) in the case of each Aircraft
that is owned by Midway at the time such Indenture is entered into (the "Owned
Aircraft"), Midway will issue on a recourse basis four series of Equipment Notes
to finance the purchase of such Aircraft, and (ii) in the case of each Aircraft
that is leased to Midway pursuant to a related Lease at the time such Indenture
is entered into (the "Leased Aircraft"), the related Owner Trustee will issue on
a nonrecourse basis four series of Equipment Notes to finance the purchase of
such Aircraft;
WHEREAS, pursuant to the Note Purchase Agreement and the
Participation 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 class 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 Purchase Agreement, the Initial Purchasers
propose to purchase the Certificates issued by each Trust in the aggregate face
amount set forth opposite 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
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for the respective Trustee of the Class A Trust, the Class B Trust and the Class
C Trust, for the benefit of the Certificateholders of such Trust; and
WHEREAS, it is a condition precedent to the obligations of the
Initial Purchasers under the Purchase Agreement that the Subordination Agent,
the Trustees and the Liquidity Providers agree to the terms of subordination set
forth in this Agreement in respect of each Class of Certificates, and the
Subordination Agent, the Trustees and the Liquidity Providers, by entering into
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".
"ABN AMRO" means ABN AMRO Bank N.V., acting through its Chicago
branch.
"ABN AMRO Fee Letter" means the Fee Letter dated August 13, 1998
between ABN AMRO, Midway and the Subordination Agent with respect to the
Liquidity Facilities.
"Acceleration" means, with respect to the amounts payable in respect
of the Equipment Notes issued under any Indenture, the declaration of such
amounts to
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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 (excluding interest,
if any, payable with respect to the Deposits related to such Trust) plus (y) the
greater of:
(A) the difference between (x) the Pool Balance of such Certificates
as of the immediately preceding Distribution Date (or, if the Current
Distribution Date is the first Distribution Date, the original aggregate
face amount of the Certificates of such Trust) 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, (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 (iii) the principal of any Equipment
Note formerly held in such Trust that has been sold pursuant hereto has
been paid in full and such payment has been distributed to the holders of
such Certificates, but without giving effect to any reduction in the Pool
Balance as a result of any distribution attributable to Deposits occurring
after the immediately preceding Distribution Date (or, if the current
Distribution Date is the first Distribution Date, occurring after the
initial issuance of the Certificates of such Trust); and
(B) the amount, if any, by which (i) the Pool Balance of such Class
of Certificates as of the immediately preceding Distribution Date (or, if
the Current Distribution Date is the first Distribution Date, the original
aggregate face amount of the Certificates of such Trust), less the amount
of the Deposits for such Class of Certificates as of such preceding
Distribution Date (or, if the Current Distribution Date is the first
Distribution Date, the original aggregate amount of the Deposits for such
Class of Certificates) other than any portion of such Deposits thereafter
used to acquire Equipment Notes pursuant to the Note Purchase Agreement,
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.
For purposes of calculating Adjusted Expected Distributions with
respect to the Certificates of any Trust, any premium paid on the Equipment
Notes held in such Trust that has not been distributed to the Certificateholders
of such Trust (other than such premium or a portion thereof applied to the
payment of interest on the Certificates of such Trust or the reduction of the
Pool Balance of such Trust) shall be added to the amount of Adjusted Expected
Distributions.
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"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 Leased Aircraft and Owned 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 with respect to such
senior Class or Classes but in no event an amount less than zero.
"Aircraft" means, with respect to each Indenture, the "Aircraft"
referred to therein.
"Applicable Margin" has the meaning assigned thereto in each of the
Liquidity Facilities.
"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.
"Appraisers" means Aircraft Information Services, Inc., Morten Beyer
and Agnew, Inc., and Simat, Helliesen & Eichner, Inc..
"Assignment and Assumption Agreements" means each of the Assignment
and Assumption Agreements to be executed to be executed among a Trustee and
trustee of the relevant Successor Trust in accordance with the relevant Trust
Agreement, as the same may be amended, modified or supplemented from time to
time.
"Available Amount" means, with respect to any Liquidity Facility on
any drawing date, subject to the proviso contained in the first sentence of
Section 3.6(g) hereof, an amount equal to (a) the Stated Amount of such
Liquidity Facility, less (b) the amount of each Interest Drawing honored by the
Liquidity Provider under such Liquidity Facility on or prior to such date which
has not been reimbursed or reinstated as of such date; provided that, following
a Downgrade Drawing, a Non-Extension Drawing or a Final Drawing under such
Liquidity Facility, the Available Amount of such Liquidity Facility shall be
zero.
"Business Day" means any day other than a Saturday or Sunday or a
day on which commercial banks are required or authorized to close in Charlotte,
North Carolina, New York, New York, Baltimore, Maryland, or the city and state
in which any Trustee, the Subordination Agent or any Loan Trustee maintains its
Corporate Trust Office or receives and disburses funds, and solely with respect
to draws under any Liquidity Facility, which is also a "Business Day" as defined
in such Liquidity Facility.
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<PAGE>
"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 an Eligible Institution,
which shall be the Subordination Agent if it shall so qualify, into which all
amounts drawn under the Class A Liquidity Facility pursuant to Section 3.6(c),
3.6(d) or 3.6(i) shall be deposited.
"Class A Certificateholder" means, at any time, any holder of one or
more Class A Certificates.
"Class A Certificates" means the certificates issued by the Class A
Trust, substantially in the form of Exhibit A to the Class A Trust Agreement,
and authenticated by the Class A Trustee, representing fractional undivided
interests in the Class A Trust, and any certificates issued in exchange therefor
or replacement thereof pursuant to the terms of the Class A Trust Agreement.
"Class A Liquidity Facility" means, initially, the Irrevocable
Revolving Credit Agreement dated as of August 13, 1998, 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 ABN AMRO Bank N.V., acting
through its Chicago 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 (i) prior to the Transfer, the Midway Airlines
1998-lA-O Pass Through Trust created and administered pursuant to the Class A
Trust Agreement and (ii) after the Transfer, the Midway Airlines 1998-1A-S Pass
Through Trust created and administered pursuant to the Class A Trust Agreement.
"Class A Trust Agreement" means (i) prior to the Transfer, the Pass
Through Trust Agreement 1998-1A-O dated as of August 13, 1998, between Midway
and the Class A Trustee and (ii) after the Transfer, the Pass Through Trust
Agreement
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<PAGE>
1998-1A-S dated as of August 13, 1998 between Midway and the Class A Trustee, in
each case as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Class A Trustee" means The First National Bank of Maryland, 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 an Eligible Institution,
which shall be the Subordination Agent if it shall so qualify, into which all
amounts drawn under the Class B Liquidity Facility pursuant to Section 3.6(c),
3.6(d) or 3.6(i) shall be deposited.
"Class B Certificateholder" means, at any time, any holder of one or
more Class B Certificates.
"Class B Certificates" means the certificates issued by the Class B
Trust, substantially in the form of Exhibit A to the Class B Trust Agreement,
and authenticated by the Class B Trustee, representing fractional undivided
interests in the Class B Trust, and any certificates issued in exchange therefor
or replacement thereof pursuant to the terms of the Class B Trust Agreement.
"Class B Liquidity Facility" means, initially, the Irrevocable
Revolving Credit Agreement dated as of August 13, 1998, 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 ABN AMRO Bank N.V., acting
through its Chicago 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 (i) prior to the Transfer, the Midway Airlines
1998-lB-O Pass Through Trust created and administered pursuant to the Class B
Trust Agreement and (ii) after the Transfer, the Midway Airlines 1998-1B-S Pass
Through Trust created and administered pursuant to the Class A Trust Agreement.
"Class B Trust Agreement" means (i) prior to the Transfer, the Pass
Through Trust Agreement 1998-1B-O dated as of August 13, 1998, between Midway
and the Class B Trustee and (ii) after the Transfer, the Pass Through Trust
Agreement 1998-1B-S dated as of August 13, 1998, between Midway and the Class B
Trustee, in
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<PAGE>
each case as the same may be amended, supplemented or otherwise modified from
time to time in accordance with its terms.
"Class B Trustee" means The First National Bank of Maryland, 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 to the Subordination Agent and maintained at an Eligible
Institution, which shall be the Subordination Agent if it shall so qualify, into
which all amounts drawn under the Class C Liquidity Facility pursuant to Section
3.6(c), 3.6(d) or 3.6(i) shall be deposited.
"Class C Certificateholder" means, at any time, any holder of one or
more Class C Certificates.
"Class C Certificates" means the certificates issued by the Class C
Trust, substantially in the form of Exhibit A to the Class C Trust Agreement,
and authenticated by the Class C Trustee, representing fractional undivided
interests in the Class C Trust, and any certificates issued in exchange therefor
or in replacement thereof pursuant to the terms of the Class C Trust Agreement.
"Class C Liquidity Facility" means, initially, the Irrevocable
Revolving Credit Agreement dated as of August 13, 1998, 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 ABN AMRO Bank N.V., acting
through its Chicago 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 (i) prior to the Transfer, the Midway Airlines
1998-lC-O Pass Through Trust created and administered pursuant to the Class C
Trust Agreement and (ii) after the Transfer, the Midway Airlines 1998-1C-S Pass
Through Trust created and administered pursuant to the Class A Trust Agreement.
"Class C Trust Agreement" means (i) prior to the Transfer, the Pass
Through Trust Agreement 1998-1C-O dated as of August 13, 1998, between Midway
and the Class C Trustee and (ii) after the Transfer, the Pass Through Trust
Agreement 1998-1C-S dated as of August 13, 1998, between Midway and the Class C
Trustee, in each case as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
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<PAGE>
"Class C Trustee" means The First National Bank of Maryland, not in
its individual capacity except as expressly set forth in the Class C Trust
Agreement, but solely as trustee under the Class C Trust Agreement, together
with any successor trustee appointed pursuant thereto.
"Class D Certificateholder" means, at any time, any holder of one or
more Class D Certificates.
"Class D Certificates" means the certificates issued by the Class D
Trust, substantially in the form of Exhibit A to the Class D Trust Agreement,
and authenticated by the Class D Trustee, representing fractional undivided
interests in the Class D Trust, and any certificates issued in exchange therefor
or in replacement thereof pursuant to the terms of the Class D Trust Agreement.
"Class D Trust" means (i) prior to the Transfer, the Midway Airlines
1998-lD-O Pass Through Trust created and administered pursuant to the Class D
Trust Agreement and (ii) after the Transfer, the Midway Airlines 1998-1D-S Pass
Through Trust Agreement created and administered pursuant to the Class D Trust
Agreement.
"Class D Trust Agreement" means (i) prior to the Transfer, the Pass
Through Trust Agreement 1998-1D-O dated as of August 13, 1998, between Midway
and the Class D Trustee and (ii) after the Transfer, the Pass Through Trust
Agreement 1998-1D-S dated as of August 13, 1998, between Midway and the Class D
Trustee, in each case, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Class D Trustee" means The First National Bank of Maryland, 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 August 13, 1998.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and Treasury Regulations promulgated thereunder.
"Collection Account" means the Eligible Deposit Account established
by the Subordination Agent pursuant to Section 2.2 which the Subordination Agent
shall make deposits in and withdrawals from in accordance with this Agreement.
"Controlling Party" means the Person entitled to act as such
pursuant to the terms of Section 2.6.
"Corporate Trust Office" means, with respect to any Trustee, the
Subordination Agent or any Loan Trustee, the office of such Person in the city
at
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which, at any particular time, its corporate trust business shall be principally
administered.
"Current Distribution Date" means a Distribution Date specified as a
reference date for calculating the Adjusted Expected Distributions or Expected
Distributions with respect to the Certificates of any Trust as of such
Distribution Date.
"Delivery Period Expiry Date" means the earlier of (a) September 30,
1999 (provided that, if a labor strike occurs at the Manufacturer prior to such
date, such date shall be extended by adding thereto the number of days that such
strike has continued in effect) and (b) the date on which Equipment Notes with
respect to all New Aircraft have been purchased by the Trusts in accordance with
the Note Purchase Agreement.
"Deposit Agreement" shall mean, with respect to any Class, the
Deposit Agreement pertaining to such Class dated the date hereof between the
Escrow Agent, and the Depositary, as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof.
"Depositary" means First Union National Bank, as depositary under
each Deposit Agreement.
"Deposits" with respect to any Class, shall have the meaning set
forth in the Deposit Agreement pertaining to such Class.
"Designated Representatives" means the Subordination Agent
Representatives, Trustee Representatives and the LP Representatives identified
under Section 2.5.
"Distribution Date" means a Regular Distribution Date or a Special
Distribution Date.
"Dollars" means United States dollars.
"Downgrade Drawing" has the meaning assigned to such term in Section
3.6(c).
"Downgraded Facility" has the meaning assigned to such term in
Section 3.6(c).
"Drawing" means an Interest Drawing, a Final Drawing, a
Non-Extension 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 with corporate trust
powers organized under the laws of the United States of America or any one of
the states thereof or the District of
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Columbia (or any U.S. branch of a foreign bank), 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,
or, if such ratings are unavailable, rated by any nationally recognized rating
organization in the United States equal to the highest rating assigned by such
rating organization, 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,
(d) any mutual fund the portfolio of which is limited to investments of the
types specified in the preceding clauses (a) through (c), including any
proprietary mutual fund of The First National Bank of Maryland for which such
bank or an affiliate is investment advisor or to which such bank provides other
services and receives reasonable compensation for such services or (e) overnight
federal funds transactions with members of the Federal Reserve Systems arranged
by federal funds brokers; 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) and (c) 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) and (c) 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
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for purposes of the Code. Notwithstanding the foregoing, no investment of the
types described in clause (b) or (c) above which is issued or guaranteed by a
Liquidity Provider or any of its 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.
"Escrow Agent" means First Union Trust Company, National
Association, as escrow agent under each Escrow and Paying Agent Agreement,
together with its successors in such capacity.
"Escrow and Paying Agent Agreement" shall mean, with respect to any
Class, the Escrow and Paying Agent Agreement pertaining to such Class dated the
date hereof between the Escrow Agent, the Initial Purchasers, the Trustee for
such Class and the Paying Agent, as the same may be amended, modified or
supplemented from time to time in accordance with the terms thereof.
"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 (excluding interest, if any, payable with respect
to Deposits related to such Trust) and (y) the difference between (A) the Pool
Balance of such Certificates as of the immediately preceding Distribution Date
(or, if the Current Distribution Date is the first Distribution Date, the
original aggregate face amount of the Certificates of such Trust) and (B) the
Pool Balance of such Certificates as of the Current Distribution Date,
calculated on the basis that (i) the principal of the Equipment Notes held in
such Trust has been paid when due (whether at stated maturity or upon
redemption, prepayment, purchase or acceleration or otherwise) and such payments
have been distributed to the holders of such Certificates and (ii) the principal
of any Equipment Note formerly held in such Trust that has been sold pursuant
hereto has been paid in full and such payments have been distributed to the
holders of such Certificates, but without giving effect to any reduction in the
Pool Balance as a result of any distribution attributable to Deposits occurring
after the immediately preceding Distribution Date (or, if the Current
Distribution Date is the first Distribution Date, occurring after the initial
issuance of the Certificates of such Trust). For purposes of calculating
Expected Distributions, any premium paid on the Equipment Notes held in any
Trust which has not been distributed to the Certificateholders of such Trust
(other than such premium or a portion thereof applied to the payment of interest
on the Certificates of such Trust or the reduction of the Pool Balance of such
Trust) shall be added to the amount of such Expected Distributions.
"Final Distribution" 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 (excluding interest, if any,
payable with respect to the Deposits relating to such Trust) and (y) the Pool
Balance of such Certificates as of
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the immediately preceding Distribution Date (less the amount of the Deposits for
such Class of Certificates as of such preceding Distribution Date other than any
portion of such Deposits thereafter used to acquire Equipment Notes pursuant to
the Note Purchase Agreement). For purposes of calculating Final Distributions
with respect to the Certificates of any Trust, any premium paid on the Equipment
Notes held in such Trust which has not been distributed to the
Certificateholders of such Trust (other than such premium or a portion thereof
applied to the payment of interest on the Certificates of such Trust or the
reduction of the Pool Balance of such Trust) shall be added to the amount of
such Final Distributions.
"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 or a Non-Extension Drawing.
"Final Legal Distribution Date" means, for the Class A Certificates,
July 2, 2016, for the Class B Certificates, July 2, 2014, for the Class C
Certificates, July 2, 2009, and for the Class D Certificates, January 2, 2003.
"Indenture" means each of the Trust Indenture and Security
Agreements entered into by the Loan Trustee, and the Owner Trustee or Midway,
pursuant to the Note Purchase Agreement, in each case 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 Event
of Default (as such term is defined in such Indenture) thereunder.
"Initial Purchasers" means Morgan Stanley & Co. Incorporated and
Credit Suisse First Boston Corporation.
"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 pertaining to a Leased
Aircraft, the "Lease" referred to therein.
"Leased Aircraft" has the meaning given to such term in the
Introduction hereto.
"Lien" means any mortgage, pledge, lien, charge, claim, disposition
of title, encumbrance, lease, sublease, sub-sublease or security interest of any
kind, including,
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without limitation, any thereof arising under any conditional sales or other
title retention agreement.
"Liquidity Event of Default", with respect to any Liquidity
Facility, has the meaning assigned to such term in such Liquidity Facility.
"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
and Sections 6.01 and 7.01 of the Participation Agreements and the ABN AMRO Fee
Letter.
"Liquidity Provider" means, at any time, the Class A Liquidity
Provider, the Class B Liquidity Provider or the Class C Liquidity Provider, as
applicable.
"Loan Trustee" means, with respect to any Indenture, the indenture
trustee thereunder.
"LP Incumbency Certificate" has the meaning assigned to such term in
Section 2.5(b).
"LP Representatives" has the meaning assigned to such term in
Section 2.5(b).
"LTV Appraisal" means a current fair market appraisal (which may be
a "desktop" appraisal) performed by an 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 and both having knowledge of all
relevant facts.
"LTV Collateral Amount" of any Leased Aircraft or Owned Aircraft, as
the case may be, for any Class of Certificates on any Distribution Date means
the lesser of (i) the LTV Ratio for such Class of Certificates multiplied by the
Appraised Current Market Value of such Aircraft (or with respect to any such
Aircraft which has suffered an Event of Loss under and as defined in the
relevant Lease (in the case of a Leased Aircraft) or Indenture (in the case of
an Owned Aircraft), the amount of the insurance proceeds paid to the related
Loan Trustee in respect thereof to the extent then held by such Loan Trustee
(and/or on deposit in the Special Payments Account) or payable to such Loan
Trustee in respect thereof), 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.
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"LTV Ratio" means for the Class A Certificates 36.7%, for the Class
B Certificates 52.6%, for the Class C Certificates 65.5% and for the Class D
Certificates 69.0%.
"Midway" means Midway Airlines Corporation, a Delaware corporation,
and its successors and permitted assigns.
"Midway 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 Midway 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 Midway 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 sixty (60) 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
Midway, a receiver, trustee or liquidator of Midway, or of any substantial
part of its property, or sequestering any substantial part of the property
of Midway 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 sixty (60) days after the date of
entry thereof; or
(b) the commencement by Midway 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 Midway to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of Midway or for all or
substantially all of its property, or the making by Midway of any
assignment for the benefit of creditors or the taking by Midway of any
corporate action to authorize any of the foregoing.
"Midway Provisions" has the meaning given to such term in Section
9.1.
"Minimum Sale Price" means, (x) with respect to any Leased Aircraft
or the Equipment Notes issued in respect of such Leased Aircraft, at any time,
the lesser of (1) 75% of the Appraised Current Market Value of such Leased
Aircraft and (2) the aggregate outstanding principal amount of such Equipment
Notes, plus accrued and unpaid interest thereon, (y) with respect to any Owned
Aircraft, at any time, the lesser of (1) 75% of the Appraised Current Market
Value of such Owned Aircraft and (2) the aggregate outstanding principal amount
of the Equipment Notes issued under related Owned Aircraft Indenture plus
accrued and unpaid interest on such Equipment Notes and (z) with respect to the
Equipment Notes issued under any Owned Aircraft
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Indenture, at any time, the lesser of (1) 75% of the aggregate Appraised Current
Market Value of the Aircraft subject to the lien of such Owned Aircraft
Indenture immediately prior to the time of determination and (2) 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-Extended Facility" has the meaning provided in Section 3.6(d).
"Non-Extension Drawing" has the meaning provided in Section 3.6(d).
"Non-Performing Equipment Note" means any Equipment Note other than
a Performing Equipment Note.
"Note Purchase Agreement" means the Note Purchase Agreement dated as
of the date hereof, among Midway, each Trustee, the Escrow Agent, the
Subordination Agent and the Paying Agent.
"Officer's Certificate" of any Person means a certification signed
by a Responsible Officer of such Person.
"Operative Agreements" means this Agreement, the Note Purchase
Agreement, the Liquidity Facilities, the Indentures, the Trust Agreements, the
Purchase Agreement, the Leases, the Participation Agreements, 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 definitions of "Operative Agreements" contained in the Leases
in any or Owned Aircraft Indenture.
"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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(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 Midway or any of its Affiliates shall be disregarded and deemed not to
be Outstanding, 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 such Trustee knows to be so
owned shall be so disregarded. Certificates so owned that have been pledged in
good faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the applicable Trustee the pledgee's right so to act with
respect to such Certificates and that the pledgee is not Midway or any of their
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.
"Owned Aircraft" has the meaning assigned to such term in the
preliminary statements of this Agreement.
"Owned Aircraft Indenture" means any Indenture relating to an Owned
Aircraft.
"Owner Participant" has the meaning provided in each of the Leases.
"Owner Trustee" means, with respect to any Indenture pertaining to
any Leased Aircraft, 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.
"Participation Agreements" means with respect to each Indenture, the
"Participation Agreement" referred to therein.
"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 Midway under Title 11 of the
United States Code (the "Bankruptcy Code"), (i) any payment default existing
during a 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 Midway refuses to assume or agree
to perform its obligations under the Lease related to such Equipment Notes (in
the case of a Leased Aircraft) or under the Indenture
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pertaining to the Owned Aircraft (in the case of the Owned Aircraft) 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.
"Person" means any individual, limited liability company,
corporation, partnership, 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 or in respect of Deposits
relating to 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
special distribution with respect to unused Deposits, payment of principal, if
any, on the Equipment Notes or payment with respect to other Trust Property held
in such Trust and the distribution thereof to be made on such 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: (i) the outstanding Pool Balance of the applicable Class of
Certificates within 10 Business Days after the Final Legal Distribution Date for
such Class or (ii) interest due on such Certificates within 10 Business Days
after any Distribution Date (unless, except in the case of the Class D
Certificates, the Subordination Agent shall have made an Interest Drawing or a
withdrawal from the Cash Collateral Account, 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).
"Purchase Agreement" means the Purchase Agreement dated August 6,
1998, between the Initial Purchasers and Midway, relating to the purchase of the
Certificates by the Initial Purchasers, as the same may be amended, supplemented
or otherwise modified from time to time in accordance with its terms.
"Rating Agencies" means, collectively, at any time, each nationally
recognized rating agency which shall have been requested to rate the
Certificates and
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which shall then be rating the Certificates. Initially, the Rating Agencies
shall consist of Moody's and Standard & Poor's.
"Ratings Confirmation" means, with respect to any action proposed to
be taken, a written confirmation from each of the Rating Agencies that such
action would not result in (i) a reduction of the rating for any Class of
Certificates below the then current rating for such Class of Certificates or
(ii) a withdrawal or suspension of the rating of any Class of Certificates.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of August 13, 1998, among the Initial Purchasers, Midway and
the Trustees.
"Registration Rights Event" has the meaning given to such term in
the Registration Rights Agreement.
"Regular Distribution Dates" means each January 2 and July 2,
commencing on January 2, 1999; 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.
"Replacement Liquidity Facility" means, for any Trust (other than
the Class D 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.
"Replacement Liquidity Provider" means a Person having unsecured
debt ratings which are equal to or higher than the Threshold Rating who issues a
Replacement Liquidity Facility.
"Required Amount" means, with respect to each Liquidity Facility and
each Cash Collateral Account related thereto, for any day, the sum of the
aggregate amount of interest, calculated at the rate per annum equal to the
Stated Interest Rate for the related Class of Certificates, that would be
payable on such Class of Certificates on each of the three successive Regular
Distribution Dates immediately following such day or, if such day is a Regular
Distribution Date, on such day and the succeeding two Regular Distribution
Dates, in each case calculated on the basis of the Pool Balance of such Class of
Certificates on such date and without regard to expected future payments of
principal on such Class of Certificates.
"Responsible Officer" means (i) with respect to the Subordination
Agent and each of the Trustees, any officer in the corporate trust department of
the
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Subordination Agent or such Trustee 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 7.14% Series A Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee or Midway, as the
case may be, and authenticated by the Loan 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 8.14% Series B Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee or Midway, as the
case may be, and authenticated by the Loan Trustee thereunder, and any such
Equipment Notes issued in exchange therefor or replacement thereof pursuant to
the terms of such Indenture.
"Series C Equipment Notes" means the 8.92% Series C Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee or Midway, as the
case may be, and authenticated by the Loan Trustee thereunder, and any such
Equipment Notes issued in exchange therefor or replacement thereof pursuant to
the terms of such Indenture.
"Series D Equipment Notes" means the 8.86% Series D Equipment Notes
issued pursuant to each Indenture by the related Owner Trustee or Midway, as the
case may be, and authenticated by the Loan 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.
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"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" means with respect to any Liquidity Facility, the
Commitment (as defined in such Liquidity Facility) of the applicable Liquidity
Provider thereunder.
"Stated Expiration Date" has the meaning assigned to it in Section
3.6(d).
"Stated Interest Rate" means the sum of (a) (i) with respect to the
Class A Certificates, 7.14% per annum, (ii) with respect to the Class B
Certificates, 8.14% per annum, (iii) with respect to the Class C Certificates,
8.92% per annum, and (iv) with respect to the Class D Certificates, 8.86% per
annum, plus (b) in the case of clause (i), (ii), (iii) or (iv), .50% per annum
for such periods as are required due to the failure of a Registration Event to
occur as provided in Section 2(d) of the Registration Rights Agreement.
"Subordination Agent" has the meaning assigned to it in the Preamble
to this Agreement.
"Successor Trusts" means, collectively, Midway Airlines Pass Through
Trust 1998-1A-S, Midway Airlines Pass Through Trust 1998-1B-S, Midway Airlines
Pass Through Trust 1998-1C-S and Midway Airlines Pass Through Trust 1998-1D-S.
"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.
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"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.
"Transfer" means the transfers contemplated by the Assignment and
Assumption Agreements.
"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 a Midway Bankruptcy Event.
"Trust" means any of the Class A Trust, the Class B Trust, the Class
C Trust or the Class D Trust.
"Trust Accounts" has the meaning assigned to such term in Section
2.2(a).
"Trust Agreement" means any of the Class A Trust Agreement, Class B
Trust Agreement, Class C Trust Agreement 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(a).
"Trustee Representatives" has the meaning assigned to such term in
Section 2.5(a).
"Written Notice" means, from the Subordination Agent, any Trustee or
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.
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ARTICLE II
TRUST ACCOUNTS; CONTROLLING PARTY
SECTION 2.1 Agreement to Terms of Subordination; Payments from
Monies Received Only. (a) Each Trustee hereby acknowledges and agrees to the
terms of subordination set forth in this Agreement in respect of each Class of
Certificates and agrees to enforce such provisions and cause all payments in
respect of the Equipment Notes and the Liquidity Facilities to be applied in
accordance with the terms of this Agreement. In addition, each Trustee hereby
agrees to cause the Equipment Notes purchased by the related Trust to be
registered in the name of the Subordination Agent, as agent and trustee for such
Trustee, to be held in trust by the Subordination Agent solely for the purpose
of facilitating the enforcement of the subordination and other provisions of
this Agreement.
(b) Except as otherwise expressly provided in the next succeeding
sentence of this Section 2.1, all payments to be made by the Subordination Agent
hereunder shall be made only from amounts received by it that constitute
Scheduled Payments, Special Payments, payments under Sections 8.01 and 9.01 of
the Participation Agreements or payments under Section 6 of the Note Purchase
Agreement 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 to the relevant Deposits and that none
of the Trustees, Owner Trustees, Loan 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 Loan
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
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Collateral Accounts shall, together with the Collection Account, constitute the
"Trust Accounts" hereunder.
(b) Funds on deposit in the Trust Accounts shall be invested and
reinvested by the Subordination Agent in Eligible Investments selected by the
Subordination Agent if such investments are reasonably available and have
maturities no later than the earlier of (i) 90 days following the date of such
investment and (ii) the Business Day immediately preceding the Regular
Distribution Date or the date of 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 or Non-Extension Drawing, the Subordination Agent shall invest and
reinvest such amounts at the direction of Midway; provided further, however,
that upon the occurrence and during the continuation of the Triggering Event,
the Subordination Agent shall invest and reinvest such amounts in accordance
with the written instructions of the Controlling Party. Unless otherwise
expressly provided in this Agreement (including, without limitation, with
respect to Investment Earnings on deposit in the Cash Collateral Accounts, the
provisions of Section 3.6(f) hereof), 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
expressly provided herein with respect to Investment Earnings). The Trust
Accounts shall be held in trust by the Subordination Agent under the sole
dominion and control of the Subordination Agent for the benefit of the Trustees,
the Certificateholders and the Liquidity Providers, as the case may be. If, at
any time, any of the Trust Accounts ceases to be an Eligible Deposit Account,
the Subordination Agent shall within 10 Business Days (or such longer period,
not to exceed 30 calendar days, to which each Rating Agency may consent)
establish a new Collection Account, Special Payments Account or Cash Collateral
Account, as the case may be, as an Eligible Deposit Account and shall transfer
any cash and/or any investments to such new Collection Account, Special Payments
Account or Cash Collateral Account, as the case may be. So long as The First
National Bank of Maryland is an Eligible Institution, the Trust Accounts shall
be maintained with it as Eligible Deposit Accounts.
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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. Except as provided in Section 2.4(e), 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 20th day after the date of such written Notice 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) Redemptions and Purchases of Equipment Notes. (i) 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,
prepayment or purchase (including, without limitation, a purchase resulting from
a sale of the Equipment Notes permitted by Article IV hereof) of all the
Equipment Notes issued pursuant to an Indenture on the Special Distribution Date
for such Special Payment in the following order of priority:
first, such amount as shall be required to pay (A) all accrued and
unpaid Liquidity Expenses then in arrears plus (B) the product of (x) the
aggregate amount of all accrued and unpaid Liquidity Expenses not in
arrears to such Special Distribution Date multiplied by (y) a fraction,
the numerator of which is the aggregate outstanding principal amount of
Equipment Notes being redeemed, purchased or prepaid on such Special
Distribution 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;
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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 Distribution 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, purchased or prepaid
on such Special Distribution 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) if any Cash Collateral
Account had been previously funded as provided in Section 3.6(f), to fund
such Cash Collateral Account up to its Required Amount shall be deposited
in such Cash Collateral Account, (B) if any Liquidity Facility shall
become a Downgraded Facility or a Non-Extended Facility at a time when
unreimbursed Interest Drawings under such Liquidity Facility have reduced
the Available Amount thereunder to zero, to deposit into the related Cash
Collateral Account an amount equal to such Cash Collateral Account's
Required Amount shall be deposited in such Cash Collateral Account, and
(C) if, with respect to any particular Liquidity Facility, neither
subclause (A) nor subclause (B) of this clause "third" are applicable, to
pay or reimburse the Liquidity Provider in respect of such Liquidity
Facility in an amount equal to the amount of any unreimbursed Interest
Drawings under such Liquidity Facility shall be distributed to such
Liquidity Provider, pari passu on the basis of the amounts of all such
deficiencies and/or unreimbursed Interest Drawings;
fourth, if, with respect to any particular Liquidity Facility, any
amounts are to be distributed pursuant to either subclause (A) or (B) of
clause "third" above, then the Liquidity Provider with respect to such
Liquidity Facility shall be paid the excess of (x) the aggregate
outstanding amount of unreimbursed Advances (whether or not then due)
under such Liquidity Facility over (y) the Required Amount for the
relevant Class, pari passu on the basis of such amounts in respect of each
Liquidity Provider;
fifth, 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;
sixth, 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;
seventh, such amount as shall be required to pay in full Expected
Distributions to the holders of Class C Certificates on such Special
Distribution Date shall be distributed to the Class C Trustee;
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eighth, such amount as shall be required to pay in full Expected
Distributions to the holders of the Class D Certificates on such Special
Distribution Date shall be distributed to the Class D Trustee; and
ninth, the balance, if any, of such Special Payment shall be
transferred to the Collection Account for distribution in accordance with
Section 3.2 hereof.
For the purposes of this Section 2.4(b), clause (x) of the
definition of "Expected Distributions" shall be deemed to read as follows: "(x)
accrued, due and unpaid interest on such Certificates together with (without
duplication) accrued and unpaid interest on a portion of such Certificates equal
to the outstanding principal amount of Equipment Notes being redeemed, purchased
or prepaid (immediately prior to such redemption, purchase or prepayment)
(excluding interest, if any, payable with respect to the Deposits related to
such Trust)".
(ii) At any time following the occurrence of a Triggering Event
(whether or not continuing), the Subordination Agent shall make distributions of
amounts on deposit in the Special Payments Account on account of the redemption,
prepayment 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. Except as provided in clause (e) below,
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.
(e) Certain Payments. The Subordination Agent will distribute
promptly upon receipt thereof (i) any indemnity payment received by it from the
Owner Participant, the Owner Trustee or Midway in respect of any Pass Through
Trustee, Paying Agent or any Liquidity Provider (collectively, the "Payees") and
(ii) any compensation (including, without limitation, any fees payable to any
Liquidity Provider under Section 2.03 of any Liquidity Facility) received by it
from the Owner Participant, the Owner Trustee or Midway under any Operative
Agreement in respect of any Payee, directly to the Payee entitled thereto.
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
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or Trustee's request (which request shall not be made more than one time in any
12- month period), a certificate (a "Subordination Agent Incumbency
Certificate") of a Responsible Officer of the Subordination Agent certifying as
to the incumbency and specimen signatures of the officers of the Subordination
Agent and the attorney-in-fact and agents of the Subordination Agent (the
"Subordination Agent Representatives") authorized to give Written Notices on
behalf of the Subordination Agent hereunder. Until each Liquidity Provider and
Trustee receives a subsequent Subordination Agent Incumbency Certificate, it
shall be entitled to rely on the last Subordination Agent Incumbency Certificate
delivered to it hereunder.
(b) With the delivery of this Agreement, each Trustee shall furnish
to the Subordination Agent, and from time to time thereafter may furnish to the
Subordination Agent, at such Trustee's discretion, or upon the Subordination
Agent's request (which request shall not be made more than one time in any
12-month period), a certificate (a "Trustee Incumbency Certificate") of a
Responsible Officer of such Trustee certifying as to the incumbency and specimen
signatures of the officers of such Trustee and the attorney-in-fact and agents
of such Trustee (the "Trustee Representatives") authorized to give Written
Notices on behalf of such Trustee hereunder. Until the Subordination Agent
receives a subsequent Trustee Incumbency Certificate, it shall be entitled to
rely on the last Trustee Incumbency Certificate delivered to it hereunder.
(c) With the delivery of this Agreement, each Liquidity Provider
shall furnish to the Subordination Agent, and from time to time thereafter may
furnish to the Subordination Agent, at such Liquidity Provider's discretion, or
upon the Subordination Agent's request (which request shall not be made more
than one time in any 12-month period), a certificate (an "LP Incumbency
Certificate") of any authorized signatory of such Liquidity Provider certifying
as to the incumbency and specimen signatures of any officer, attorney-in-fact,
agent or other designated representative of such Liquidity Provider (the "LP
Representatives" and, together with the Trustee Representatives, 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 Loan Trustee thereunder will be directed (i) in taking, or refraining from
taking, any action with respect to such Indenture or the Equipment Notes issued
thereunder, so long as no Indenture Default has occurred and is continuing
thereunder, by the holders of at least a majority of the outstanding principal
amount of such Equipment Notes (provided that, for so long as the Subordination
Agent is the registered holder of the Equipment Notes, the Subordination Agent
shall act with respect to this clause (i) in accordance with the directions of
the Trustees representing holders of Certificates representing an undivided
interest in such principal amount of Equipment Notes), and (ii) after the
occurrence and during the continuance of an Indenture Default thereunder
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(which, in the case of an Indenture related to a Leased Aircraft, has not been
cured by the applicable Owner Trustee or the applicable Owner Participant
pursuant to Section 8.03 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
the 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 Providers holding a
majority in interest 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, (ii) the date on which the entire available and
undrawn amount under any Liquidity Facility shall have been drawn (for any
reason other than a Downgrade Drawing or a Non-Extension Drawing) and remains
unreimbursed and (iii) the date on which the entire amount of any Downgrade
Drawing or Non-Extension Drawing shall have become an Applied Downgrade Drawing
or Applied Non-Extension Drawing, as the case may be, if, in the case of clause
(i), (ii) and (iii) above, at the time of such election all Liquidity
Obligations owed to such Liquidity Provider under the Liquidity Facilities have
not been paid in full.
(d) The exercise of remedies by the Controlling Party under this
Agreement shall be expressly limited by Section 4.1(a)(ii) hereof.
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(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 Regular
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 "fifth" 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 "sixth" 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 "seventh" 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 "eighth" of Section 3.2 or Section 2.4(b), as the case may be,
hereof;
(v) With respect to each Liquidity Facility, the Liquidity Provider
thereunder shall separately set forth the amounts to be paid in accordance
with clauses "first", "second", "third" and "fourth" of Section 3.2 or
Section 2.4(b), as the case may be, hereof; and
(vi) Each Trustee shall set forth the amounts to be paid in
accordance with clause "ninth" of Section 3.2 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.
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(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" (to reimburse payments made by the Class A
Certificateholders pursuant to subclause (iii) of clause "first" of
Section 3.3 hereof) and "seventh" 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" (to reimburse payments made by the Class B
Certificateholders pursuant to subclause (iii) of clause "first" of
Section 3.3 hereof) and "eighth" 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" (to reimburse payments made by the Class C
Certificateholders pursuant to subclause (iii) of clause "first" of
Section 3.3 hereof) and "ninth" 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" (to reimburse payments made by the Class D
Certificateholders pursuant to subclause (iii) of clause "first" of
Section 3.3 hereof) and "tenth" of Section 3.3 hereof;
(v) With respect to each Liquidity Facility, the Liquidity Provider
thereunder shall separately set forth the amounts to be paid in accordance
with subclause (iii) of clause "first" of Section 3.3 hereof and clauses
"second", "third" and "fourth" of Section 3.3 hereof; and
(vi) Each Trustee shall set forth the amounts to be paid in
accordance with clause "sixth" of Section 3.3 hereof.
(c) At such time as a Trustee or a Liquidity Provider shall have
received all amounts owing to it (and, in the case of a Trustee, the
Certificateholders for which it is acting) pursuant to Section 2.4, 3.2 or 3.3
hereof, as applicable, and, in the case of a Liquidity Provider, its commitment
under the related Liquidity Facility shall have terminated or expired, such
Person shall, by a Written Notice, so inform the Subordination Agent and each
other party to this Agreement.
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(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 any 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 paragraph (a) or (b) above which is required
to enable the Subordination Agent to make a distribution to such Person pursuant
to Section 2.4(b), 3.2 or 3.3 hereof, the Subordination Agent shall request such
information and, failing to receive any such information, the Subordination
Agent shall not make such distribution(s) to such Person. In such event, the
Subordination Agent shall make distributions pursuant to clauses "first" through
"eighth" of Section 2.4(b) or clauses "first" through "ninth" of Section 3.2 and
clauses "first" through "tenth" of Section 3.3, as the case may be, 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, but in any event automatically
at the end of each calendar quarter, the Subordination Agent shall send to such
party a written statement reflecting all amounts on deposit with the
Subordination Agent pursuant to Section 3.1(f) hereof.
SECTION 3.2 Distribution of Amounts on Deposit in the Collection
Account. Except as otherwise provided in Sections 2.4, 3.1(f), 3.3, 3.4 and
3.6(b), amounts on deposit in the Collection Account (or, in the case of any
amount described in Section 2.4(c), on deposit in the Special Payments Account)
shall be promptly distributed on each Regular Distribution Date (or in the case
of any amount described in Section 2.4(c), on the Special Distribution Date
thereof) 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
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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, or in the amount, 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) if any Cash Collateral
Account had been previously funded as provided in Section 3.6(f), to fund
such Cash Collateral Account up to its Required Amount shall be deposited
in such Cash Collateral Account, (B) if any Liquidity Facility shall
become a Downgraded Facility or a Non-Extended Facility at a time when
unreimbursed Interest Drawings under such Liquidity Facility have reduced
the Available Amount thereunder to zero, to deposit into the related Cash
Collateral Account an amount equal to the Required Amount shall be
deposited in such Cash Collateral Account, and (C) if, with respect to any
particular Liquidity Facility, neither subclause (A) nor subclause (B) of
this clause "third" is applicable, to pay or reimburse the Liquidity
Provider in respect of such Liquidity Facility in an amount equal to the
amount of all Liquidity Obligations then due under such Liquidity Facility
(other than amounts payable pursuant to clause "first" or "second" of this
Section 3.2) shall be distributed to such Liquidity Provider, pari passu
on the basis of the amounts of all such deficiencies and/or unreimbursed
Liquidity Obligations;
fourth, if, with respect to any particular Liquidity Facility, any
amounts are to be distributed pursuant to either subclause (A) or (B) of
clause "third" above, then the Liquidity Provider with respect to such
Liquidity Facility shall be paid the excess of (x) the aggregate
outstanding amount of unreimbursed Advances (whether or not then due)
under such Liquidity Facility over (y) the Required Amount for the
relevant Class, pari passu on the basis of such amounts in respect of each
Liquidity Provider;
fifth, 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;
sixth, 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;
seventh, 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;
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eighth, 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;
ninth, such amount as shall be required to pay in full the aggregate
unpaid amount of fees and expenses payable as of such Distribution Date to
the Subordination Agent and each Trustee pursuant to the terms of this
Agreement and the Trust Agreements, as the case may be, shall be
distributed to the Subordination Agent and such Trustee; and
tenth, the balance, if any, of any such payment remaining thereafter
shall be held in the Collection Account for later distribution in
accordance with this Article III.
SECTION 3.3 Distribution of Amounts on Deposit Following a
Triggering Event. 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, shall be applied by the Subordination Agent in
reimbursement of such costs and expenses, (ii) each Trustee for any
amounts of the nature described in clause (i) above actually incurred by
it under the applicable Trust Agreement (to the extent not previously
reimbursed), shall be distributed to such Trustee and (iii) any Liquidity
Provider or Certificateholder for payments, if any, made by it to the
Subordination Agent or any Trustee in respect of amounts described in
clause (i) above, shall be distributed to such Liquidity Provider or to
the applicable Trustee for the account of such Certificateholder, in each
such case, pari passu on the basis of all amounts described in clauses (i)
through (iii) above;
second, such amount remaining as shall be required to pay all
accrued and unpaid Liquidity Expenses shall be distributed to each
Liquidity Provider pari passu on the basis of the amount of Liquidity
Expenses owed to each Liquidity Provider;
third, such amount remaining as shall be required to pay accrued and
unpaid interest on the Liquidity Obligations as provided in the Liquidity
Facilities shall be distributed to each Liquidity Provider pari passu on
the basis of the amount of such accrued and unpaid interest owed to each
Liquidity Provider;
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fourth, such amount remaining as shall be required (A) if any Cash
Collateral Account had been previously funded as provided in Section
3.6(f), unless a Performing Note Deficiency exists to fund such Cash
Collateral Account up to its Required Amount (less the amount of any
repayments of Interest Drawings under such Liquidity Facility while
subclause (A)(i) above is applicable) shall be deposited in such Cash
Collateral Account, (B) if any Liquidity Facility shall become a
Downgraded Facility or a Non-Extended Facility at a time when unreimbursed
Interest Drawings under such Liquidity Facility have reduced the Available
Amount thereunder to zero, unless a Performing Note Deficiency exists to
deposit into the related Cash Collateral Account an amount equal to such
Cash Collateral Account's Required Amount (less the amount of any
repayments of Interest Drawings under such Liquidity Facility while
subclause (B)(i) above is applicable) shall be deposited in such Cash
Collateral Account, and (C) if, with respect to any particular Liquidity
Facility, neither subclause (A) nor subclause (B) of this clause "fourth"
are applicable, to pay in full the outstanding amount of all Liquidity
Obligations then due under such Liquidity Facility (other than amounts
payable pursuant to clause "second" or "third" of this Section 3.3) shall
be distributed to such Liquidity Provider, pari passu on the basis of the
amounts of all such deficiencies and/or unreimbursed Liquidity
Obligations;
fifth, if, with respect to any particular Liquidity Facility, any
amounts are to be distributed pursuant to other subclause (A) or (B) of
clause "fourth" above, then the Liquidity Provider with respect to such
Liquidity Facility shall be paid the excess of (x) the aggregate
outstanding amount of unreimbursed Advances (whether or not then due)
under such Liquidity Facility over (y) the Required Amount for the
relevant Class (less the amount of any repayments of Interest Drawings
under such Liquidity Facility while subclause (A)(i) or (B)(i), as the
case may be, of clause "fourth" above is applicable), pari passu on the
basis of such amounts in respect of each Liquidity Provider;
sixth, 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;
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seventh, 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;
eighth, 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;
ninth, 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;
tenth, 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;
eleventh, such amount remaining shall be retained in the Collection
Account until the immediately succeeding Distribution Date; and
twelfth, if all Classes of Certificates shall have been paid in
full, such amount remaining shall be distributed to the Certificateholders
of the related Trust.
SECTION 3.4 Other Payments. (a) 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.
(b) On any Interest Payment Date under each Liquidity Facility which
is not a Distribution Date, the Subordination Agent shall pay to the Liquidity
Provider under such Liquidity Facility from, and only to the extent of, amounts
on deposit in the Collection Account, an amount equal to the amount of interest
then due and payable to such Liquidity Provider under such Liquidity Facility.
(c) Except as otherwise provided in Section 3.3 hereof, if the
Subordination Agent receives any Scheduled Payment after the Scheduled Payment
Date relating thereto, but prior to such payment becoming an Overdue Scheduled
Payment, then the Subordination Agent shall deposit such Scheduled Payment in
the Collection Account and promptly distribute such Scheduled Payment in
accordance with the priority of distributions set forth in Section 3.2 hereof;
provided that, for the purposes of this Section 3.4(c) only, each reference in
clause "eighth" of Section 3.2 to "Distribution Date" shall be deemed to mean
the actual date of payment of such Scheduled Payment and each reference in
clause "fifth", "sixth" or "seventh" of Section 3.2 to "Distribution Date" shall
be deemed to refer to such Scheduled Payment Date.
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SECTION 3.5 Payments to the Trustees and the Liquidity Providers.
Any amounts distributed hereunder to any Liquidity Provider shall be paid to
such Liquidity Provider by wire transfer of funds to the address such Liquidity
Provider shall provide to the Subordination Agent. The Subordination Agent shall
provide a Written Notice of any such transfer to the applicable Liquidity
Provider, as the case may be, at the time of such transfer. Any amounts
distributed hereunder by the Subordination Agent to any Trustee which shall not
be the same institution as the Subordination Agent shall be paid to such Trustee
by wire transfer funds at the address such Trustee shall provide to the
Subordination Agent.
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 1 p.m. (New
York City time) on such Distribution Date, the Subordination Agent shall request
a drawing (each such drawing, an "Interest Drawing") under the Liquidity
Facility with respect to such Class of Certificates in an amount equal to the
lesser of (i) an amount sufficient to pay the amount of such accrued interest
(at the Stated Interest Rate for such Class of Certificates) and (ii) the
Available Amount under such Liquidity Facility, and shall pay such amount to the
Trustee with respect to such Class of Certificates in payment of such accrued
interest.
(b) Application of Interest Drawings. Notwithstanding anything to
the contrary contained in this Agreement, (i) all payments received by the
Subordination Agent in respect of an Interest Drawing under the Class A
Liquidity Facility and all amounts withdrawn by the Subordination Agent from the
Class A Cash Collateral Account, and payable in each case to the Class A
Certificateholders, shall be promptly distributed to the Class A Trustee and
(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")), Midway may arrange
for a Replacement Liquidity Provider to issue and deliver a Replacement
Liquidity Facility to the Subordination Agent within such 30 day period. If a
Downgraded Facility has not been replaced in accordance with the terms of this
paragraph, the Subordination
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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. The Liquidity Provider may also arrange for a Replacement Liquidity
Provider to issue and deliver a Replacement Liquidity Facility at any time after
such Downgrade Drawing so long as such Downgrade Drawing has not been reimbursed
in full to the Liquidity Provider, provided that any such replacement shall be
made subject to the terms of the proviso to the final paragraph of Section 3(e).
(d) Non-Extension Drawings. If the Liquidity Facility for any Class
of Certificates is scheduled to expire on a date (the "Stated Expiration Date")
prior to the date that is 15 days after the Final Legal Distribution Date for
such Class of Certificates then, no earlier than the 60th day and no later than
the 40th day prior to the then Stated Expiration Date, the Subordination Agent
shall request that such Liquidity Provider extend the Stated Expiration Date for
a period of 364 days after the Stated Expiration Date (unless the obligations of
such Liquidity Provider thereunder are earlier terminated in accordance with
such Liquidity Facility). The Liquidity Provider shall advise the Subordination
Agent, no earlier than 40 days and no later than 25 days prior to such Stated
Expiration Date, whether, in its sole discretion, it agrees to so extend the
Stated Expiration Date. If, on or before such 25th day, such Liquidity Facility
shall not have been so extended or replaced in accordance with Section 3.6(e),
or if the Liquidity Provider fails irrevocably and unconditionally to advise the
Subordination Agent on or before the 25th day prior to the Stated Expiration
Date then in effect that such Stated Expiration Date shall be so extended, the
Subordination Agent shall, on such 25th day (or as soon as possible thereafter),
in accordance with and to the extent permitted by the terms of the expiring
Liquidity Facility (a "Non-Extended Facility"), request a drawing under such
expiring Liquidity Facility (such drawing, the "Non-Extension Drawing") of all
available and undrawn amounts thereunder. Amounts drawn pursuant to a
Non-Extension Drawing shall be maintained and invested as provided in Section
3.6(f) hereof.
(e) Issuance of Replacement Liquidity Facility. At any time, the
Subordination Agent may, but only upon the direction of Midway, with or without
cause, arrange for a Replacement Liquidity Facility to replace the Liquidity
Facility for any Class of Certificates; provided that, any such replacement of
the initial Liquidity Provider may not be effective until the fifth anniversary
of the Closing Date unless (A) there shall have become due to the initial
Liquidity Provider, or the initial Liquidity Provider shall have demanded,
amounts pursuant to Section 3.1, 3.2 or 3.3 of any Liquidity Facility or the
letter dated as of August 13, 1998 from Midway to the Liquidity Provider
regarding certain tax matters and the replacement of the initial Liquidity
Provider would reduce or eliminate the obligation to pay such amounts or Midway
determines in good faith that there is a material likelihood that the initial
Liquidity Provider will have the right to claim any such amounts (unless the
initial
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Liquidity Provider waives, in writing, any right it may have to claim such
amounts), (B) 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 any Liquidity Facility, to the extent that such
Replacement Liquidity Facility would be able to maintain or fund such LIBOR
Advances, (C) the short-term unsecured debt rating of the initial Liquidity
Provider is downgraded by Standard & Poor's from A-1+ to A-1 and there is a
resulting downgrade in the rating by any Rating Agency of any Class of
Certificates, (D) a Downgrade Drawing or a Non-Extension Drawing shall have
occurred under any Liquidity Facility or (E) the initial Liquidity Provider
shall have breached any of its payment (including, without limitation, funding)
obligations under any Liquidity Facility. If such Replacement Liquidity Facility
is provided at any time after a Downgrade Drawing or a Non-Extension Drawing has
been made, all funds on deposit in the relevant Cash Collateral Account will be
returned to the Liquidity Provider being replaced. No such Replacement Liquidity
Facility executed in connection therewith shall become effective and no such
Replacement Liquidity Facility shall be deemed a "Liquidity Facility" under the
Operative Agreements, unless and until (i) the conditions referred to in the
immediately following paragraph shall have been satisfied and (ii) if such
Replacement Liquidity Facility shall materially adversely affect the rights,
remedies, interests or obligations of the Class A Certificateholders, the Class
B Certificateholders, the Class C Certificateholders or the Class D
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.
If any Liquidity Provider shall determine not to extend its
Liquidity Facility in accordance with Section 3.6(d), then such Liquidity
Provider may, at its option, arrange for a Replacement Liquidity Facility to
replace such Liquidity Facility during the period no earlier than 40 days and no
later than 25 days prior to the then effected Stated Expiration Date of such
Liquidity Facility; provided that (i) such right shall not interfere with the
right of the Subordination Agent, at the direction of Midway, to select a
Replacement Liquidity Facility pursuant to the immediately preceding paragraph
and (ii) no Replacement Liquidity Provider selected pursuant to this sentence
shall result in any increase in the obligations (or contingent obligations) of
Midway pursuant to this Liquidity Agreement or any other Operative Agreements.
In connection with the issuance of each Replacement Liquidity Facility, Midway
shall, prior to the issuance of such Replacement Liquidity Facility, obtain
written confirmation from each Rating Agency that such Replacement Liquidity
Facility will not cause a reduction of the rating then in effect for any Class
of Certificates by such Rating Agency (without regard to the ratings of any
Liquidity Provider being replaced pursuant to Section 3.6(c) hereof), and the
Subordination Agent shall (x) 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
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Liquidity Provider) until all amounts owed to the replaced Liquidity Provider
have been paid) and (y) 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), 3.6(d) or 3.6(i) hereof, or in the event
amounts are to be deposited in the Cash Collateral Account pursuant to subclause
(B) of clause "third" of Section 2.4(b), subclause (B) of clause "third" of
Section 3.2 or subclause (B) of clause "fourth" of Section 3.3, amounts so drawn
or to be deposited, as the case may be, 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. All amounts on
deposit in each Cash Collateral Account shall be invested and reinvested in
Eligible Investments in accordance with Section 2.2(b) hereof. Investment
Earnings on amounts on deposit in the Cash Collateral Account with respect to
each Liquidity Facility shall be deposited in the Collection Account on each
Interest Payment Date under such Liquidity Facility and applied on such Interest
Payment Date in accordance with Section 3.2, 3.3 or 3.4 (as applicable). The
Subordination Agent shall deliver a written statement to Midway and the
Liquidity Provider one day prior to each Interest Payment Date setting forth the
aggregate amount of Investment Earnings held in the Cash Collateral Accounts as
of such date. In addition, from and after the date funds are so deposited, the
Subordination Agent shall make withdrawals from such account as follows:
(i) on each Distribution Date, the Subordination Agent shall, to the
extent it shall not have received funds to pay accrued and unpaid interest
on the Class A Certificates (at the Stated Interest Rate for the Class A
Certificates) from any other source, withdraw from the Class A Cash
Collateral Account, and pay to the Class A Trustee an amount equal to the
lesser of (x) an amount necessary to pay accrued and unpaid interest (at
the Stated Interest Rate for the Class A Certificates) on such Class A
Certificates and (y) the amount on deposit in the Class A Cash Collateral
Account;
(ii) on each Distribution Date, the Subordination Agent shall, to
the extent it shall not have received funds to pay accrued and unpaid
interest on the Class B Certificates (at the Stated Interest Rate for the
Class B Certificates) from any other 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
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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 or pursuant to Section 2.03 of
the Escrow and Paying Agent Agreement, 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) plus Investment Earnings on deposit in such Cash Collateral
Account will be on deposit in the Class A Cash Collateral Account and
shall first, pay such amount to the Class A Liquidity Provider until the
Liquidity Obligations (with respect to the Class A Certificates) shall
have been paid in full, and second, deposit any remaining amount in the
Collection Account;
(v) on each date on which the Pool Balance of the Class B Trust
shall have been reduced by payments made to the Class B Certificateholders
pursuant to Section 2.4, 3.2 or 3.3 hereof or pursuant to Section 2.03 of
the Escrow and Paying Agent Agreement, 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) plus Investment Earnings on deposit in such Cash Collateral
Account 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 or pursuant to Section 2.03 of
the Escrow and
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Paying Agent Agreement, 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) plus Investment Earnings
on deposit in such Cash Collateral Account 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, on the date on which the Subordination Agent
shall have been notified by the Liquidity Provider for such Class of
Certificates that the Liquidity Obligations owed to such Liquidity
Provider have been paid in full, the Subordination Agent shall withdraw
all amounts on deposit in the Cash Collateral Account in respect of such
Class of Certificates and shall deposit such amount in the Collection
Account.
(g) Reinstatement. With respect to any Interest Drawing under the
Liquidity Facility for any Trust, upon the reimbursement of the applicable
Liquidity Provider for all or any part of the amount of such Interest Drawing,
together with any accrued interest thereon, the Available Amount of such
Liquidity Facility shall be reinstated by an amount equal to the amount so
reimbursed to the applicable Liquidity Provider but not exceed the Required
Amount; provided, however, that such Liquidity Facility shall not be so
reinstated at any time after (i) the acceleration of all of the outstanding
Equipment Notes or (ii) both (A) a Triggering Event shall have occurred and (B)
a Performing Note Deficiency exists. 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
clause (i), (ii) or (iii) of Section 3.6(f) hereof, or such Liquidity Facility
shall have become a Downgraded Facility or a Non-Extended Facility at a time
when unreimbursed Interest Drawings under such Liquidity Facility have reduced
the Available Amount thereunder to zero, 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
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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 required under a Liquidity
Facility to be taken by the Subordination Agent in order to make a Final Drawing
thereunder, the Subordination Agent shall not fail to take such action. Upon
receipt of the proceeds of a Final Drawing under the related Liquidity Facility,
the Subordination Agent shall maintain and invest such proceeds in accordance
with Section 3.6(f) hereof.
(j) Reduction of Stated Amount. Promptly following each date on
which the Required Amount of the Liquidity Facility for a Class of Certificates
is reduced as a result of a distribution to the Certificateholders of such Class
of Certificates, the Subordination Agent shall, if such Liquidity Facility
provides for reductions of the Stated Amount of such Liquidity Facility and if
such reductions are not automatic, request the Liquidity Provider for such Class
of Certificates to reduce such Stated Amount to an amount equal to the Required
Amount with respect to such Liquidity Facility (as calculated by the
Subordination Agent after giving effect to such payment). Each such request
shall be made in accordance with the provisions of the applicable Liquidity
Facility.
(k) Relation to Subordination Provisions. Interest Drawings under
the Liquidity Facilities and withdrawals from the Cash Collateral Accounts, in
each case, in respect of interest on the Certificates of any Class, will be
distributed to the Trustee for such Class of Certificates, notwithstanding
Sections 3.2, 3.3 and 3.6(h) 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 Subordination Agent, which
shall in turn direct the Loan 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 with
respect to the Leased Aircraft 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 direct the
Subordination Agent to sell, assign, contract to sell or otherwise dispose of
and
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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 with respect to the Leased Aircraft to
purchase the Equipment Notes, and notwithstanding the foregoing, so long as any
Certificates remain Outstanding, during the period ending on the date which is
nine months after the earlier of (x) the Acceleration of the Equipment Notes
issued pursuant to any Indenture or (y) the occurrence of a Midway 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) with respect to the Leased Aircraft, the amount and
payment dates of rentals payable by Midway under the Lease for such Leased
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 Midway 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 (but at no expense to
the Subordination Agent), 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 (but at no
expense to the Subordination Agent) 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 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 Loan 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.
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SECTION 4.2 Remedies Cumulative. Each and every right, power and
remedy given to the Trustees, the Liquidity Providers, the Controlling Party or
the Subordination Agent specifically or otherwise in this Agreement shall be
cumulative and shall be in addition to every other right, power and remedy
herein specifically given or now or hereafter existing at law, in equity or by
statute, and each and every right, power and remedy whether specifically herein
given or otherwise existing may, subject always to the terms and conditions
hereof, be exercised from time to time and as often and in such order as may be
deemed expedient by any Trustee, the Controlling Party or the Subordination
Agent, as appropriate, and the exercise or the beginning of the exercise of any
power or remedy shall not be construed to be a waiver of the right to exercise
at the same time or thereafter any other right, power or remedy. No delay or
omission by any Trustee, the Controlling Party or the Subordination Agent in the
exercise of any right, remedy or power or in the pursuit of any remedy shall
impair any such right, power or remedy or be construed to be a waiver of any
default or to be an acquiescence therein.
SECTION 4.3 Discontinuance of Proceedings. In case any party to this
Agreement (including the Controlling Party in such capacity) shall have
instituted any Proceeding to enforce any right, power or remedy under this
Agreement by foreclosure, entry or otherwise, and such Proceedings shall have
been discontinued or abandoned for any reason or shall have been determined
adversely to the Person instituting such Proceeding, then and in every such case
each such party shall, subject to any determination in such Proceedings, be
restored to its former position and rights hereunder, and all rights, remedies
and powers of such party shall continue as if no such Proceedings had been
instituted.
SECTION 4.4 Right of Certificateholders to Receive Payments Not to
Be Impaired. Anything in this Agreement to the contrary notwithstanding but
subject to each Trust Agreement, the right of any Certificateholder or any
Liquidity Provider, respectively, to receive payments hereunder (including
pursuant to Section 2.4, 3.2 or 3.3 hereof) when due, or to institute suit for
the enforcement of any such payment on or after the applicable Distribution
Date, shall not be impaired or affected without the consent of such
Certificateholder or such Liquidity Provider, respectively.
SECTION 4.5 Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Agreement or in any suit against any
Controlling Party or the Subordination Agent for any action taken or omitted by
it as Controlling Party or Subordination Agent, as the case may be, a court in
its discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees and expenses,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. The provisions of
this Section do not apply to a suit instituted by the Subordination Agent, a
Liquidity Provider or a Trustee or a suit by Certificateholders holding more
than 10% of the original principal amount of any Class of Certificates.
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ARTICLE V
DUTIES OF THE SUBORDINATION AGENT;
AGREEMENTS OF TRUSTEES, ETC.
SECTION 5.1 Notice of Indenture Default or Triggering Event. (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 otherwise
directly distributed to such Liquidity Provider or Trustee, as applicable,
pursuant to the express provision of any other Operative Agreement.
(c) Determinations and Notifications. The Subordination Agent agrees
to provide to Midway, upon its request and at its expense, information
concerning amounts contained in, and returns earned on, any Cash Collateral
Account and any other information needed for Midway to determine amounts owing
to any Liquidity Provider.
SECTION 5.2 Indemnification. The Subordination Agent shall not be
required to take any action or refrain from taking any action under Section
3.6(e) and 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, or refrain from taking 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 3.6(e) and Section 5.1 (other than
the first
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sentence thereof) or Article IV hereof, nor shall any other provision of this
Agreement be deemed to impose a duty on the Subordination Agent to take any
action, if the Subordination Agent shall have been advised by counsel that such
action is contrary to the terms hereof or is otherwise contrary to law.
SECTION 5.3 No Duties Except as Specified in Intercreditor
Agreement. The Subordination Agent shall not have any duty or obligation to take
or refrain from taking any action under, or in connection with, this Agreement,
except as expressly provided by the terms of this Agreement; and no implied
duties or obligations shall be read into this Agreement against the
Subordination Agent. The Subordination Agent agrees that it will, in its
individual capacity and at its own cost and expense (but without any right of
indemnity in respect of any such cost or expense under Section 7.1 hereof)
promptly take such action as may be necessary to duly discharge all Liens on any
of the Trust Accounts or any monies deposited therein which result from claims
against it in its individual capacity not related to its activities hereunder or
any other Operative Agreement.
SECTION 5.4 Notice from the Liquidity Providers and Trustees. If a
Responsible Officer of any Liquidity Provider or Trustee has notice of an
Indenture Default or a Triggering Event, such Liquidity Provider or Trustee, as
the case may be, shall promptly give notice thereof to all other Liquidity
Providers and Trustees and to the Subordination Agent; provided, however, that
no such Person shall have any liability hereunder as a result of its failure to
deliver any such notice.
ARTICLE VI
THE SUBORDINATION AGENT
SECTION 6.1 Authorization; Acceptance of Trusts and Duties. Each of
the Class A Trustee, Class B Trustee, Class C Trustee and Class D 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.
The First National Bank of Maryland 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 accounting
shall be negligence), (b) as provided in Section 2.2 hereof and (c) 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
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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
(other than for the handling of funds, for which the standard of accounting
shall be negligence) in ascertaining the pertinent facts.
SECTION 6.2 Absence of Duties. The Subordination Agent shall have no
duty to see to any recording or filing of this Agreement or any other document,
or to see to the maintenance of any such recording or filing.
SECTION 6.3 No Representations or Warranties as to Documents. The
Subordination Agent in its individual capacity does not make nor shall be deemed
to have made any representation or warranty as to the validity, legality or
enforceability of this Agreement or any other Operative Agreement or as to the
correctness of any statement contained in any thereof, except for the
representations and warranties of the Subordination Agent, made in its
individual capacity, under any Operative Agreement to which it is a party. The
Certificateholders, the Trustees and the Liquidity Providers make no
representation or warranty hereunder whatsoever.
SECTION 6.4 No Segregation of Monies; No Interest. Any monies paid
to or retained by the Subordination Agent pursuant to any provision hereof and
not then required to be distributed to any Trustee or any Liquidity Provider as
provided in Articles II and III hereof need not be segregated in any manner
except to the extent required by such Articles II and III and by law, and the
Subordination Agent shall not (except as otherwise provided in Section 2.2
hereof) be liable for any interest thereon; provided, however, that any payments
received or applied hereunder by the Subordination Agent shall be accounted for
by the Subordination Agent so that any portion thereof paid or applied pursuant
hereto shall be identifiable as to the source thereof.
SECTION 6.5 Reliance; Agents; Advice of Counsel. The Subordination
Agent shall not incur liability to anyone in acting upon any signature,
instrument, notice, resolution, request, consent, order, certificate, report,
opinion, bond or other document or paper believed by it to be genuine and
believed by it to be signed by the proper party or parties. As to the Pool
Balance of any Trust as of any date, the Subordination Agent may for all
purposes hereof rely on a certificate signed by any 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
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and each of the Trustees are authorized to enter into this Agreement and to take
all action to be taken by them pursuant to the provisions hereof, and shall not
inquire into the authorization of each of the Liquidity Providers and each of
the Trustees with respect thereto. In the administration of the trusts
hereunder, the Subordination Agent may execute any of the trusts or powers
hereof and perform its powers and duties hereunder directly or through agents or
attorneys and may consult with counsel, accountants and other skilled persons to
be selected and retained by it, and the Subordination Agent shall not be liable
for the acts or omissions of any agent appointed with due care or for anything
done, suffered or omitted in good faith by it in accordance with the advice or
written opinion of any such counsel, accountants or other skilled persons.
SECTION 6.6 Capacity in Which Acting. The Subordination Agent acts
hereunder solely as agent and trustee herein and not in its individual capacity,
except as otherwise expressly provided in the Operative Agreements.
SECTION 6.7 Compensation. The Subordination Agent shall be entitled
to compensation, including expenses and disbursements, for all services rendered
hereunder (such compensation shall be set forth in a separate fee agreement
between Midway and The First National Bank of Maryland) and shall have a
priority claim to the extent set forth in Article III hereof on all monies
collected hereunder for the payment of such compensation, to the extent that
such compensation shall not be paid by others. The Subordination Agent agrees
that it shall have no right against any Trustee or Liquidity Provider for any
fee as compensation for its services as agent under this Agreement. The
provisions of this Section 6.7 shall survive the termination of this Agreement.
SECTION 6.8 May Become Certificateholder. The institution acting as
Subordination Agent hereunder may become a Certificateholder and have all rights
and benefits of a Certificateholder to the same extent as if it were not the
institution acting as the Subordination Agent.
SECTION 6.9 Subordination Agent Required; Eligibility. There shall
at all times be a Subordination Agent hereunder which shall be a corporation
organized and doing business under the laws of the United States of America or
of any State or the District of Columbia having a combined capital and surplus
of at least $100,000,000 (or the obligations of which, whether now in existence
or hereafter incurred, are fully and unconditionally guaranteed by a corporation
organized and doing business under the laws of the United States, any State
thereof or of the District of Columbia and having a combined capital and surplus
of at least $100,000,000), if there is such an institution willing and able to
perform the duties of the Subordination Agent hereunder upon reasonable or
customary terms. Such corporation shall be authorized under the laws of the
United States or any State thereof or of the District of Columbia to exercise
corporate trust powers and shall be subject to supervision or examination by
federal, state or District of Columbia authorities. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of any of the
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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 OF SUBORDINATION AGENT
SECTION 7.1 Scope of Indemnification. The Subordination Agent shall
be indemnified hereunder to the extent and in the manner described in Section
7.01 of the Participation Agreements and Section 7 of the Note Purchase
Agreement. The indemnities contained in such Sections 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 Controlling Party may remove the
Subordination Agent for cause by so notifying the Subordination Agent and may
appoint a successor Subordination Agent. The Controlling Party (or, prior to the
occurrence of a Triggering Event, the Person who would be the Controlling Party
if a Triggering Event had occurred) shall remove the Subordination Agent if:
(1) the Subordination Agent fails to comply with Section 6.9 hereof;
(2) the Subordination Agent is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Subordination Agent or its property; or
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(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, in consultation with Midway, shall promptly
appoint a successor Subordination Agent.
Any corporation into which the Subordination Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Subordination Agent
shall be a party, or any corporation to which substantially all the corporate
trust business of the Subordination Agent may be transferred, shall, subject to
the terms of Section 6.9 hereof, be the Subordination Agent hereunder and under
the other Operative Documents 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 Providers and each Trustee.
A successor Subordination Agent shall deliver a written acceptance
of its appointment as Subordination Agent hereunder to the retiring
Subordination Agent, upon which the resignation or removal of the retiring
Subordination Agent shall become effective, and the successor Subordination
Agent shall have all the rights, powers and duties of the Subordination Agent
under this Agreement. The successor Subordination Agent shall mail a notice of
its succession to the Liquidity Providers and the Trustees. The retiring
Subordination Agent shall promptly transfer its rights under each of the
Liquidity Facilities and all of the property held by it as Subordination Agent
to the successor Subordination Agent.
If a successor Subordination Agent does not take office within 60
days after the retiring Subordination Agent resigns or is removed, the retiring
Subordination Agent or one or more of the Trustees may petition any court of
competent jurisdiction for the appointment of a successor Subordination Agent.
If the Subordination Agent fails to comply with Section 6.9 hereof
(to the extent applicable), one or more of the Trustees or one or more of the
Liquidity Providers may petition any court of competent jurisdiction for the
removal of the Subordination Agent and the appointment of a successor
Subordination Agent.
Notwithstanding the foregoing, no resignation or removal of the
Subordination Agent shall be effective unless and until a successor has been
appointed. No appointment of a successor Subordination Agent shall be effective
unless and until the Rating Agencies shall have delivered a Ratings
Confirmation.
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ARTICLE IX
SUPPLEMENTS AND AMENDMENTS
SECTION 9.1 Amendments, Waivers, Etc. (a) This Agreement may not be
supplemented, amended or modified without the consent of each Trustee (acting
with the consent of holders of Certificates of the related Class evidencing
interests in the related Trust aggregating not less than a majority in interest
in such Trust), the Subordination Agent and each Liquidity Provider; provided,
however, that this Agreement may be supplemented, amended or modified without
the consent of any Trustee if such supplement or amendment cures an ambiguity or
inconsistency or does not materially adversely affect such Trustee or the
holders of the related Class of Certificates; and provided further however,
that, if such supplement, amendment or modification would (x) directly or
indirectly modify or supersede, or otherwise conflict with, Section 2.2(b),
Section 3.6(e), Section 3.6(f) or the second sentence of Section 10.6
(collectively, the "Midway Provisions") or (y) otherwise adversely affect the
interests of a potential Replacement Liquidity Provider or of Midway with
respect to its ability to replace any Liquidity Facility or with respect to its
payment obligations under the Note Purchase Agreement or any Indenture or
Participation Agreement, then such supplement, amendment or modification shall
not be effective without the additional written consent of Midway.
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, Participation
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, in
the case of an Indenture pertaining to a Leased Aircraft, has not been cured by
the applicable Owner Trustee or the applicable Owner Participant pursuant to
Section 4.03 of 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 termination values payable by
the lessee under
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the Lease; and provided further that no amendment of or supplement to any
Indenture, Lease, Purchase Agreement Assignment, PAA Consent or Participation
Agreement (the terms "Purchase Agreement Assignment" and "PAA Consent" having
the meanings specified in the Participation Agreements) 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 such Indenture.
SECTION 9.2 Subordination Agent Protected. If, in the opinion of
counsel or the reasonable opinion of the institution acting as the Subordination
Agent hereunder, any document required to be executed pursuant to the terms of
Section 9.1 affects any right, duty, immunity or indemnity with respect to it
under this Agreement or any Liquidity Facility, the Subordination Agent may in
its discretion decline to execute such document.
SECTION 9.3 Effect of Supplemental Agreements. Upon the execution of
any amendment or supplement hereto pursuant to the provisions hereof, this
Agreement shall be and be deemed to be and shall be modified and amended in
accordance therewith and the respective rights, limitations of rights,
obligations, duties and immunities under this Agreement of the parties hereto
and beneficiaries hereof shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental agreement shall be and be
deemed to be and shall be part of the terms and conditions of this Agreement for
any and all purposes. In executing or accepting any supplemental agreement
permitted by this Article IX, the Subordination Agent shall be entitled to
receive, and shall be fully protected in relying upon, an opinion of counsel
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
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as aforesaid or otherwise provided, this Agreement and the trusts created hereby
shall continue in full force and effect in accordance with the terms hereof.
SECTION 10.2 Intercreditor Agreement for Benefit of Trustees,
Liquidity Providers and Subordination Agent. Nothing in this Agreement, whether
express or implied, shall be construed to give to any Person other than the
Trustees, the Liquidity Providers and the Subordination Agent any legal or
equitable right, remedy or claim under or in respect of this Agreement.
SECTION 10.3 Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices, requests, demands, authorizations,
directions, consents, waivers or documents provided or permitted by this
Agreement to be made, given, furnished or filed shall be in writing, mailed by
certified mail, postage prepaid, or by confirmed telecopy and
(i) if to the Subordination Agent, addressed to at its office at:
The First National Bank of Maryland
25 South Charles Street
Baltimore, Maryland 21201
Facsimile: (410) 244-4626
Attention: Corporate Trust Department
(ii) if to any Trustee, addressed to it at its office at:
The First National Bank of Maryland
25 South Charles Street
Baltimore, Maryland 21201
Facsimile: (410) 244-4626
Attention: Corporate Trust Department
(iii) if to any Liquidity Provider, addressed to it at its office
at:
ABN AMRO BANK N.V.
Aerospace Department
135 South LaSalle Street, #760
Chicago, IL 60674-9135
Attention: Claudia Heldring
Telephone: (312) 904-2900
Telecopy: (312) 606-8428
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with copy to:
AMB AMRO BANK N.V.
135 South LaSalle Street, #625
Chicago, IL 60674-9135
Attention: Loan Operations
Telephone: (312) 904-2836
Telecopy: (312) 606-8428
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, if such notice is received, if such notice is mailed by certified
mail, postage prepaid or by courier service or is sent by confirmed telecopy
addressed as provided above. Any party hereto may change the address to which
notices to such party will be sent by giving notice of such change to the other
parties to this Agreement.
SECTION 10.4 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 10.5 No Oral Modifications or Continuing Waivers. No terms
or provisions of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by the party or other Person
against whom enforcement of the change, waiver, discharge or termination is
sought and any other party or other Person whose consent is required pursuant to
this Agreement and any waiver of the terms hereof shall be effective only in the
specific instance and for the specific purpose given.
SECTION 10.6 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
parties hereto and the successors and assigns of each, all as herein provided.
In addition, the Midway Provisions shall inure to the benefit of Midway and its
successors and assigns, and (without limitation of the foregoing) Midway is
hereby constituted, and agreed to be, an express third party beneficiary of the
Midway Provisions. Upon the occurrence of the Transfers contemplated by the
Assignment and Assumption Agreements, the Trustee of each Class shall (without
any further act) be deemed to have transferred all of its rights, title and
interest in and to this Agreement to the trustee of the Successor Trust of the
same Class and, thereafter, the trustee of the Successor Trust of the same Class
and, thereafter, the trustee of each Successor Trust shall be deemed to be the
"Trustee" of such Successor Trust with the rights and obligations of a "Trustee"
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hereunder and under the other Operative Agreements and each reference to a Trust
of any Class herein shall be deemed a reference to the Successor Trust of such
Class.
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 Documents which, had the subordination provisions
of this Agreement been properly applied to such payment, distribution or other
amount, would not have been distributed to such Person, then such payment,
distribution or other amount shall be received and held in trust by such Person
and paid over or delivered to the Subordination Agent for application as
provided herein.
(c) If any Trustee, any Liquidity Provider or the Subordination
Agent receives any payment in respect of any obligations owing hereunder (or, in
the case of the Liquidity Providers, in respect of the Liquidity Obligations),
which is subsequently invalidated, declared preferential, set aside and/or
required to be repaid to a trustee, receiver or other party, then, to the extent
of such payment, such obligations (or, in the case of the Liquidity Providers,
such Liquidity Obligations) intended to be satisfied shall be revived and
continue in full force and effect as if such payment had not been received.
(d) The Trustees (on behalf of themselves and the holders of
Certificates), the Liquidity Providers and the Subordination Agent confirm that
the payment priorities specified in Sections 2.4, 3.2 and 3.3 shall apply in all
circumstances (including to the payment of any sum which would have accrued but
for the commencement of any 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.
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(e) Each of the Trustees (on behalf of themselves and the holders of
Certificates), the Liquidity Providers and the Subordination Agent may take any
of the following actions without impairing its rights under this Agreement:
(i) obtain a lien on any property to secure any amounts owing to it
hereunder, including, in the case of the Liquidity Providers, the
Liquidity Obligations,
(ii) obtain the primary or secondary obligation of any other obligor
with respect to any amounts owing to it hereunder, including, in the case
of the Liquidity Providers, any of the Liquidity Obligations,
(iii) renew, extend, increase, alter or exchange any amounts owing
to it hereunder, including, in the case of the Liquidity Providers, any of
the Liquidity Obligations, or release or compromise any obligation of any
obligor with respect thereto,
(iv) refrain from exercising any right or remedy, or delay in
exercising such right or remedy, which it may have, or
(v) take any other action which might discharge a subordinated party
or a surety under applicable law.
SECTION 10.10 GOVERNING LAW. THIS AGREEMENT SHALL IN ALL RESPECTS BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
SECTION 10.11 Submission to Jurisdiction; Waiver of Jury Trial;
Waiver of Immunity. (a) Each of the parties hereto 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) 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
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<PAGE>
substantially similar form and mail), postage prepaid, to each party
hereto at its address set forth in Section 10.3 hereof, or at such other
address of which the other parties shall have been notified pursuant
thereto; and
(iv) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction.
(b) EACH OF THE PARTIES HERETO AGREES TO WAIVE ITS 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. Each of the parties warrants and
represents 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 IS IRREVOCABLE AND CANNOT BE MODIFIED
ORALLY.
(c) The Liquidity Provider hereby waives any immunity it may have
from the jurisdiction of the courts of the United States or of any State and
waives any immunity any of its properties located in the United States may have
from attachment or execution upon a judgment entered by any such court under the
United States Foreign Sovereign Immunities Act of 1976 or any similar successor
legislation.
* * *
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<PAGE>
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.
THE FIRST NATIONAL BANK OF
MARYLAND, not in its individual capacity but
solely as Trustee for each of the Trusts
By: /s/ Robert D. Brown
----------------------------------------
Name: Robert D. Brown
Title: Assistant Vice President
ABN AMRO BANK N.V., acting through its
Chicago Branch, as Class A Liquidity
Provider, Class B Liquidity Provider and
Class C Liquidity Provider
By: /s/ Claudia C. Heldring
----------------------------------------
Name: Claudia C. Heldring
Title: Vice President
By: /s/ Carla S. Waggoner
----------------------------------------
Name: Carla S. Waggoner
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF
MARYLAND, not in its individual capacity
except as expressly set forth herein but
solely as Subordination Agent and trustee
By: /s/ Robert D. Brown
----------------------------------------
Name: Robert D. Brown
Title: Assistant Vice President
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================================================================================
ESCROW AND PAYING AGENT AGREEMENT
(Class A)
Dated as of August 13, 1998
among
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
as Escrow Agent
MORGAN STANLEY & CO. INCORPORATED
and
CREDIT SUISSE FIRST BOSTON CORPORATION
as Initial Purchasers
THE FIRST NATIONAL BANK OF MARYLAND
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Midway Airlines Pass Through Trust 1998-1A-O
as Pass Through Trustee
and
THE FIRST NATIONAL BANK OF MARYLAND
as Paying Agent
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Escrow Agent...................................................... 2
Section 1.01. Appointment of Escrow Agent............................. 2
Section 1.02. Instruction; Etc........................................ 3
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts...... 3
Section 1.04. Payments to Receiptholders.............................. 4
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt..... 4
Section 1.06. Additional Escrow Amounts............................... 5
Section 1.07. Resignation or Removal of Escrow Agent.................. 5
Section 1.08. Persons Deemed Owners................................... 5
Section 1.09. Further Assurances...................................... 6
SECTION 2. Paying Agent...................................................... 6
Section 2.01. Appointment of Paying Agent............................. 6
Section 2.02. Establishment of Paying Agent Account................... 6
Section 2.03. Payments from Paying Agent Account...................... 6
Section 2.04. Withholding Taxes....................................... 7
Section 2.05. Resignation or Removal of Paying Agent.................. 8
Section 2.06. Notice of Final Withdrawal.............................. 8
SECTION 3. Payments.......................................................... 9
SECTION 4. Other Actions..................................................... 9
SECTION 5. Representations and Warranties of the Escrow Agent................ 9
SECTION 6. Representations and Warranties of the Paying Agent................ 10
SECTION 7. Indemnification................................................... 11
SECTION 8. Amendment, Etc.................................................... 12
SECTION 9. Notices........................................................... 12
SECTION 10. Transfer......................................................... 13
SECTION 11. Entire Agreement................................................. 13
SECTION 12. Governing Law.................................................... 13
i
<PAGE>
SECTION 13. Waiver of Jury Trial Right....................................... 13
SECTION 14. Counterparts..................................................... 14
EXHIBIT A Escrow Receipt
EXHIBIT B Withdrawal Certificate
ii
<PAGE>
ESCROW AND PAYING AGENT AGREEMENT (Class A) dated as of August 13,
1998 (as amended, modified or supplemented from time to time, this "Agreement")
among FIRST UNION TRUST COMPANY, National Association, a national banking
association, as Escrow Agent (in such capacity, together with its successors in
such capacity, the "Escrow Agent"); MORGAN STANLEY & CO. INCORPORATED and CREDIT
SUISSE FIRST BOSTON CORPORATION, as Initial Purchasers of the Certificates
referred to below (the "Initial Purchasers" and together with their respective
transferees and assigns as registered owners of the Certificates, the
"Investors") under the Purchase Agreement referred to below; THE FIRST NATIONAL
BANK OF MARYLAND, a national banking association, not in its individual capacity
except as otherwise expressly provided herein, but solely as trustee (in such
capacity, together with its successors in such capacity, the "Pass Through
Trustee") under the Pass Through Trust Agreement referred to below; and THE
FIRST NATIONAL BANK OF MARYLAND, a national banking association, as paying agent
hereunder (in such capacity, together with its successors in such capacity, the
"Paying Agent").
W I T N E S S E T H
WHEREAS, Midway Airlines Corporation ("Midway") and the Pass Through
Trustee have entered into the Pass Through Trust Agreement, dated as of August
13, 1998 (together, as amended, modified or supplemented from time to time in
accordance with the terms thereof, the "Pass Through Trust Agreement") relating
to Midway Airlines Pass Through Trust 1998-1A-O (the "Pass Through Trust")
pursuant to which the Midway Airlines Pass Through Trust, Series 1998-1A-O
Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Midway and the Initial Purchasers have entered into a
Purchase Agreement dated as of August 6, 1998 (as amended, modified or
supplemented from time to time in accordance with the terms thereof, the
"Purchase Agreement") pursuant to which the Pass Through Trustee will issue and
sell the Certificates to the Initial Purchasers;
WHEREAS, Midway, the Pass Through Trustee, certain other pass
through trustees and certain other persons concurrently herewith are entering
into the Note Purchase Agreement, dated as of the date hereof (the "Note
Purchase Agreement"), pursuant to which the Pass Through Trustee has agreed to
acquire from time to time on or prior to the Delivery Period Termination Date
(as defined in the Note Purchase Agreement) equipment notes (the "Equipment
Notes") issued to finance the acquisition of aircraft by Midway, as lessee or as
owner, utilizing a portion of the proceeds from the sale of the Certificates
(the "Net Proceeds");
WHEREAS, the Initial Purchasers and the Pass Through Trustee intend
that the Net Proceeds be held in escrow by the Escrow Agent on behalf of the
<PAGE>
Investors, subject to withdrawal upon request by the Pass Through Trustee and
satisfaction of the conditions set forth in the Note Purchase Agreement for the
purpose of purchasing Equipment Notes, and that pending such withdrawal the Net
Proceeds be deposited on behalf of the Escrow Agent with First Union National
Bank, as Depositary (the "Depositary") under the Deposit Agreement, dated as of
the date hereof between the Depositary and the Escrow Agent relating to the Pass
Through Trust (as amended, modified or supplemented from time to time in
accordance with the terms thereof, the "Deposit Agreement") pursuant to which,
among other things, the Depositary will pay interest for distribution to the
Investors and establish accounts from which the Escrow Agent shall make
withdrawals upon request of and proper certification by the Pass Through
Trustee;
WHEREAS, the Escrow Agent wishes to appoint the Paying Agent to pay
amounts required to be distributed to the Investors in accordance with this
Agreement; and
WHEREAS, capitalized terms used but not defined herein shall have
the meanings ascribed to such terms in the Pass Through Trust Agreement.
NOW, THEREFORE, in consideration of the obligations contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. Escrow Agent.
Section 1.01. Appointment of Escrow Agent. Each of the Initial
Purchasers, for and on behalf of each of the Investors, hereby irrevocably
appoints, authorizes and directs the Escrow Agent to act as escrow agent and
fiduciary hereunder and under the Deposit Agreement for such specific purposes
and with such powers as are specifically delegated to the Escrow Agent by the
terms of this Agreement, together with such other powers as are reasonably
incidental thereto. Any and all money received and held by the Escrow Agent
under this Agreement or the Deposit Agreement shall be held in escrow by the
Escrow Agent in accordance with the terms of this Agreement. This Agreement is
irrevocable and the Investors' rights with respect to any monies received and
held in escrow by the Escrow Agent under this Agreement or the Deposit Agreement
shall only be as provided under the terms and conditions of this Agreement and
the Deposit Agreement. The Escrow Agent (which term as used in this sentence
shall include reference to its affiliates and its own and its affiliates'
officers, directors, employees and agents): (a) shall have no duties or
responsibilities except those expressly set forth in this Agreement; (b) shall
not be responsible to the Pass Through Trustee or the Investors for any
recitals, statements, representations or warranties of any person other than
itself contained in this Agreement or the Deposit Agreement or for the failure
by the Pass Through Trustee, the Investors or any other person or entity (other
than the Escrow Agent) to perform any of its obligations hereunder (whether or
not the Escrow Agent shall have any knowledge thereof); and (c) shall not be
responsible for any action taken or omitted to be taken by it hereunder
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<PAGE>
or provided for herein or in connection herewith, except for its own willful
misconduct or gross negligence (or simple negligence in connection with the
handling of funds).
Section 1.02. Instruction; Etc. The Initial Purchasers, for and on
behalf of each of the Investors, hereby irrevocably instruct the Escrow Agent,
and the Escrow Agent agrees, (a) to enter into the Deposit Agreement, (b) to
appoint the Paying Agent as provided in this Agreement, (c) upon receipt at any
time and from time to time prior to the Termination Date (as defined below) of a
certificate substantially in the form of Exhibit B hereto (a "Withdrawal
Certificate") executed by the Pass Through Trustee, together with an attached
Notice of Purchase Withdrawal in substantially the form of Exhibit A to the
Deposit Agreement duly completed by the Pass Through Trustee (the "Applicable
Notice of Purchase Withdrawal") and the withdrawal to which it relates, a
"Purchase Withdrawal"), immediately to execute the Applicable Notice of Purchase
Withdrawal as Escrow Agent and transmit it to the Depositary by facsimile
transmission in accordance with the Deposit Agreement; provided that, upon the
request of the Pass Through Trustee after such transmission, the Escrow Agent
shall cancel such Applicable Notice of Purchase Withdrawal, and (d) if there are
any undrawn Deposits (as defined in the Deposit Agreement) on the "Termination
Date", which shall mean the earlier of (i) October 1, 1999 (provided that, if a
labor strike occurs at Bombardier, Inc. prior to such date (a "Labor Strike"),
such date shall be extended by adding thereto the number of days that such
strike continued in effect (the "Additional Days") and (ii) the day on which the
Escrow Agent receives notice from the Pass Through Trustee that the Pass Through
Trustee's obligation to purchase Equipment Notes under the Note Purchase
Agreement has terminated, to give notice to the Depositary (with a copy to the
Paying Agent) substantially in the form of Exhibit B to the Deposit Agreement
requesting a withdrawal of all of the remaining Deposits, together with accrued
and unpaid interest on such Deposits to the date of withdrawal, on the 35th day
after the date that such notice of withdrawal is given to the Depositary (or, if
not a Business Day, on the next succeeding Business Day) (a "Final Withdrawal"),
provided that if the day scheduled for the Final Withdrawal in accordance with
the foregoing is within 10 days before or after a Regular Distribution Date,
then the Escrow Agent shall request that such requested Final Withdrawal be made
on such Regular Distribution Date (the date of such requested withdrawal, the
"Final Withdrawal Date"). If for any reason the Escrow Agent shall have failed
to give the Final Withdrawal Notice to the Depositary on or before October 7,
1999 (provided that if a Labor Strike occurs, such date shall be extended by the
Additional Days) and there are unwithdrawn Deposits on such date, the Final
Withdrawal Date shall be deemed to be October 31, 1999 (provided that if a Labor
Strike occurs, such date shall be extended by the Additional Days).
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts.
The Escrow Agent hereby directs the Initial Purchasers to, and the Initial
Purchasers hereby acknowledge that on the date hereof they shall, irrevocably
deliver to the Depositary on behalf of the Escrow Agent, an amount in U.S.
dollars ("Dollars") and immediately available funds equal to $58,426,000 for
deposit on behalf of the Escrow Agent with the Depositary in accordance with
Section 2.1 of the Deposit Agreement.
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<PAGE>
The Initial Purchasers hereby instruct the Escrow Agent, upon receipt of such
sum from the Initial Purchasers, to confirm such receipt by executing and
delivering to the Pass Through Trustee an Escrow Receipt in the form of Exhibit
A hereto (an "Escrow Receipt"), (a) to be affixed by the Pass Through Trustee to
each Certificate and (b) to evidence the same percentage interest (the "Escrow
Interest") in the Account Amounts (as defined below) as the Fractional Undivided
Interest in the Pass Through Trust evidenced by the Certificate to which it is
to be affixed. The Escrow Agent shall provide to the Pass Through Trustee for
attachment to each Certificate newly issued under and in accordance with the
Pass Through Trust Agreement an executed Escrow Receipt as the Pass Through
Trustee may from time to time request of the Escrow Agent. Each Escrow Receipt
shall be registered by the Escrow Agent in a register (the "Register")
maintained by the Escrow Agent in the same name and same manner as the
Certificate to which it is attached and may not thereafter be detached from such
Certificate to which it is to be affixed prior to the distribution of the Final
Withdrawal (the "Final Distribution"). After the Final Distribution, no
additional Escrow Receipts shall be issued and the Pass Through Trustee shall
request the return to the Escrow Agent for cancellation of all outstanding
Escrow Receipts.
Section 1.04. Payments to Receiptholders. All payments and
distributions made to holders of an Escrow Receipt (collectively
"Receiptholders") in respect of the Escrow Receipt shall be made only from
amounts deposited in the Paying Agent Account (as defined below) ("Account
Amounts"). Each Receiptholder, by its acceptance of an Escrow Receipt, agrees
that (a) it will look solely to the Account Amounts for any payment or
distribution due to such Receiptholder pursuant to the terms of the Escrow
Receipt and this Agreement and (b) it will have no recourse to Midway, the Pass
Through Trustee, the Paying Agent or the Escrow Agent, except as expressly
provided herein or in the Pass Through Trust Agreement. No Receiptholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Paying Agent Account or the obligations of the parties hereto,
nor shall anything set forth herein, or contained in the terms of the Escrow
Receipt, be construed so as to constitute the Receiptholders from time to time
as partners or members of an association.
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt.
If (a) any mutilated Escrow Receipt is surrendered to the Escrow Agent or the
Escrow Agent receives evidence to its satisfaction of the destruction, loss or
theft of any Escrow Receipt and (b) there is delivered to the Escrow Agent and
the Pass Through Trustee such security, indemnity, or bond, as may be required
by them to hold each of them harmless, then, absent notice to the Escrow Agent
or the Pass Through Trustee that such destroyed, lost or stolen Escrow Receipt
has been acquired by a bona fide purchaser, and provided that the requirements
of Section 8-405 of the Uniform Commercial Code in effect in any applicable
jurisdiction are met, the Escrow Agent shall execute, authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Escrow Receipt, a new Escrow Receipt or Escrow Receipts and of like Escrow
Interest in the Account Amounts and bearing a number not contemporaneously
outstanding.
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<PAGE>
In connection with the issuance of any new Escrow Receipt under this
Section 1.05, the Escrow Agent may 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 Pass
Through Trustee and the Escrow Agent) connected therewith.
Any duplicate Escrow Receipt issued pursuant to this Section 1.05
shall constitute conclusive evidence of the appropriate Escrow Interest in the
Account Amounts, as if originally issued, whether or not the lost, stolen or
destroyed Escrow Receipt shall be found at any time.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Escrow Receipts.
Section 1.06. Additional Escrow Amounts. On the date of any Purchase
Withdrawal, the Pass Through Trustee may re-deposit with the Depositary some or
all of the amounts so withdrawn in accordance with Section 2.4 of the Deposit
Agreement.
Section 1.07. Resignation or Removal of Escrow Agent. Subject to the
appointment and acceptance of a successor Escrow Agent as provided below, the
Escrow Agent may resign at any time by giving 30 days' prior written notice
thereof to the Pass Through Trustee, but may not otherwise be removed except for
cause by the written consent of the Investors with respect to Investors
representing Escrow Interests aggregating not less than a majority in interest
in the Account Amounts (an "Action of Investors"). Upon any such resignation or
removal, the Investors, by an Action of Investors, shall have the right to
appoint a successor Escrow Agent. If no successor Escrow Agent shall have been
so appointed and shall have accepted such appointment within 30 days after the
retiring Escrow Agent's giving of notice of resignation or the removal of the
retiring Escrow Agent, then the retiring Escrow Agent may appoint a successor
Escrow Agent. Any successor Escrow Agent shall be a bank which has an office in
the United States with a combined capital and surplus of at least $100,000,000.
Upon the acceptance of any appointment as Escrow Agent hereunder by a successor
Escrow Agent, such successor Escrow Agent shall enter into such documents as the
Pass Through Trustee shall require and shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Escrow
Agent, and the retiring Escrow Agent shall be discharged from its duties and
obligations hereunder. No resignation or removal of the Escrow Agent shall be
effective unless a written confirmation shall have been obtained from each of
Moody's Investors Service, Inc. and Standard & Poor's Rating Group, a division
of McGraw-Hill Inc., that the replacement of the Escrow Agent with the successor
Escrow Agent will not result in (a) a reduction of the rating for the
Certificates below the then current rating for the Certificates or (b) a
withdrawal or suspension of the rating of the Certificates.
Section 1.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Escrow Agent and the Paying Agent
may
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<PAGE>
treat the Person in whose name any Escrow Receipt is registered (as of the day
of determination) as the owner of such Escrow Receipt for the purpose of
receiving distributions pursuant to this Agreement and for all other purposes
whatsoever, and neither the Escrow Agent nor the Paying Agent shall be affected
by any notice to the contrary.
Section 1.09. Further Assurances. The Escrow Agent agrees to take
such actions, and execute such other documents, as may be reasonably requested
by the Pass Through Trustee in order to effectuate the purposes of this
Agreement and the performance by the Escrow Agent of its obligations hereunder.
SECTION 2. Paying Agent.
Section 2.01. Appointment of Paying Agent. The Escrow Agent hereby
irrevocably appoints and authorizes the Paying Agent to act as its paying agent
hereunder, for the benefit of the Investors, for such specific purposes and with
such powers as are specifically delegated to the Paying Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Any and all money received and held by the Paying Agent under this
Agreement or the Deposit Agreement shall be held in the Paying Agent Account for
the benefit of the Investors. The Paying Agent (which term as used in this
sentence shall include reference to its affiliates and its own and its
affiliates' officers, directors, employees and agents): (a) shall have no duties
or responsibilities except those expressly set forth in this Agreement, and
shall not by reason of this Agreement be a trustee for the Escrow Agent; (b)
shall not be responsible to the Escrow Agent for any recitals, statements,
representations or warranties of any person other than itself contained in this
Agreement or for the failure by the Escrow Agent or any other person or entity
(other than the Paying Agent) to perform any of its obligations hereunder
(whether or not the Paying Agent shall have any knowledge thereof); and (c)
shall not be responsible for any action taken or omitted to be taken by it
hereunder or provided for herein or in connection herewith, except for its own
willful misconduct or gross negligence (or simple negligence in connection with
the handling of funds).
Section 2.02. Establishment of Paying Agent Account. The Paying
Agent shall establish a deposit account (the "Paying Agent Account") at The
First National Bank of Maryland in the name of the Escrow Agent. It is expressly
understood by the parties hereto that the Paying Agent is acting as the paying
agent of the Escrow Agent hereunder and that no amounts on deposit in the Paying
Agent Account constitute part of the Trust Property.
Section 2.03. Payments from Paying Agent Account. The Escrow Agent
hereby irrevocably instructs the Paying Agent, and the Paying Agent agrees to
act, as follows:
(a) On each Interest Payment Date (as defined in the Deposit
Agreement) or as soon thereafter as the Paying Agent has confirmed receipt
in
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<PAGE>
the Paying Agent Account from the Depositary of any amount in respect of
accrued interest on the Deposits, the Paying Agent shall distribute out of
the Paying Agent Account the entire amount deposited therein by the
Depositary. There shall be so distributed to each Receiptholder of record
on the 15th day (whether or not a Business Day) preceding such Interest
Payment Date by check mailed to such Receiptholder, at the address
appearing in the Register, such Receiptholder's pro rata share (based on
the Escrow Interest in the Account Amounts held by such Receiptholder) of
the total amount of interest deposited by the Depositary in the Paying
Agent Account on such date, except that, with respect to Escrow Receipts
registered on the Record Date in the name of DTC, such distribution shall
be made by wire transfer in immediately available funds to the account
designated by DTC.
(b) Upon the confirmation by the Paying Agent of receipt in the
Paying Agent Account from the Depositary of any amount in respect of the
Final Withdrawal, the Paying Agent shall forthwith distribute the entire
amount of the Final Withdrawal deposited therein by the Depositary. There
shall be so distributed to each Receiptholder of record on the 15th day
(whether or not a Business Day) preceding the Final Withdrawal Date by
check mailed to such Receiptholder, at the address appearing in the
Register, such Receiptholder's pro rata share (based on the Escrow
Interest in the Account Amounts held by such Receiptholder) of the total
amount in the Paying Agent Account on account of such Final Withdrawal,
except that, with respect to Escrow Receipts registered on the Record Date
in the name of DTC, such distribution shall be made by wire transfer in
immediately available funds to the account designated by DTC.
(c) If any payment of interest or principal in respect of the Final
Withdrawal is not received by the Paying Agent within five days of the
applicable date when due, then it shall be distributed to Receiptholders
after actual receipt by the Paying Agent on the same basis as a Special
Payment is distributed under the Pass Through Trust Agreement.
(d) The Paying Agent shall include with any check mailed pursuant to
this Section any notice required to be distributed under the Pass Through
Trust Agreement that is furnished to the Paying Agent by the Pass Through
Trustee.
Section 2.04. Withholding Taxes. The Paying Agent shall exclude and
withhold from each distribution of accrued interest on the Deposits (as defined
in the Deposit Agreement) and any amount in respect of the Final Withdrawal any
and all withholding taxes applicable thereto as required by law. The Paying
Agent agrees to act as such withholding agent and, in connection therewith,
whenever any present or future taxes or similar charges are required to be
withheld with respect to any amounts payable in respect of the Deposits (as
defined in the Deposit Agreement) or the escrow amounts, to withhold such
amounts and timely pay the same to the appropriate authority in the name of and
on behalf of the Receiptholders, that it will file any necessary withholding tax
returns or statements when due, and that, as promptly as
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<PAGE>
possible after the payment thereof, it will deliver to each such Receiptholder
appropriate documentation showing the payment thereof, together with such
additional documentary evidence as such Receiptholder may reasonably request
from time to time. The Paying Agent agrees to file any other information reports
as it may be required to file under United States law.
Section 2.05. Resignation or Removal of Paying Agent. Subject to the
appointment and acceptance of a successor Paying Agent as provided below, the
Paying Agent may resign at any time by giving 30 days' prior written notice
thereof to the Escrow Agent, but may not otherwise be removed except for cause
by the Escrow Agent. Upon any such resignation or removal, the Escrow Agent
shall have the right to appoint a successor Paying Agent. If no successor Paying
Agent shall have been so appointed and shall have accepted such appointment
within 30 days after the retiring Paying Agent's giving of notice of resignation
or the removal of the retiring Paying Agent, then the retiring Paying Agent may
appoint a successor Paying Agent. Any Successor Paying Agent shall be a bank
which has an office in the United States with a combined capital and surplus of
at least $100,000,000. Upon the acceptance of any appointment as Paying Agent
hereunder by a successor Paying Agent, such successor Paying Agent shall enter
into such documents as the Escrow Agent shall require and shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Paying Agent, and the retiring Paying Agent shall be discharged
from its duties and obligations hereunder.
Section 2.06. Notice of Final Withdrawal. Promptly after receipt by
the Paying Agent of notice that the Escrow Agent has requested a Final
Withdrawal or that a Final Withdrawal will be made, the Paying Agent shall cause
notice of the distribution of the Final Withdrawal to be mailed to each of the
Receiptholders at its address as it appears in the Register. Such notice shall
be mailed not less than 15 days prior to the Final Withdrawal Date. Such notice
shall set forth:
(i) the Final Withdrawal Date and the date for determining
Receiptholders of record who shall be entitled to receive
distributions in respect of the Final Withdrawal,
(ii) the amount of the payment in respect of the Final
Withdrawal for each $1,000 face amount Certificate (based on
information provided by the Pass Through Trustee) and the amount
thereof constituting unused Deposits (as defined in the Deposit
Agreement) and interest thereon, and
(iii) if the Final Withdrawal Date is the same date as a
Regular Distribution Date, the total amount to be received on such
date for each $1,000 face amount Certificate (based on information
provided by the Pass Through Trustee).
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<PAGE>
Such mailing may include any notice required to be given to
Certificate holders in connection with such distribution pursuant to the Pass
Through Trust Agreement.
SECTION 3. Payments. If, notwithstanding the instructions in Section
4 of the Deposit Agreement that all amounts payable to the Escrow Agent under
the Deposit Agreement be paid by the Depositary directly to the Paying Agent or
the Pass Through Trustee (depending on the circumstances), the Escrow Agent
receives any payment thereunder, then the Escrow Agent shall forthwith pay such
amount in Dollars and in immediately available funds by wire transfer to (a) in
the case of a payment of accrued interest on the Deposits (as defined in the
Deposit Agreement) or any Final Withdrawal, directly to the Paying Agent Account
and (b) in the case of any Purchase Withdrawal, directly to the Pass Through
Trustee or its designee as specified and in the manner provided in the
Applicable Notice of Purchase Withdrawal. The Escrow Agent hereby waives any and
all rights of set-off, combination of accounts, right of retention or similar
right (whether arising under applicable law, contract or otherwise) it may have
against amounts payable to the Paying Agent howsoever arising.
SECTION 4. Other Actions. The Escrow Agent shall take such other
actions under or in respect of the Deposit Agreement (including, without
limitation, the enforcement of the obligations of the Depositary thereunder) as
the Investors, by an Action of Investors, may from time to time request.
SECTION 5. Representations and Warranties of the Escrow Agent. The
Escrow Agent represents and warrants to Midway, the Investors, the Paying Agent
and the Pass Through Trustee as follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America;
(ii) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement and the Deposit Agreement;
(iii) the execution, delivery and performance of each of this
Agreement and the Deposit Agreement have been duly authorized by all
necessary corporate action on the part of it and do not require any
stockholder approval, or approval or consent of any trustee or holder of
any indebtedness or obligations of it, and each such document has been
duly executed and delivered by it and constitutes its legal, valid and
binding obligations enforceable against it in accordance with the terms
hereof or thereof except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
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<PAGE>
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action by,
and no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement or the Deposit Agreement;
(v) neither the execution, delivery or performance by it of this
Agreement or the Deposit Agreement, nor compliance with the terms and
provisions hereof or thereof, conflicts or will conflict with or results
or will result in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under, any law,
governmental rule or regulation or the charter documents, as amended, or
bylaws, as amended, of it or any similar instrument binding on it or any
order, writ, injunction or decree of any court or governmental authority
against it or by which it or any of its properties is bound or any
indenture, mortgage or contract or other agreement or instrument to which
it is a party or by which it or any of its properties is bound, or
constitutes or will constitute a default thereunder or results or will
result in the imposition of any lien upon any of its properties; and
(vi) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (A) would
adversely affect the ability of it to perform its obligations under this
Agreement or the Deposit Agreement or (B) would call into question or
challenge the validity of this Agreement or the Deposit Agreement or the
enforceability hereof or thereof in accordance with the terms hereof or
thereof, nor is the Escrow Agent in default with respect to any order of
any court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its obligations
under this Agreement or the Deposit Agreement.
SECTION 6. Representations and Warranties of the Paying Agent. The
Paying Agent represents and warrants to Midway, the Investors, the Escrow Agent
and the Pass Through Trustee as follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
incorporation;
(ii) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
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<PAGE>
(iii) the execution, delivery and performance of this Agreement has
been duly authorized by all necessary corporate action on the part of it
and does not require any stockholder approval, or approval or consent of
any trustee or holder of any indebtedness or obligations of it, and such
document has been duly executed and delivered by it and constitutes its
legal, valid and binding obligations enforceable against it in accordance
with the terms hereof except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action by,
and no notice to or filing with, any United States or State of Maryland
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(v) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts
or will conflict with or results or will result in a breach or violation
of any of the terms, conditions or provisions of, or will require any
consent or approval under, any law, governmental rule or regulation or the
articles of association documents, as amended, or bylaws, as amended, of
it or any similar instrument binding on it or any order, writ, injunction
or decree of any court or governmental authority against it or by which it
or any of its properties is bound or any indenture, mortgage or contract
or other agreement or instrument to which it is a party or by which it or
any of its properties is bound, or constitutes or will constitute a
default thereunder or results or will result in the imposition of any lien
upon any of its properties; and
(vi) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (A) would
adversely affect the ability of it to perform its obligations under this
Agreement or (B) would call into question or challenge the validity of
this Agreement or the enforceability hereof in accordance with the terms
hereof, nor is the Paying Agent in default with respect to any order of
any court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its obligations
under this Agreement.
SECTION 7. Indemnification. Except for actions expressly required of
the Escrow Agent or the Paying Agent hereunder, each of the Escrow Agent and the
Paying Agent shall in all cases be fully justified in failing or refusing to act
hereunder
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<PAGE>
unless it shall have been indemnified by the party requesting such action in a
manner reasonably satisfactory to it against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. In the event Midway requests any amendment to any Operative Agreement
(as defined in the Note Purchase Agreement), the Pass Through Trustee, solely to
the extent of funds made available by Midway for such purpose, agrees to pay all
reasonable fees and expenses (including, without limitation, fees and
disbursements of counsel) of the Escrow Agent and the Paying Agent in connection
therewith.
SECTION 8. Amendment, Etc. Upon request of the Pass Through Trustee
and approval by an Action of Investors, the Escrow Agent shall enter into an
amendment to this Agreement, so long as such amendment does not adversely affect
the rights or obligations of the Escrow Agent or the Paying Agent, provided that
upon request of the Pass Through Trustee and without any consent of the
Investors, the Escrow Agent shall enter into an amendment to this Agreement for
any of the following purposes:
(1) to correct or supplement any provision in this Agreement which
may be defective or inconsistent with any other provision herein or to
cure any ambiguity or correct any mistake or to modify any other provision
with respect to matters or questions arising under this Agreement,
provided that any such action shall not materially adversely affect the
interests of the Investors; or
(2) to comply with any requirement of the SEC, applicable law, rules
or regulations of any exchange or quotation system on which the
Certificates are listed or any regulatory body; or
(3) to evidence and provide for the acceptance of appointment under
this Agreement of a successor Escrow Agent, successor Paying Agent or
successor Pass Through Trustee.
SECTION 9. Notices. Unless otherwise expressly provided herein, any
notice or other communication under this Agreement shall be in writing
(including by facsimile) and shall be deemed to be given and effective upon
receipt thereof. All notices shall be sent to (a) in the case of the Investors,
as their respective addresses shall appear in the Register, (b) in the case of
the Escrow Agent, First Union Trust Company, National Association, One Rodney
Square, 920 King Street, Suite 102, Wilmington, Delaware 19801, Attention:
Corporate Trust Administration (Telecopier: (302) 888-7544), (c) in the case of
the Pass Through Trustee, The First National Bank of Maryland, 25 South Charles
Street, Mail Code 101-591, Baltimore, Maryland 21201, Attention: Corporate Trust
Department (Telecopier: (410) 244-4236) or (d) in the case of the Paying Agent,
The First National Bank of Maryland, 25 South Charles Street, Mail Code 101-591,
Baltimore, Maryland 21201, Attention: Corporate Trust Department (Telecopier:
(410) 244-4236), in each case with a copy to Midway, Midway Airlines
Corporation, 300 W. Morgan St. Suite 1200, Durham, North Carolina 27701,
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<PAGE>
Attention: General Counsel (Telecopier: (919) 956-7568) (or at such other
address as any such party may specify from time to time in a written notice to
the other parties). On or prior to the execution of this Agreement, the Pass
Through Trustee has delivered to the Escrow Agent a certificate containing
specimen signatures of the representatives of the Pass Through Trustee who are
authorized to give notices and instructions with respect to this Agreement. The
Escrow Agent may conclusively rely on such certificate until the Escrow Agent
receives written notice from the Pass Through Trustee to the contrary.
SECTION 10. Transfer. No party hereto shall be entitled to assign or
otherwise transfer this Agreement (or any interest herein) other than (in the
case of the Escrow Agent) to a successor escrow agent under Section 1.06 hereof
or (in the case of the Paying Agent) to a successor paying agent under Section
2.04 hereof, and any purported assignment in violation thereof shall be void.
This Agreement shall be binding upon the parties hereto and their respective
successors and (in the case of the Escrow Agent and the Paying Agent) their
respective permitted assigns. Upon the occurrence of the Transfer (as defined
below) contemplated by the Assignment and Assumption Agreement (as defined
below), the Pass Through Trustee shall (without further act) be deemed to have
transferred all of its right, title and interest in and to this Agreement to the
trustee of the Successor Trust (as defined below) and, thereafter, the trustee
of the Successor Trust shall be deemed to be the "Pass Through Trustee"
hereunder with the rights and obligations of the "Pass Through Trustee"
hereunder and each reference herein to "Midway Airlines Pass Through Trust"
1998-1A-O" shall be deemed to be a reference to "Midway Airlines Pass Through
Trust 1998-1A-S". The parties hereto hereby acknowledge and consent to the
Transfer contemplated by the Assignment and Assumption Agreement. As used
herein, "Transfer" means the transfers of the assets to the Successor Trust
contemplated by the Assignment and Assumption Agreement; "Assignment and
Assumption Agreement" means the Assignment and Assumption Agreement to be
entered into between the Pass Through Trustee and the trustee of the Successor
Trust, substantially in the form of Exhibit C to the Trust Supplement;
"Successor Trust" means the Midway Airlines Pass Through Trust 1998-1A-S.
SECTION 11. Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and understandings among the Escrow
Agent, the Paying Agent, the Underwriters and the Pass Through Trustee with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 13. Waiver of Jury Trial Right. EACH OF THE ESCROW AGENT,
THE PAYING AGENT, THE INVESTORS AND THE PASS THROUGH TRUSTEE ACKNOWLEDGES AND
ACCEPTS THAT IN ANY SUIT, ACTION OR
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<PAGE>
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT SUCH PARTY IRREVOCABLY
WAIVES ITS RIGHT TO A TRIAL BY JURY.
SECTION 14. Counterparts. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.
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<PAGE>
IN WITNESS WHEREOF, the Escrow Agent, the Paying Agent, the Initial
Purchasers and the Pass Through Trustee have caused this Escrow and Paying Agent
Agreement (Class A) to be duly executed as of the day and year first above
written.
MORGAN STANLEY & CO.
INCORPORATED; and
CREDIT SUISSE FIRST BOSTON
CORPORATION,
as Initial Purchasers
By: MORGAN STANLEY & CO.
INCORPORATED
By: /s/ Tom Cahill
------------------------------------
Name: Tom Cahill
Title: Principal
THE FIRST NATIONAL BANK OF MARYLAND, not
in its individual capacity, but solely
as Pass Through Trustee for and on
behalf of Midway Airlines Pass Through
Trust 1998-1A-O
By: /s/ Robert D. Brown
------------------------------------
Name: Robert D. Brown
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF MARYLAND, as
Paying Agent
By: /s/ Stephen J. Kaba
------------------------------------
Name: Stephen J. Kaba
Title: Vice President
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<PAGE>
EXHIBIT A
MIDWAY AIRLINES 1998-1A ESCROW RECEIPT
No. _
This Escrow Receipt evidences a fractional undivided interest in
amounts ("Account Amounts") from time to time deposited into a certain paying
agent account (the "Paying Agent Account") described in the Escrow and Paying
Agent Agreement (Class A) dated as of August 13, 1998 (as amended, modified or
supplemented from time to time, the "Escrow and Paying Agent Agreement") among
First Union Trust Company, National Association, as Escrow Agent (in such
capacity, together with its successors in such capacity, the "Escrow Agent"),
Morgan Stanley & Co. Incorporated and Credit Suisse First Boston Corporation, as
Initial Purchasers, The First National Bank of Maryland, as Pass Through Trustee
(in such capacity, together with its successors in such capacity, the "Pass
Through Trustee") and The First National Bank of Maryland, as paying agent (in
such capacity, together with its successors in such capacity, the "Paying
Agent"). Capitalized terms not defined herein shall have the meanings assigned
to them in the Escrow and Paying Agent Agreement.
This Escrow Receipt is issued under and is subject to the terms,
provisions and conditions of the Escrow and Paying Agent Agreement. By virtue of
its acceptance hereof the holder of this Escrow Receipt assents and agrees to be
bound by the provisions of the Escrow and Paying Agent Agreement and this Escrow
Receipt.
This Escrow Receipt represents a fractional undivided interest in
amounts deposited from time to time in the Paying Agent Account, and grants or
represents no rights, benefits or interests of any kind in respect of any assets
or property other than such amounts. This Escrow Receipt evidences the same
percentage interest in the Account Amounts as the Fractional Undivided Interest
in the Pass Through Trust evidenced by the Certificate to which this Escrow
Receipt is affixed.
All payments and distributions made to Receiptholders in respect of
the Escrow Receipt shall be made only from Account Amounts deposited in the
Paying Agent Account. The holder of this Escrow Receipt, by its acceptance of
this Escrow Receipt, agrees that it will look solely to the Account Amounts for
any payment or distribution due to it pursuant to this Escrow Receipt and that
it will not have any recourse to Midway, the Pass Through Trustee, the Paying
Agent or the Escrow Agent, except as expressly provided herein or in the Pass
Through Trust Agreement. No Receiptholder of this Escrow Receipt shall have any
right to vote or in any manner otherwise control the operation and management of
the Paying Agent Account, nor shall anything set forth herein, or contained in
the terms of this Escrow Receipt, be construed so as to constitute the
Receiptholders from time to time as partners or members of an association.
<PAGE>
This Escrow Receipt may not be assigned or transferred except in
connection with the assignment or transfer of the Certificate to which this
Escrow Receipt is affixed. After payment to the holder hereof of its Escrow
Interest in the Final Distribution, upon the request of the Pass Through
Trustee, the holder hereof will return this Escrow Receipt to the Pass Through
Trustee.
The Paying Agent may treat the person in whose name the Certificate
to which this Escrow Receipt is attached as the owner hereof for all purposes,
and the Paying Agent shall not be affected by any notice to the contrary.
THIS ESCROW RECEIPT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
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<PAGE>
IN WITNESS WHEREOF, the Escrow Agent has caused this Escrow Receipt
to be duly executed.
Dated: August ___, 1998
First Union Trust Company, National
Association, as Escrow Agent
By
-------------------------------------
Name:
Title:
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<PAGE>
EXHIBIT B
WITHDRAWAL CERTIFICATE
(Class A)
First Union Trust Company, National Association
as Escrow Agent
Dear Sirs:
Reference is made to the Escrow and Paying Agent Agreement, dated as
of August 13, 1998 (the "Agreement"). We hereby certify to you that the
conditions to the obligations of the undersigned to execute a Participation
Agreement pursuant to the Note Purchase Agreement have been satisfied. Pursuant
to Section 1.02(c) of the Agreement, please execute the attached Notice of
Withdrawal and immediately transmit by facsimile to the Depositary, at First
Union National Bank, Attention: Peter J. Lancos (facsimile no. 704-383-9139).
Very truly yours,
THE FIRST NATIONAL BANK OF MARYLAND, not
in its individual capacity but solely as
Pass Through Trustee
By
--------------------------------------
Name
Dated: _______________, 199__
================================================================================
ESCROW AND PAYING AGENT AGREEMENT
(Class B)
Dated as of August 13, 1998
among
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
as Escrow Agent
MORGAN STANLEY & CO. INCORPORATED
and
CREDIT SUISSE FIRST BOSTON CORPORATION
as Initial Purchasers
THE FIRST NATIONAL BANK OF MARYLAND
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Midway Airlines Pass Through Trust 1998-1B-O
as Pass Through Trustee
and
THE FIRST NATIONAL BANK OF MARYLAND
as Paying Agent
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Escrow Agent...................................................... 2
Section 1.01. Appointment of Escrow Agent............................. 2
Section 1.02. Instruction; Etc........................................ 3
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts...... 3
Section 1.04. Payments to Receiptholders.............................. 4
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt..... 4
Section 1.06. Additional Escrow Amounts............................... 5
Section 1.07. Resignation or Removal of Escrow Agent.................. 5
Section 1.08. Persons Deemed Owners................................... 6
Section 1.09. Further Assurances...................................... 6
SECTION 2. Paying Agent...................................................... 6
Section 2.01. Appointment of Paying Agent............................. 6
Section 2.02. Establishment of Paying Agent Account................... 6
Section 2.03. Payments from Paying Agent Account...................... 6
Section 2.04. Withholding Taxes....................................... 7
Section 2.05. Resignation or Removal of Paying Agent.................. 8
Section 2.06. Notice of Final Withdrawal.............................. 8
SECTION 3. Payments.......................................................... 9
SECTION 4. Other Actions..................................................... 9
SECTION 5. Representations and Warranties of the Escrow Agent................ 9
SECTION 6. Representations and Warranties of the Paying Agent................ 10
SECTION 7. Indemnification................................................... 11
SECTION 8. Amendment, Etc.................................................... 12
SECTION 9. Notices........................................................... 12
SECTION 10. Transfer......................................................... 13
SECTION 11. Entire Agreement................................................. 13
SECTION 12. Governing Law.................................................... 13
i
<PAGE>
SECTION 13. Waiver of Jury Trial Right....................................... 13
SECTION 14. Counterparts..................................................... 14
EXHIBIT A Escrow Receipt
EXHIBIT B Withdrawal Certificate
ii
<PAGE>
ESCROW AND PAYING AGENT AGREEMENT (Class B) dated as of August 13,
1998 (as amended, modified or supplemented from time to time, this "Agreement")
among FIRST UNION TRUST COMPANY, National Association, a national banking
association, as Escrow Agent (in such capacity, together with its successors in
such capacity, the "Escrow Agent"); MORGAN STANLEY & CO. INCORPORATED and CREDIT
SUISSE FIRST BOSTON CORPORATION, as Initial Purchasers of the Certificates
referred to below (the "Initial Purchasers" and together with their respective
transferees and assigns as registered owners of the Certificates, the
"Investors") under the Purchase Agreement referred to below; THE FIRST NATIONAL
BANK OF MARYLAND, a national banking association, not in its individual capacity
except as otherwise expressly provided herein, but solely as trustee (in such
capacity, together with its successors in such capacity, the "Pass Through
Trustee") under the Pass Through Trust Agreement referred to below; and THE
FIRST NATIONAL BANK OF MARYLAND, a national banking association, as paying agent
hereunder (in such capacity, together with its successors in such capacity, the
"Paying Agent").
W I T N E S S E T H
WHEREAS, Midway Airlines Corporation ("Midway") and the Pass Through
Trustee have entered into the Pass Through Trust Agreement, dated as of August
13, 1998 (together, as amended, modified or supplemented from time to time in
accordance with the terms thereof, the "Pass Through Trust Agreement") relating
to Midway Airlines Pass Through Trust 1998-1B-O (the "Pass Through Trust")
pursuant to which the Midway Airlines Pass Through Trust, Series 1998-1B-O
Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Midway and the Initial Purchasers have entered into a
Purchase Agreement dated as of August 6, 1998 (as amended, modified or
supplemented from time to time in accordance with the terms thereof, the
"Purchase Agreement") pursuant to which the Pass Through Trustee will issue and
sell the Certificates to the Initial Purchasers;
WHEREAS, Midway, the Pass Through Trustee, certain other pass
through trustees and certain other persons concurrently herewith are entering
into the Note Purchase Agreement, dated as of the date hereof (the "Note
Purchase Agreement"), pursuant to which the Pass Through Trustee has agreed to
acquire from time to time on or prior to the Delivery Period Termination Date
(as defined in the Note Purchase Agreement) equipment notes (the "Equipment
Notes") issued to finance the acquisition of aircraft by Midway, as lessee or as
owner, utilizing a portion of the proceeds from the sale of the Certificates
(the "Net Proceeds");
WHEREAS, the Initial Purchasers and the Pass Through Trustee intend
that the Net Proceeds be held in escrow by the Escrow Agent on behalf of the
<PAGE>
Investors, subject to withdrawal upon request by the Pass Through Trustee and
satisfaction of the conditions set forth in the Note Purchase Agreement for the
purpose of purchasing Equipment Notes, and that pending such withdrawal the Net
Proceeds be deposited on behalf of the Escrow Agent with First Union National
Bank, as Depositary (the "Depositary") under the Deposit Agreement, dated as of
the date hereof between the Depositary and the Escrow Agent relating to the Pass
Through Trust (as amended, modified or supplemented from time to time in
accordance with the terms thereof, the "Deposit Agreement") pursuant to which,
among other things, the Depositary will pay interest for distribution to the
Investors and establish accounts from which the Escrow Agent shall make
withdrawals upon request of and proper certification by the Pass Through
Trustee;
WHEREAS, the Escrow Agent wishes to appoint the Paying Agent to pay
amounts required to be distributed to the Investors in accordance with this
Agreement; and
WHEREAS, capitalized terms used but not defined herein shall have
the meanings ascribed to such terms in the Pass Through Trust Agreement.
NOW, THEREFORE, in consideration of the obligations contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. Escrow Agent.
Section 1.01. Appointment of Escrow Agent. Each of the Initial
Purchasers, for and on behalf of each of the Investors, hereby irrevocably
appoints, authorizes and directs the Escrow Agent to act as escrow agent and
fiduciary hereunder and under the Deposit Agreement for such specific purposes
and with such powers as are specifically delegated to the Escrow Agent by the
terms of this Agreement, together with such other powers as are reasonably
incidental thereto. Any and all money received and held by the Escrow Agent
under this Agreement or the Deposit Agreement shall be held in escrow by the
Escrow Agent in accordance with the terms of this Agreement. This Agreement is
irrevocable and the Investors' rights with respect to any monies received and
held in escrow by the Escrow Agent under this Agreement or the Deposit Agreement
shall only be as provided under the terms and conditions of this Agreement and
the Deposit Agreement. The Escrow Agent (which term as used in this sentence
shall include reference to its affiliates and its own and its affiliates'
officers, directors, employees and agents): (a) shall have no duties or
responsibilities except those expressly set forth in this Agreement; (b) shall
not be responsible to the Pass Through Trustee or the Investors for any
recitals, statements, representations or warranties of any person other than
itself contained in this Agreement or the Deposit Agreement or for the failure
by the Pass Through Trustee, the Investors or any other person or entity (other
than the Escrow Agent) to perform any of its obligations hereunder (whether or
not the Escrow Agent shall have any knowledge thereof); and (c) shall not be
responsible for any action taken or omitted to be taken by it hereunder
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<PAGE>
or provided for herein or in connection herewith, except for its own willful
misconduct or gross negligence (or simple negligence in connection with the
handling of funds).
Section 1.02. Instruction; Etc. The Initial Purchasers, for and on
behalf of each of the Investors, hereby irrevocably instruct the Escrow Agent,
and the Escrow Agent agrees, (a) to enter into the Deposit Agreement, (b) to
appoint the Paying Agent as provided in this Agreement, (c) upon receipt at any
time and from time to time prior to the Termination Date (as defined below) of a
certificate substantially in the form of Exhibit B hereto (a "Withdrawal
Certificate") executed by the Pass Through Trustee, together with an attached
Notice of Purchase Withdrawal in substantially the form of Exhibit A to the
Deposit Agreement duly completed by the Pass Through Trustee (the "Applicable
Notice of Purchase Withdrawal") and the withdrawal to which it relates, a
"Purchase Withdrawal"), immediately to execute the Applicable Notice of Purchase
Withdrawal as Escrow Agent and transmit it to the Depositary by facsimile
transmission in accordance with the Deposit Agreement; provided that, upon the
request of the Pass Through Trustee after such transmission, the Escrow Agent
shall cancel such Applicable Notice of Purchase Withdrawal, and (d) if there are
any undrawn Deposits (as defined in the Deposit Agreement) on the "Termination
Date", which shall mean the earlier of (i) October 1, 1999 (provided that, if a
labor strike occurs at Bombardier, Inc. prior to such date (a "Labor Strike"),
such date shall be extended by adding thereto the number of days that such
strike continued in effect (the "Additional Days") and (ii) the day on which the
Escrow Agent receives notice from the Pass Through Trustee that the Pass Through
Trustee's obligation to purchase Equipment Notes under the Note Purchase
Agreement has terminated, to give notice to the Depositary (with a copy to the
Paying Agent) substantially in the form of Exhibit B to the Deposit Agreement
requesting a withdrawal of all of the remaining Deposits, together with accrued
and unpaid interest on such Deposits to the date of withdrawal, on the 35th day
after the date that such notice of withdrawal is given to the Depositary (or, if
not a Business Day, on the next succeeding Business Day) (a "Final Withdrawal"),
provided that if the day scheduled for the Final Withdrawal in accordance with
the foregoing is within 10 days before or after a Regular Distribution Date,
then the Escrow Agent shall request that such requested Final Withdrawal be made
on such Regular Distribution Date (the date of such requested withdrawal, the
"Final Withdrawal Date"). If for any reason the Escrow Agent shall have failed
to give the Final Withdrawal Notice to the Depositary on or before October 7,
1999 (provided that if a Labor Strike occurs, such date shall be extended by the
Additional Days) and there are unwithdrawn Deposits on such date, the Final
Withdrawal Date shall be deemed to be October 31, 1999 (provided that if a Labor
Strike occurs, such date shall be extended by the Additional Days).
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts.
The Escrow Agent hereby directs the Initial Purchasers to, and the Initial
Purchasers hereby acknowledge that on the date hereof they shall, irrevocably
deliver to the Depositary on behalf of the Escrow Agent, an amount in U.S.
dollars ("Dollars") and immediately available funds equal to $25,266,000 for
deposit on behalf of the Escrow Agent with the Depositary in accordance with
Section 2.1 of the Deposit Agreement.
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<PAGE>
The Initial Purchasers hereby instruct the Escrow Agent, upon receipt of such
sum from the Initial Purchasers, to confirm such receipt by executing and
delivering to the Pass Through Trustee an Escrow Receipt in the form of Exhibit
A hereto (an "Escrow Receipt"), (a) to be affixed by the Pass Through Trustee to
each Certificate and (b) to evidence the same percentage interest (the "Escrow
Interest") in the Account Amounts (as defined below) as the Fractional Undivided
Interest in the Pass Through Trust evidenced by the Certificate to which it is
to be affixed. The Escrow Agent shall provide to the Pass Through Trustee for
attachment to each Certificate newly issued under and in accordance with the
Pass Through Trust Agreement an executed Escrow Receipt as the Pass Through
Trustee may from time to time request of the Escrow Agent. Each Escrow Receipt
shall be registered by the Escrow Agent in a register (the "Register")
maintained by the Escrow Agent in the same name and same manner as the
Certificate to which it is attached and may not thereafter be detached from such
Certificate to which it is to be affixed prior to the distribution of the Final
Withdrawal (the "Final Distribution"). After the Final Distribution, no
additional Escrow Receipts shall be issued and the Pass Through Trustee shall
request the return to the Escrow Agent for cancellation of all outstanding
Escrow Receipts.
Section 1.04. Payments to Receiptholders. All payments and
distributions made to holders of an Escrow Receipt (collectively
"Receiptholders") in respect of the Escrow Receipt shall be made only from
amounts deposited in the Paying Agent Account (as defined below) ("Account
Amounts"). Each Receiptholder, by its acceptance of an Escrow Receipt, agrees
that (a) it will look solely to the Account Amounts for any payment or
distribution due to such Receiptholder pursuant to the terms of the Escrow
Receipt and this Agreement and (b) it will have no recourse to Midway, the Pass
Through Trustee, the Paying Agent or the Escrow Agent, except as expressly
provided herein or in the Pass Through Trust Agreement. No Receiptholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Paying Agent Account or the obligations of the parties hereto,
nor shall anything set forth herein, or contained in the terms of the Escrow
Receipt, be construed so as to constitute the Receiptholders from time to time
as partners or members of an association.
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt.
If (a) any mutilated Escrow Receipt is surrendered to the Escrow Agent or the
Escrow Agent receives evidence to its satisfaction of the destruction, loss or
theft of any Escrow Receipt and (b) there is delivered to the Escrow Agent and
the Pass Through Trustee such security, indemnity, or bond, as may be required
by them to hold each of them harmless, then, absent notice to the Escrow Agent
or the Pass Through Trustee that such destroyed, lost or stolen Escrow Receipt
has been acquired by a bona fide purchaser, and provided that the requirements
of Section 8-405 of the Uniform Commercial Code in effect in any applicable
jurisdiction are met, the Escrow Agent shall execute, authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Escrow Receipt, a new Escrow Receipt or Escrow Receipts and of like Escrow
Interest in the Account Amounts and bearing a number not contemporaneously
outstanding.
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In connection with the issuance of any new Escrow Receipt under this
Section 1.05, the Escrow Agent may 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 Pass
Through Trustee and the Escrow Agent) connected therewith.
Any duplicate Escrow Receipt issued pursuant to this Section 1.05
shall constitute conclusive evidence of the appropriate Escrow Interest in the
Account Amounts, as if originally issued, whether or not the lost, stolen or
destroyed Escrow Receipt shall be found at any time.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Escrow Receipts.
Section 1.06. Additional Escrow Amounts. On the date of any Purchase
Withdrawal, the Pass Through Trustee may re-deposit with the Depositary some or
all of the amounts so withdrawn in accordance with Section 2.4 of the Deposit
Agreement.
Section 1.07. Resignation or Removal of Escrow Agent. Subject to the
appointment and acceptance of a successor Escrow Agent as provided below, the
Escrow Agent may resign at any time by giving 30 days' prior written notice
thereof to the Pass Through Trustee, but may not otherwise be removed except for
cause by the written consent of the Investors with respect to Investors
representing Escrow Interests aggregating not less than a majority in interest
in the Account Amounts (an "Action of Investors"). Upon any such resignation or
removal, the Investors, by an Action of Investors, shall have the right to
appoint a successor Escrow Agent. If no successor Escrow Agent shall have been
so appointed and shall have accepted such appointment within 30 days after the
retiring Escrow Agent's giving of notice of resignation or the removal of the
retiring Escrow Agent, then the retiring Escrow Agent may appoint a successor
Escrow Agent. Any successor Escrow Agent shall be a bank which has an office in
the United States with a combined capital and surplus of at least $100,000,000.
Upon the acceptance of any appointment as Escrow Agent hereunder by a successor
Escrow Agent, such successor Escrow Agent shall enter into such documents as the
Pass Through Trustee shall require and shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Escrow
Agent, and the retiring Escrow Agent shall be discharged from its duties and
obligations hereunder. No resignation or removal of the Escrow Agent shall be
effective unless a written confirmation shall have been obtained from each of
Moody's Investors Service, Inc. and Standard & Poor's Rating Group, a division
of McGraw-Hill Inc., that the replacement of the Escrow Agent with the successor
Escrow Agent will not result in (a) a reduction of the rating for the
Certificates below the then current rating for the Certificates or (b) a
withdrawal or suspension of the rating of the Certificates.
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Section 1.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Escrow Agent and the Paying Agent
may treat the Person in whose name any Escrow Receipt is registered (as of the
day of determination) as the owner of such Escrow Receipt for the purpose of
receiving distributions pursuant to this Agreement and for all other purposes
whatsoever, and neither the Escrow Agent nor the Paying Agent shall be affected
by any notice to the contrary.
Section 1.09. Further Assurances. The Escrow Agent agrees to take
such actions, and execute such other documents, as may be reasonably requested
by the Pass Through Trustee in order to effectuate the purposes of this
Agreement and the performance by the Escrow Agent of its obligations hereunder.
SECTION 2. Paying Agent.
Section 2.01. Appointment of Paying Agent. The Escrow Agent hereby
irrevocably appoints and authorizes the Paying Agent to act as its paying agent
hereunder, for the benefit of the Investors, for such specific purposes and with
such powers as are specifically delegated to the Paying Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Any and all money received and held by the Paying Agent under this
Agreement or the Deposit Agreement shall be held in the Paying Agent Account for
the benefit of the Investors. The Paying Agent (which term as used in this
sentence shall include reference to its affiliates and its own and its
affiliates' officers, directors, employees and agents): (a) shall have no duties
or responsibilities except those expressly set forth in this Agreement, and
shall not by reason of this Agreement be a trustee for the Escrow Agent; (b)
shall not be responsible to the Escrow Agent for any recitals, statements,
representations or warranties of any person other than itself contained in this
Agreement or for the failure by the Escrow Agent or any other person or entity
(other than the Paying Agent) to perform any of its obligations hereunder
(whether or not the Paying Agent shall have any knowledge thereof); and (c)
shall not be responsible for any action taken or omitted to be taken by it
hereunder or provided for herein or in connection herewith, except for its own
willful misconduct or gross negligence (or simple negligence in connection with
the handling of funds).
Section 2.02. Establishment of Paying Agent Account. The Paying
Agent shall establish a deposit account (the "Paying Agent Account") at The
First National Bank of Maryland in the name of the Escrow Agent. It is expressly
understood by the parties hereto that the Paying Agent is acting as the paying
agent of the Escrow Agent hereunder and that no amounts on deposit in the Paying
Agent Account constitute part of the Trust Property.
Section 2.03. Payments from Paying Agent Account. The Escrow Agent
hereby irrevocably instructs the Paying Agent, and the Paying Agent agrees to
act, as follows:
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(a) On each Interest Payment Date (as defined in the Deposit
Agreement) or as soon thereafter as the Paying Agent has confirmed receipt
in the Paying Agent Account from the Depositary of any amount in respect
of accrued interest on the Deposits, the Paying Agent shall distribute out
of the Paying Agent Account the entire amount deposited therein by the
Depositary. There shall be so distributed to each Receiptholder of record
on the 15th day (whether or not a Business Day) preceding such Interest
Payment Date by check mailed to such Receiptholder, at the address
appearing in the Register, such Receiptholder's pro rata share (based on
the Escrow Interest in the Account Amounts held by such Receiptholder) of
the total amount of interest deposited by the Depositary in the Paying
Agent Account on such date, except that, with respect to Escrow Receipts
registered on the Record Date in the name of DTC, such distribution shall
be made by wire transfer in immediately available funds to the account
designated by DTC.
(b) Upon the confirmation by the Paying Agent of receipt in the
Paying Agent Account from the Depositary of any amount in respect of the
Final Withdrawal, the Paying Agent shall forthwith distribute the entire
amount of the Final Withdrawal deposited therein by the Depositary. There
shall be so distributed to each Receiptholder of record on the 15th day
(whether or not a Business Day) preceding the Final Withdrawal Date by
check mailed to such Receiptholder, at the address appearing in the
Register, such Receiptholder's pro rata share (based on the Escrow
Interest in the Account Amounts held by such Receiptholder) of the total
amount in the Paying Agent Account on account of such Final Withdrawal,
except that, with respect to Escrow Receipts registered on the Record Date
in the name of DTC, such distribution shall be made by wire transfer in
immediately available funds to the account designated by DTC.
(c) If any payment of interest or principal in respect of the Final
Withdrawal is not received by the Paying Agent within five days of the
applicable date when due, then it shall be distributed to Receiptholders
after actual receipt by the Paying Agent on the same basis as a Special
Payment is distributed under the Pass Through Trust Agreement.
(d) The Paying Agent shall include with any check mailed pursuant to
this Section any notice required to be distributed under the Pass Through
Trust Agreement that is furnished to the Paying Agent by the Pass Through
Trustee.
Section 2.04. Withholding Taxes. The Paying Agent shall exclude and
withhold from each distribution of accrued interest on the Deposits (as defined
in the Deposit Agreement) and any amount in respect of the Final Withdrawal any
and all withholding taxes applicable thereto as required by law. The Paying
Agent agrees to act as such withholding agent and, in connection therewith,
whenever any present or future taxes or similar charges are required to be
withheld with respect to any amounts payable in respect of the Deposits (as
defined in the Deposit Agreement) or the escrow amounts, to withhold such
amounts and timely pay the same to the appropriate
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authority in the name of and on behalf of the Receiptholders, 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
Receiptholder appropriate documentation showing the payment thereof, together
with such additional documentary evidence as such Receiptholder may reasonably
request from time to time. The Paying Agent agrees to file any other information
reports as it may be required to file under United States law.
Section 2.05. Resignation or Removal of Paying Agent. Subject to the
appointment and acceptance of a successor Paying Agent as provided below, the
Paying Agent may resign at any time by giving 30 days' prior written notice
thereof to the Escrow Agent, but may not otherwise be removed except for cause
by the Escrow Agent. Upon any such resignation or removal, the Escrow Agent
shall have the right to appoint a successor Paying Agent. If no successor Paying
Agent shall have been so appointed and shall have accepted such appointment
within 30 days after the retiring Paying Agent's giving of notice of resignation
or the removal of the retiring Paying Agent, then the retiring Paying Agent may
appoint a successor Paying Agent. Any Successor Paying Agent shall be a bank
which has an office in the United States with a combined capital and surplus of
at least $100,000,000. Upon the acceptance of any appointment as Paying Agent
hereunder by a successor Paying Agent, such successor Paying Agent shall enter
into such documents as the Escrow Agent shall require and shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Paying Agent, and the retiring Paying Agent shall be discharged
from its duties and obligations hereunder.
Section 2.06. Notice of Final Withdrawal. Promptly after receipt by
the Paying Agent of notice that the Escrow Agent has requested a Final
Withdrawal or that a Final Withdrawal will be made, the Paying Agent shall cause
notice of the distribution of the Final Withdrawal to be mailed to each of the
Receiptholders at its address as it appears in the Register. Such notice shall
be mailed not less than 15 days prior to the Final Withdrawal Date. Such notice
shall set forth:
(i) the Final Withdrawal Date and the date for determining
Receiptholders of record who shall be entitled to receive distributions in
respect of the Final Withdrawal,
(ii) the amount of the payment in respect of the Final Withdrawal
for each $1,000 face amount Certificate (based on information provided by
the Pass Through Trustee) and the amount thereof constituting unused
Deposits (as defined in the Deposit Agreement) and interest thereon, and
(iii) if the Final Withdrawal Date is the same date as a Regular
Distribution Date, the total amount to be received on such date for each
$1,000 face amount Certificate (based on information provided by the Pass
Through Trustee).
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Such mailing may include any notice required to be given to
Certificate holders in connection with such distribution pursuant to the Pass
Through Trust Agreement.
SECTION 3. Payments. If, notwithstanding the instructions in Section
4 of the Deposit Agreement that all amounts payable to the Escrow Agent under
the Deposit Agreement be paid by the Depositary directly to the Paying Agent or
the Pass Through Trustee (depending on the circumstances), the Escrow Agent
receives any payment thereunder, then the Escrow Agent shall forthwith pay such
amount in Dollars and in immediately available funds by wire transfer to (a) in
the case of a payment of accrued interest on the Deposits (as defined in the
Deposit Agreement) or any Final Withdrawal, directly to the Paying Agent Account
and (b) in the case of any Purchase Withdrawal, directly to the Pass Through
Trustee or its designee as specified and in the manner provided in the
Applicable Notice of Purchase Withdrawal. The Escrow Agent hereby waives any and
all rights of set-off, combination of accounts, right of retention or similar
right (whether arising under applicable law, contract or otherwise) it may have
against amounts payable to the Paying Agent howsoever arising.
SECTION 4. Other Actions. The Escrow Agent shall take such other
actions under or in respect of the Deposit Agreement (including, without
limitation, the enforcement of the obligations of the Depositary thereunder) as
the Investors, by an Action of Investors, may from time to time request.
SECTION 5. Representations and Warranties of the Escrow Agent. The
Escrow Agent represents and warrants to Midway, the Investors, the Paying Agent
and the Pass Through Trustee as follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America;
(ii) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement and the Deposit Agreement;
(iii) the execution, delivery and performance of each of this
Agreement and the Deposit Agreement have been duly authorized by all
necessary corporate action on the part of it and do not require any
stockholder approval, or approval or consent of any trustee or holder of
any indebtedness or obligations of it, and each such document has been
duly executed and delivered by it and constitutes its legal, valid and
binding obligations enforceable against it in accordance with the terms
hereof or thereof except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
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enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action by,
and no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement or the Deposit Agreement;
(v) neither the execution, delivery or performance by it of this
Agreement or the Deposit Agreement, nor compliance with the terms and
provisions hereof or thereof, conflicts or will conflict with or results
or will result in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under, any law,
governmental rule or regulation or the charter documents, as amended, or
bylaws, as amended, of it or any similar instrument binding on it or any
order, writ, injunction or decree of any court or governmental authority
against it or by which it or any of its properties is bound or any
indenture, mortgage or contract or other agreement or instrument to which
it is a party or by which it or any of its properties is bound, or
constitutes or will constitute a default thereunder or results or will
result in the imposition of any lien upon any of its properties; and
(vi) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (A) would
adversely affect the ability of it to perform its obligations under this
Agreement or the Deposit Agreement or (B) would call into question or
challenge the validity of this Agreement or the Deposit Agreement or the
enforceability hereof or thereof in accordance with the terms hereof or
thereof, nor is the Escrow Agent in default with respect to any order of
any court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its obligations
under this Agreement or the Deposit Agreement.
SECTION 6. Representations and Warranties of the Paying Agent. The
Paying Agent represents and warrants to Midway, the Investors, the Escrow Agent
and the Pass Through Trustee as follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
incorporation;
(ii) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
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(iii) the execution, delivery and performance of this Agreement has
been duly authorized by all necessary corporate action on the part of it
and does not require any stockholder approval, or approval or consent of
any trustee or holder of any indebtedness or obligations of it, and such
document has been duly executed and delivered by it and constitutes its
legal, valid and binding obligations enforceable against it in accordance
with the terms hereof except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action by,
and no notice to or filing with, any United States or State of Maryland
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(v) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts
or will conflict with or results or will result in a breach or violation
of any of the terms, conditions or provisions of, or will require any
consent or approval under, any law, governmental rule or regulation or the
articles of association documents, as amended, or bylaws, as amended, of
it or any similar instrument binding on it or any order, writ, injunction
or decree of any court or governmental authority against it or by which it
or any of its properties is bound or any indenture, mortgage or contract
or other agreement or instrument to which it is a party or by which it or
any of its properties is bound, or constitutes or will constitute a
default thereunder or results or will result in the imposition of any lien
upon any of its properties; and
(vi) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (A) would
adversely affect the ability of it to perform its obligations under this
Agreement or (B) would call into question or challenge the validity of
this Agreement or the enforceability hereof in accordance with the terms
hereof, nor is the Paying Agent in default with respect to any order of
any court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its obligations
under this Agreement.
SECTION 7. Indemnification. Except for actions expressly required of
the Escrow Agent or the Paying Agent hereunder, each of the Escrow Agent and the
Paying Agent shall in all cases be fully justified in failing or refusing to act
hereunder
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unless it shall have been indemnified by the party requesting such action in a
manner reasonably satisfactory to it against any and all liability and expense
which may be incurred by it by reason of taking or continuing to take any such
action. In the event Midway requests any amendment to any Operative Agreement
(as defined in the Note Purchase Agreement), the Pass Through Trustee, solely to
the extent of funds made available by Midway for such purpose, agrees to pay all
reasonable fees and expenses (including, without limitation, fees and
disbursements of counsel) of the Escrow Agent and the Paying Agent in connection
therewith.
SECTION 8. Amendment, Etc. Upon request of the Pass Through Trustee
and approval by an Action of Investors, the Escrow Agent shall enter into an
amendment to this Agreement, so long as such amendment does not adversely affect
the rights or obligations of the Escrow Agent or the Paying Agent, provided that
upon request of the Pass Through Trustee and without any consent of the
Investors, the Escrow Agent shall enter into an amendment to this Agreement for
any of the following purposes:
(1) to correct or supplement any provision in this Agreement which
may be defective or inconsistent with any other provision herein or to
cure any ambiguity or correct any mistake or to modify any other provision
with respect to matters or questions arising under this Agreement,
provided that any such action shall not materially adversely affect the
interests of the Investors; or
(2) to comply with any requirement of the SEC, applicable law, rules
or regulations of any exchange or quotation system on which the
Certificates are listed or any regulatory body; or
(3) to evidence and provide for the acceptance of appointment under
this Agreement of a successor Escrow Agent, successor Paying Agent or
successor Pass Through Trustee.
SECTION 9. Notices. Unless otherwise expressly provided herein, any
notice or other communication under this Agreement shall be in writing
(including by facsimile) and shall be deemed to be given and effective upon
receipt thereof. All notices shall be sent to (a) in the case of the Investors,
as their respective addresses shall appear in the Register, (b) in the case of
the Escrow Agent, First Union Trust Company, National Association, One Rodney
Square, 920 King Street, Suite 102, Wilmington, Delaware 19801, Attention:
Corporate Trust Administration (Telecopier: (302) 888-7544), (c) in the case of
the Pass Through Trustee, The First National Bank of Maryland, 25 South Charles
Street, Mail Code 101-591, Baltimore, Maryland 21201, Attention: Corporate Trust
Department (Telecopier: (410) 244-4236) or (d) in the case of the Paying Agent,
The First National Bank of Maryland, 25 South Charles Street, Mail Code 101-591,
Baltimore, Maryland 21201, Attention: Corporate Trust Department (Telecopier:
(410) 244-4236), in each case with a copy to Midway, Midway Airlines
Corporation, 300 W. Morgan St. Suite 1200, Durham, North Carolina 27701,
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Attention: General Counsel (Telecopier: (919) 956-7568) (or at such other
address as any such party may specify from time to time in a written notice to
the other parties). On or prior to the execution of this Agreement, the Pass
Through Trustee has delivered to the Escrow Agent a certificate containing
specimen signatures of the representatives of the Pass Through Trustee who are
authorized to give notices and instructions with respect to this Agreement. The
Escrow Agent may conclusively rely on such certificate until the Escrow Agent
receives written notice from the Pass Through Trustee to the contrary.
SECTION 10. Transfer. No party hereto shall be entitled to assign or
otherwise transfer this Agreement (or any interest herein) other than (in the
case of the Escrow Agent) to a successor escrow agent under Section 1.06 hereof
or (in the case of the Paying Agent) to a successor paying agent under Section
2.04 hereof, and any purported assignment in violation thereof shall be void.
This Agreement shall be binding upon the parties hereto and their respective
successors and (in the case of the Escrow Agent and the Paying Agent) their
respective permitted assigns. Upon the occurrence of the Transfer (as defined
below) contemplated by the Assignment and Assumption Agreement (as defined
below), the Pass Through Trustee shall (without further act) be deemed to have
transferred all of its right, title and interest in and to this Agreement to the
trustee of the Successor Trust (as defined below) and, thereafter, the trustee
of the Successor Trust shall be deemed to be the "Pass Through Trustee"
hereunder with the rights and obligations of the "Pass Through Trustee"
hereunder and each reference herein to "Midway Airlines Pass Through Trust"
1998-1B-O" shall be deemed to be a reference to "Midway Airlines Pass Through
Trust 1998-1B-S". The parties hereto hereby acknowledge and consent to the
Transfer contemplated by the Assignment and Assumption Agreement. As used
herein, "Transfer" means the transfers of the assets to the Successor Trust
contemplated by the Assignment and Assumption Agreement; "Assignment and
Assumption Agreement" means the Assignment and Assumption Agreement to be
entered into between the Pass Through Trustee and the trustee of the Successor
Trust, substantially in the form of Exhibit C to the Trust Supplement;
"Successor Trust" means the Midway Airlines Pass Through Trust 1998-1B-S.
SECTION 11. Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and understandings among the Escrow
Agent, the Paying Agent, the Underwriters and the Pass Through Trustee with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 13. Waiver of Jury Trial Right. EACH OF THE ESCROW AGENT,
THE PAYING AGENT, THE INVESTORS AND THE PASS THROUGH TRUSTEE ACKNOWLEDGES AND
ACCEPTS THAT IN ANY SUIT, ACTION OR
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PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT SUCH PARTY IRREVOCABLY
WAIVES ITS RIGHT TO A TRIAL BY JURY.
SECTION 14. Counterparts. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.
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IN WITNESS WHEREOF, the Escrow Agent, the Paying Agent, the Initial
Purchasers and the Pass Through Trustee have caused this Escrow and Paying Agent
Agreement (Class B) to be duly executed as of the day and year first above
written.
MORGAN STANLEY & CO.
INCORPORATED; and
CREDIT SUISSE FIRST BOSTON
CORPORATION,
as Initial Purchasers
By: MORGAN STANLEY & CO.
INCORPORATED
By: /s/Tom Cahill
------------------------------------
Name: Tom Cahill
Title: Principal
THE FIRST NATIONAL BANK OF MARYLAND, not
in its individual capacity, but solely
as Pass Through Trustee for and on
behalf of Midway Airlines Pass Through
Trust 1998-1B-O
By: /s/ Robert D. Brown
------------------------------------
Name: Robert D. Brown
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF MARYLAND, as
Paying Agent
By: /s/ Stephen J. Kaba
------------------------------------
Name: Stephen J. Kaba
Title: Vice President
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EXHIBIT A
MIDWAY AIRLINES 1998-1B ESCROW RECEIPT
No. _
This Escrow Receipt evidences a fractional undivided interest in
amounts ("Account Amounts") from time to time deposited into a certain paying
agent account (the "Paying Agent Account") described in the Escrow and Paying
Agent Agreement (Class B) dated as of August 13, 1998 (as amended, modified or
supplemented from time to time, the "Escrow and Paying Agent Agreement") among
First Union Trust Company, National Association, as Escrow Agent (in such
capacity, together with its successors in such capacity, the "Escrow Agent"),
Morgan Stanley & Co. Incorporated and Credit Suisse First Boston Corporation, as
Initial Purchasers, The First National Bank of Maryland, as Pass Through Trustee
(in such capacity, together with its successors in such capacity, the "Pass
Through Trustee") and The First National Bank of Maryland, as paying agent (in
such capacity, together with its successors in such capacity, the "Paying
Agent"). Capitalized terms not defined herein shall have the meanings assigned
to them in the Escrow and Paying Agent Agreement.
This Escrow Receipt is issued under and is subject to the terms,
provisions and conditions of the Escrow and Paying Agent Agreement. By virtue of
its acceptance hereof the holder of this Escrow Receipt assents and agrees to be
bound by the provisions of the Escrow and Paying Agent Agreement and this Escrow
Receipt.
This Escrow Receipt represents a fractional undivided interest in
amounts deposited from time to time in the Paying Agent Account, and grants or
represents no rights, benefits or interests of any kind in respect of any assets
or property other than such amounts. This Escrow Receipt evidences the same
percentage interest in the Account Amounts as the Fractional Undivided Interest
in the Pass Through Trust evidenced by the Certificate to which this Escrow
Receipt is affixed.
All payments and distributions made to Receiptholders in respect of
the Escrow Receipt shall be made only from Account Amounts deposited in the
Paying Agent Account. The holder of this Escrow Receipt, by its acceptance of
this Escrow Receipt, agrees that it will look solely to the Account Amounts for
any payment or distribution due to it pursuant to this Escrow Receipt and that
it will not have any recourse to Midway, the Pass Through Trustee, the Paying
Agent or the Escrow Agent, except as expressly provided herein or in the Pass
Through Trust Agreement. No Receiptholder of this Escrow Receipt shall have any
right to vote or in any manner otherwise control the operation and management of
the Paying Agent Account, nor shall anything set forth herein, or contained in
the terms of this Escrow Receipt, be construed so as to constitute the
Receiptholders from time to time as partners or members of an association.
<PAGE>
This Escrow Receipt may not be assigned or transferred except in
connection with the assignment or transfer of the Certificate to which this
Escrow Receipt is affixed. After payment to the holder hereof of its Escrow
Interest in the Final Distribution, upon the request of the Pass Through
Trustee, the holder hereof will return this Escrow Receipt to the Pass Through
Trustee.
The Paying Agent may treat the person in whose name the Certificate
to which this Escrow Receipt is attached as the owner hereof for all purposes,
and the Paying Agent shall not be affected by any notice to the contrary.
THIS ESCROW RECEIPT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the Escrow Agent has caused this Escrow Receipt
to be duly executed.
Dated: August ___, 1998
First Union Trust Company, National
Association, as Escrow Agent
By
-------------------------------------
Name:
Title:
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<PAGE>
EXHIBIT B
WITHDRAWAL CERTIFICATE
(Class B)
First Union Trust Company, National Association
as Escrow Agent
Dear Sirs:
Reference is made to the Escrow and Paying Agent Agreement, dated as
of August 13, 1998 (the "Agreement"). We hereby certify to you that the
conditions to the obligations of the undersigned to execute a Participation
Agreement pursuant to the Note Purchase Agreement have been satisfied. Pursuant
to Section 1.02(c) of the Agreement, please execute the attached Notice of
Withdrawal and immediately transmit by facsimile to the Depositary, at First
Union National Bank, Attention: Peter J. Lancos (facsimile no. 704-383-9139).
Very truly yours,
THE FIRST NATIONAL BANK OF MARYLAND, not
in its individual capacity but solely as
Pass Through Trustee
By
-------------------------------------
Name
Dated: _______________, 199__
================================================================================
ESCROW AND PAYING AGENT AGREEMENT
(Class C)
Dated as of August 13, 1998
among
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
as Escrow Agent
MORGAN STANLEY & CO. INCORPORATED
and
CREDIT SUISSE FIRST BOSTON CORPORATION
as Initial Purchasers
THE FIRST NATIONAL BANK OF MARYLAND
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Midway Airlines Pass Through Trust 1998-1C-O
as Pass Through Trustee
and
THE FIRST NATIONAL BANK OF MARYLAND
as Paying Agent
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Escrow Agent...................................................... 2
Section 1.01. Appointment of Escrow Agent............................. 2
Section 1.02. Instruction; Etc........................................ 3
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts...... 3
Section 1.04. Payments to Receiptholders.............................. 4
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt..... 4
Section 1.06. Additional Escrow Amounts............................... 5
Section 1.07. Resignation or Removal of Escrow Agent.................. 5
Section 1.08. Persons Deemed Owners................................... 6
Section 1.09. Further Assurances...................................... 6
SECTION 2. Paying Agent...................................................... 6
Section 2.01. Appointment of Paying Agent............................. 6
Section 2.02. Establishment of Paying Agent Account................... 6
Section 2.03. Payments from Paying Agent Account...................... 6
Section 2.04. Withholding Taxes....................................... 7
Section 2.05. Resignation or Removal of Paying Agent.................. 8
Section 2.06. Notice of Final Withdrawal.............................. 8
SECTION 3. Payments.......................................................... 9
SECTION 4. Other Actions..................................................... 9
SECTION 5. Representations and Warranties of the Escrow Agent................ 9
SECTION 6. Representations and Warranties of the Paying Agent................ 10
SECTION 7. Indemnification................................................... 12
SECTION 8. Amendment, Etc.................................................... 12
SECTION 9. Notices........................................................... 12
SECTION 10. Transfer......................................................... 13
SECTION 11. Entire Agreement................................................. 13
SECTION 12. Governing Law.................................................... 13
SECTION 13. Waiver of Jury Trial Right....................................... 14
i
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SECTION 14. Counterparts..................................................... 14
EXHIBIT A Escrow Receipt
EXHIBIT B Withdrawal Certificate
ii
<PAGE>
ESCROW AND PAYING AGENT AGREEMENT (Class C) dated as of August 13,
1998 (as amended, modified or supplemented from time to time, this "Agreement")
among FIRST UNION TRUST COMPANY, National Association, a national banking
association, as Escrow Agent (in such capacity, together with its successors in
such capacity, the "Escrow Agent"); MORGAN STANLEY & CO. INCORPORATED and CREDIT
SUISSE FIRST BOSTON CORPORATION, as Initial Purchasers of the Certificates
referred to below (the "Initial Purchasers" and together with their respective
transferees and assigns as registered owners of the Certificates, the
"Investors") under the Purchase Agreement referred to below; THE FIRST NATIONAL
BANK OF MARYLAND, a national banking association, not in its individual capacity
except as otherwise expressly provided herein, but solely as trustee (in such
capacity, together with its successors in such capacity, the "Pass Through
Trustee") under the Pass Through Trust Agreement referred to below; and THE
FIRST NATIONAL BANK OF MARYLAND, a national banking association, as paying agent
hereunder (in such capacity, together with its successors in such capacity, the
"Paying Agent").
W I T N E S S E T H
WHEREAS, Midway Airlines Corporation ("Midway") and the Pass Through
Trustee have entered into the Pass Through Trust Agreement, dated as of August
13, 1998 (together, as amended, modified or supplemented from time to time in
accordance with the terms thereof, the "Pass Through Trust Agreement") relating
to Midway Airlines Pass Through Trust 1998-1C-O (the "Pass Through Trust")
pursuant to which the Midway Airlines Pass Through Trust, Series 1998-1C-O
Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Midway and the Initial Purchasers have entered into a
Purchase Agreement dated as of August 6, 1998 (as amended, modified or
supplemented from time to time in accordance with the terms thereof, the
"Purchase Agreement") pursuant to which the Pass Through Trustee will issue and
sell the Certificates to the Initial Purchasers;
WHEREAS, Midway, the Pass Through Trustee, certain other pass
through trustees and certain other persons concurrently herewith are entering
into the Note Purchase Agreement, dated as of the date hereof (the "Note
Purchase Agreement"), pursuant to which the Pass Through Trustee has agreed to
acquire from time to time on or prior to the Delivery Period Termination Date
(as defined in the Note Purchase Agreement) equipment notes (the "Equipment
Notes") issued to finance the acquisition of aircraft by Midway, as lessee or as
owner, utilizing a portion of the proceeds from the sale of the Certificates
(the "Net Proceeds");
WHEREAS, the Initial Purchasers and the Pass Through Trustee intend
that the Net Proceeds be held in escrow by the Escrow Agent on behalf of the
<PAGE>
Investors, subject to withdrawal upon request by the Pass Through Trustee and
satisfaction of the conditions set forth in the Note Purchase Agreement for the
purpose of purchasing Equipment Notes, and that pending such withdrawal the Net
Proceeds be deposited on behalf of the Escrow Agent with First Union National
Bank, as Depositary (the "Depositary") under the Deposit Agreement, dated as of
the date hereof between the Depositary and the Escrow Agent relating to the Pass
Through Trust (as amended, modified or supplemented from time to time in
accordance with the terms thereof, the "Deposit Agreement") pursuant to which,
among other things, the Depositary will pay interest for distribution to the
Investors and establish accounts from which the Escrow Agent shall make
withdrawals upon request of and proper certification by the Pass Through
Trustee;
WHEREAS, the Escrow Agent wishes to appoint the Paying Agent to pay
amounts required to be distributed to the Investors in accordance with this
Agreement; and
WHEREAS, capitalized terms used but not defined herein shall have
the meanings ascribed to such terms in the Pass Through Trust Agreement.
NOW, THEREFORE, in consideration of the obligations contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. Escrow Agent.
Section 1.01. Appointment of Escrow Agent. Each of the Initial
Purchasers, for and on behalf of each of the Investors, hereby irrevocably
appoints, authorizes and directs the Escrow Agent to act as escrow agent and
fiduciary hereunder and under the Deposit Agreement for such specific purposes
and with such powers as are specifically delegated to the Escrow Agent by the
terms of this Agreement, together with such other powers as are reasonably
incidental thereto. Any and all money received and held by the Escrow Agent
under this Agreement or the Deposit Agreement shall be held in escrow by the
Escrow Agent in accordance with the terms of this Agreement. This Agreement is
irrevocable and the Investors' rights with respect to any monies received and
held in escrow by the Escrow Agent under this Agreement or the Deposit Agreement
shall only be as provided under the terms and conditions of this Agreement and
the Deposit Agreement. The Escrow Agent (which term as used in this sentence
shall include reference to its affiliates and its own and its affiliates'
officers, directors, employees and agents): (a) shall have no duties or
responsibilities except those expressly set forth in this Agreement; (b) shall
not be responsible to the Pass Through Trustee or the Investors for any
recitals, statements, representations or warranties of any person other than
itself contained in this Agreement or the Deposit Agreement or for the failure
by the Pass Through Trustee, the Investors or any other person or entity (other
than the Escrow Agent) to perform any of its obligations hereunder (whether or
not the Escrow Agent shall have any knowledge thereof); and (c) shall not be
responsible for any action taken or omitted to be taken by it hereunder
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<PAGE>
or provided for herein or in connection herewith, except for its own willful
misconduct or gross negligence (or simple negligence in connection with the
handling of funds).
Section 1.02. Instruction; Etc. The Initial Purchasers, for and on
behalf of each of the Investors, hereby irrevocably instruct the Escrow Agent,
and the Escrow Agent agrees, (a) to enter into the Deposit Agreement, (b) to
appoint the Paying Agent as provided in this Agreement, (c) upon receipt at any
time and from time to time prior to the Termination Date (as defined below) of a
certificate substantially in the form of Exhibit B hereto (a "Withdrawal
Certificate") executed by the Pass Through Trustee, together with an attached
Notice of Purchase Withdrawal in substantially the form of Exhibit A to the
Deposit Agreement duly completed by the Pass Through Trustee (the "Applicable
Notice of Purchase Withdrawal") and the withdrawal to which it relates, a
"Purchase Withdrawal"), immediately to execute the Applicable Notice of Purchase
Withdrawal as Escrow Agent and transmit it to the Depositary by facsimile
transmission in accordance with the Deposit Agreement; provided that, upon the
request of the Pass Through Trustee after such transmission, the Escrow Agent
shall cancel such Applicable Notice of Purchase Withdrawal, and (d) if there are
any undrawn Deposits (as defined in the Deposit Agreement) on the "Termination
Date", which shall mean the earlier of (i) October 1, 1999 (provided that, if a
labor strike occurs at Bombardier, Inc. prior to such date (a "Labor Strike"),
such date shall be extended by adding thereto the number of days that such
strike continued in effect (the "Additional Days") and (ii) the day on which the
Escrow Agent receives notice from the Pass Through Trustee that the Pass Through
Trustee's obligation to purchase Equipment Notes under the Note Purchase
Agreement has terminated, to give notice to the Depositary (with a copy to the
Paying Agent) substantially in the form of Exhibit B to the Deposit Agreement
requesting a withdrawal of all of the remaining Deposits, together with accrued
and unpaid interest on such Deposits to the date of withdrawal, on the 35th day
after the date that such notice of withdrawal is given to the Depositary (or, if
not a Business Day, on the next succeeding Business Day) (a "Final Withdrawal"),
provided that if the day scheduled for the Final Withdrawal in accordance with
the foregoing is within 10 days before or after a Regular Distribution Date,
then the Escrow Agent shall request that such requested Final Withdrawal be made
on such Regular Distribution Date (the date of such requested withdrawal, the
"Final Withdrawal Date"). If for any reason the Escrow Agent shall have failed
to give the Final Withdrawal Notice to the Depositary on or before October 7,
1999 (provided that if a Labor Strike occurs, such date shall be extended by the
Additional Days) and there are unwithdrawn Deposits on such date, the Final
Withdrawal Date shall be deemed to be October 31, 1999 (provided that if a Labor
Strike occurs, such date shall be extended by the Additional Days).
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts.
The Escrow Agent hereby directs the Initial Purchasers to, and the Initial
Purchasers hereby acknowledge that on the date hereof they shall, irrevocably
deliver to the Depositary on behalf of the Escrow Agent, an amount in U.S.
dollars ("Dollars") and immediately available funds equal to $20,528,000 for
deposit on behalf of the Escrow Agent with the Depositary in accordance with
Section 2.1 of the Deposit Agreement.
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<PAGE>
The Initial Purchasers hereby instruct the Escrow Agent, upon receipt of such
sum from the Initial Purchasers, to confirm such receipt by executing and
delivering to the Pass Through Trustee an Escrow Receipt in the form of Exhibit
A hereto (an "Escrow Receipt"), (a) to be affixed by the Pass Through Trustee to
each Certificate and (b) to evidence the same percentage interest (the "Escrow
Interest") in the Account Amounts (as defined below) as the Fractional Undivided
Interest in the Pass Through Trust evidenced by the Certificate to which it is
to be affixed. The Escrow Agent shall provide to the Pass Through Trustee for
attachment to each Certificate newly issued under and in accordance with the
Pass Through Trust Agreement an executed Escrow Receipt as the Pass Through
Trustee may from time to time request of the Escrow Agent. Each Escrow Receipt
shall be registered by the Escrow Agent in a register (the "Register")
maintained by the Escrow Agent in the same name and same manner as the
Certificate to which it is attached and may not thereafter be detached from such
Certificate to which it is to be affixed prior to the distribution of the Final
Withdrawal (the "Final Distribution"). After the Final Distribution, no
additional Escrow Receipts shall be issued and the Pass Through Trustee shall
request the return to the Escrow Agent for cancellation of all outstanding
Escrow Receipts.
Section 1.04. Payments to Receiptholders. All payments and
distributions made to holders of an Escrow Receipt (collectively
"Receiptholders") in respect of the Escrow Receipt shall be made only from
amounts deposited in the Paying Agent Account (as defined below) ("Account
Amounts"). Each Receiptholder, by its acceptance of an Escrow Receipt, agrees
that (a) it will look solely to the Account Amounts for any payment or
distribution due to such Receiptholder pursuant to the terms of the Escrow
Receipt and this Agreement and (b) it will have no recourse to Midway, the Pass
Through Trustee, the Paying Agent or the Escrow Agent, except as expressly
provided herein or in the Pass Through Trust Agreement. No Receiptholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Paying Agent Account or the obligations of the parties hereto,
nor shall anything set forth herein, or contained in the terms of the Escrow
Receipt, be construed so as to constitute the Receiptholders from time to time
as partners or members of an association.
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt.
If (a) any mutilated Escrow Receipt is surrendered to the Escrow Agent or the
Escrow Agent receives evidence to its satisfaction of the destruction, loss or
theft of any Escrow Receipt and (b) there is delivered to the Escrow Agent and
the Pass Through Trustee such security, indemnity, or bond, as may be required
by them to hold each of them harmless, then, absent notice to the Escrow Agent
or the Pass Through Trustee that such destroyed, lost or stolen Escrow Receipt
has been acquired by a bona fide purchaser, and provided that the requirements
of Section 8-405 of the Uniform Commercial Code in effect in any applicable
jurisdiction are met, the Escrow Agent shall execute, authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Escrow Receipt, a new Escrow Receipt or Escrow Receipts and of like Escrow
Interest in the Account Amounts and bearing a number not contemporaneously
outstanding.
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<PAGE>
In connection with the issuance of any new Escrow Receipt under this
Section 1.05, the Escrow Agent may 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 Pass
Through Trustee and the Escrow Agent) connected therewith.
Any duplicate Escrow Receipt issued pursuant to this Section 1.05
shall constitute conclusive evidence of the appropriate Escrow Interest in the
Account Amounts, as if originally issued, whether or not the lost, stolen or
destroyed Escrow Receipt shall be found at any time.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Escrow Receipts.
Section 1.06. Additional Escrow Amounts. On the date of any Purchase
Withdrawal, the Pass Through Trustee may re-deposit with the Depositary some or
all of the amounts so withdrawn in accordance with Section 2.4 of the Deposit
Agreement.
Section 1.07. Resignation or Removal of Escrow Agent. Subject to the
appointment and acceptance of a successor Escrow Agent as provided below, the
Escrow Agent may resign at any time by giving 30 days' prior written notice
thereof to the Pass Through Trustee, but may not otherwise be removed except for
cause by the written consent of the Investors with respect to Investors
representing Escrow Interests aggregating not less than a majority in interest
in the Account Amounts (an "Action of Investors"). Upon any such resignation or
removal, the Investors, by an Action of Investors, shall have the right to
appoint a successor Escrow Agent. If no successor Escrow Agent shall have been
so appointed and shall have accepted such appointment within 30 days after the
retiring Escrow Agent's giving of notice of resignation or the removal of the
retiring Escrow Agent, then the retiring Escrow Agent may appoint a successor
Escrow Agent. Any successor Escrow Agent shall be a bank which has an office in
the United States with a combined capital and surplus of at least $100,000,000.
Upon the acceptance of any appointment as Escrow Agent hereunder by a successor
Escrow Agent, such successor Escrow Agent shall enter into such documents as the
Pass Through Trustee shall require and shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Escrow
Agent, and the retiring Escrow Agent shall be discharged from its duties and
obligations hereunder. No resignation or removal of the Escrow Agent shall be
effective unless a written confirmation shall have been obtained from each of
Moody's Investors Service, Inc. and Standard & Poor's Rating Group, a division
of McGraw-Hill Inc., that the replacement of the Escrow Agent with the successor
Escrow Agent will not result in (a) a reduction of the rating for the
Certificates below the then current rating for the Certificates or (b) a
withdrawal or suspension of the rating of the Certificates.
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<PAGE>
Section 1.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Escrow Agent and the Paying Agent
may treat the Person in whose name any Escrow Receipt is registered (as of the
day of determination) as the owner of such Escrow Receipt for the purpose of
receiving distributions pursuant to this Agreement and for all other purposes
whatsoever, and neither the Escrow Agent nor the Paying Agent shall be affected
by any notice to the contrary.
Section 1.09. Further Assurances. The Escrow Agent agrees to take
such actions, and execute such other documents, as may be reasonably requested
by the Pass Through Trustee in order to effectuate the purposes of this
Agreement and the performance by the Escrow Agent of its obligations hereunder.
SECTION 2. Paying Agent.
Section 2.01. Appointment of Paying Agent. The Escrow Agent hereby
irrevocably appoints and authorizes the Paying Agent to act as its paying agent
hereunder, for the benefit of the Investors, for such specific purposes and with
such powers as are specifically delegated to the Paying Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Any and all money received and held by the Paying Agent under this
Agreement or the Deposit Agreement shall be held in the Paying Agent Account for
the benefit of the Investors. The Paying Agent (which term as used in this
sentence shall include reference to its affiliates and its own and its
affiliates' officers, directors, employees and agents): (a) shall have no duties
or responsibilities except those expressly set forth in this Agreement, and
shall not by reason of this Agreement be a trustee for the Escrow Agent; (b)
shall not be responsible to the Escrow Agent for any recitals, statements,
representations or warranties of any person other than itself contained in this
Agreement or for the failure by the Escrow Agent or any other person or entity
(other than the Paying Agent) to perform any of its obligations hereunder
(whether or not the Paying Agent shall have any knowledge thereof); and (c)
shall not be responsible for any action taken or omitted to be taken by it
hereunder or provided for herein or in connection herewith, except for its own
willful misconduct or gross negligence (or simple negligence in connection with
the handling of funds).
Section 2.02. Establishment of Paying Agent Account. The Paying
Agent shall establish a deposit account (the "Paying Agent Account") at The
First National Bank of Maryland in the name of the Escrow Agent. It is expressly
understood by the parties hereto that the Paying Agent is acting as the paying
agent of the Escrow Agent hereunder and that no amounts on deposit in the Paying
Agent Account constitute part of the Trust Property.
Section 2.03. Payments from Paying Agent Account. The Escrow Agent
hereby irrevocably instructs the Paying Agent, and the Paying Agent agrees to
act, as follows:
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(a) On each Interest Payment Date (as defined in the Deposit
Agreement) or as soon thereafter as the Paying Agent has confirmed receipt
in the Paying Agent Account from the Depositary of any amount in respect
of accrued interest on the Deposits, the Paying Agent shall distribute out
of the Paying Agent Account the entire amount deposited therein by the
Depositary. There shall be so distributed to each Receiptholder of record
on the 15th day (whether or not a Business Day) preceding such Interest
Payment Date by check mailed to such Receiptholder, at the address
appearing in the Register, such Receiptholder's pro rata share (based on
the Escrow Interest in the Account Amounts held by such Receiptholder) of
the total amount of interest deposited by the Depositary in the Paying
Agent Account on such date, except that, with respect to Escrow Receipts
registered on the Record Date in the name of DTC, such distribution shall
be made by wire transfer in immediately available funds to the account
designated by DTC.
(b) Upon the confirmation by the Paying Agent of receipt in the
Paying Agent Account from the Depositary of any amount in respect of the
Final Withdrawal, the Paying Agent shall forthwith distribute the entire
amount of the Final Withdrawal deposited therein by the Depositary. There
shall be so distributed to each Receiptholder of record on the 15th day
(whether or not a Business Day) preceding the Final Withdrawal Date by
check mailed to such Receiptholder, at the address appearing in the
Register, such Receiptholder's pro rata share (based on the Escrow
Interest in the Account Amounts held by such Receiptholder) of the total
amount in the Paying Agent Account on account of such Final Withdrawal,
except that, with respect to Escrow Receipts registered on the Record Date
in the name of DTC, such distribution shall be made by wire transfer in
immediately available funds to the account designated by DTC.
(c) If any payment of interest or principal in respect of the Final
Withdrawal is not received by the Paying Agent within five days of the
applicable date when due, then it shall be distributed to Receiptholders
after actual receipt by the Paying Agent on the same basis as a Special
Payment is distributed under the Pass Through Trust Agreement.
(d) The Paying Agent shall include with any check mailed pursuant to
this Section any notice required to be distributed under the Pass Through
Trust Agreement that is furnished to the Paying Agent by the Pass Through
Trustee.
Section 2.04. Withholding Taxes. The Paying Agent shall exclude and
withhold from each distribution of accrued interest on the Deposits (as defined
in the Deposit Agreement) and any amount in respect of the Final Withdrawal any
and all withholding taxes applicable thereto as required by law. The Paying
Agent agrees to act as such withholding agent and, in connection therewith,
whenever any present or future taxes or similar charges are required to be
withheld with respect to any amounts payable in respect of the Deposits (as
defined in the Deposit Agreement) or the escrow amounts, to withhold such
amounts and timely pay the same to the appropriate
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<PAGE>
authority in the name of and on behalf of the Receiptholders, 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
Receiptholder appropriate documentation showing the payment thereof, together
with such additional documentary evidence as such Receiptholder may reasonably
request from time to time. The Paying Agent agrees to file any other information
reports as it may be required to file under United States law.
Section 2.05. Resignation or Removal of Paying Agent. Subject to the
appointment and acceptance of a successor Paying Agent as provided below, the
Paying Agent may resign at any time by giving 30 days' prior written notice
thereof to the Escrow Agent, but may not otherwise be removed except for cause
by the Escrow Agent. Upon any such resignation or removal, the Escrow Agent
shall have the right to appoint a successor Paying Agent. If no successor Paying
Agent shall have been so appointed and shall have accepted such appointment
within 30 days after the retiring Paying Agent's giving of notice of resignation
or the removal of the retiring Paying Agent, then the retiring Paying Agent may
appoint a successor Paying Agent. Any Successor Paying Agent shall be a bank
which has an office in the United States with a combined capital and surplus of
at least $100,000,000. Upon the acceptance of any appointment as Paying Agent
hereunder by a successor Paying Agent, such successor Paying Agent shall enter
into such documents as the Escrow Agent shall require and shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Paying Agent, and the retiring Paying Agent shall be discharged
from its duties and obligations hereunder.
Section 2.06. Notice of Final Withdrawal. Promptly after receipt by
the Paying Agent of notice that the Escrow Agent has requested a Final
Withdrawal or that a Final Withdrawal will be made, the Paying Agent shall cause
notice of the distribution of the Final Withdrawal to be mailed to each of the
Receiptholders at its address as it appears in the Register. Such notice shall
be mailed not less than 15 days prior to the Final Withdrawal Date. Such notice
shall set forth:
(i) the Final Withdrawal Date and the date for determining
Receiptholders of record who shall be entitled to receive
distributions in respect of the Final Withdrawal,
(ii) the amount of the payment in respect of the Final
Withdrawal for each $1,000 face amount Certificate (based on
information provided by the Pass Through Trustee) and the amount
thereof constituting unused Deposits (as defined in the Deposit
Agreement) and interest thereon, and
(iii) if the Final Withdrawal Date is the same date as a
Regular Distribution Date, the total amount to be received on such
date for each $1,000 face amount
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Certificate (based on information provided by the Pass Through
Trustee).
Such mailing may include any notice required to be given to
Certificate holders in connection with such distribution pursuant to the Pass
Through Trust Agreement.
SECTION 3. Payments. If, notwithstanding the instructions in Section
4 of the Deposit Agreement that all amounts payable to the Escrow Agent under
the Deposit Agreement be paid by the Depositary directly to the Paying Agent or
the Pass Through Trustee (depending on the circumstances), the Escrow Agent
receives any payment thereunder, then the Escrow Agent shall forthwith pay such
amount in Dollars and in immediately available funds by wire transfer to (a) in
the case of a payment of accrued interest on the Deposits (as defined in the
Deposit Agreement) or any Final Withdrawal, directly to the Paying Agent Account
and (b) in the case of any Purchase Withdrawal, directly to the Pass Through
Trustee or its designee as specified and in the manner provided in the
Applicable Notice of Purchase Withdrawal. The Escrow Agent hereby waives any and
all rights of set-off, combination of accounts, right of retention or similar
right (whether arising under applicable law, contract or otherwise) it may have
against amounts payable to the Paying Agent howsoever arising.
SECTION 4. Other Actions. The Escrow Agent shall take such other
actions under or in respect of the Deposit Agreement (including, without
limitation, the enforcement of the obligations of the Depositary thereunder) as
the Investors, by an Action of Investors, may from time to time request.
SECTION 5. Representations and Warranties of the Escrow Agent. The
Escrow Agent represents and warrants to Midway, the Investors, the Paying Agent
and the Pass Through Trustee as follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America;
(ii) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement and the Deposit Agreement;
(iii) the execution, delivery and performance of each of this
Agreement and the Deposit Agreement have been duly authorized by all
necessary corporate action on the part of it and do not require any
stockholder approval, or approval or consent of any trustee or holder of
any indebtedness or obligations of it, and each such document has been
duly executed and delivered by it and constitutes its legal, valid and
binding obligations enforceable against it in accordance with the terms
hereof or thereof except as such enforceability may be limited by
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bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action by,
and no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement or the Deposit Agreement;
(v) neither the execution, delivery or performance by it of this
Agreement or the Deposit Agreement, nor compliance with the terms and
provisions hereof or thereof, conflicts or will conflict with or results
or will result in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under, any law,
governmental rule or regulation or the charter documents, as amended, or
bylaws, as amended, of it or any similar instrument binding on it or any
order, writ, injunction or decree of any court or governmental authority
against it or by which it or any of its properties is bound or any
indenture, mortgage or contract or other agreement or instrument to which
it is a party or by which it or any of its properties is bound, or
constitutes or will constitute a default thereunder or results or will
result in the imposition of any lien upon any of its properties; and
(vi) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (A) would
adversely affect the ability of it to perform its obligations under this
Agreement or the Deposit Agreement or (B) would call into question or
challenge the validity of this Agreement or the Deposit Agreement or the
enforceability hereof or thereof in accordance with the terms hereof or
thereof, nor is the Escrow Agent in default with respect to any order of
any court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its obligations
under this Agreement or the Deposit Agreement.
SECTION 6. Representations and Warranties of the Paying Agent. The
Paying Agent represents and warrants to Midway, the Investors, the Escrow Agent
and the Pass Through Trustee as follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
incorporation;
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<PAGE>
(ii) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
(iii) the execution, delivery and performance of this Agreement has
been duly authorized by all necessary corporate action on the part of it
and does not require any stockholder approval, or approval or consent of
any trustee or holder of any indebtedness or obligations of it, and such
document has been duly executed and delivered by it and constitutes its
legal, valid and binding obligations enforceable against it in accordance
with the terms hereof except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action by,
and no notice to or filing with, any United States or State of Maryland
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(v) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts
or will conflict with or results or will result in a breach or violation
of any of the terms, conditions or provisions of, or will require any
consent or approval under, any law, governmental rule or regulation or the
articles of association documents, as amended, or bylaws, as amended, of
it or any similar instrument binding on it or any order, writ, injunction
or decree of any court or governmental authority against it or by which it
or any of its properties is bound or any indenture, mortgage or contract
or other agreement or instrument to which it is a party or by which it or
any of its properties is bound, or constitutes or will constitute a
default thereunder or results or will result in the imposition of any lien
upon any of its properties; and
(vi) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (A) would
adversely affect the ability of it to perform its obligations under this
Agreement or (B) would call into question or challenge the validity of
this Agreement or the enforceability hereof in accordance with the terms
hereof, nor is the Paying Agent in default with respect to any order of
any court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its obligations
under this Agreement.
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<PAGE>
SECTION 7. Indemnification. Except for actions expressly required of
the Escrow Agent or the Paying Agent hereunder, each of the Escrow Agent and the
Paying Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall have been indemnified by the party requesting such
action in a manner reasonably satisfactory to it against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. In the event Midway requests any amendment to any
Operative Agreement (as defined in the Note Purchase Agreement), the Pass
Through Trustee, solely to the extent of funds made available by Midway for such
purpose, agrees to pay all reasonable fees and expenses (including, without
limitation, fees and disbursements of counsel) of the Escrow Agent and the
Paying Agent in connection therewith.
SECTION 8. Amendment, Etc. Upon request of the Pass Through Trustee
and approval by an Action of Investors, the Escrow Agent shall enter into an
amendment to this Agreement, so long as such amendment does not adversely affect
the rights or obligations of the Escrow Agent or the Paying Agent, provided that
upon request of the Pass Through Trustee and without any consent of the
Investors, the Escrow Agent shall enter into an amendment to this Agreement for
any of the following purposes:
(1) to correct or supplement any provision in this Agreement which
may be defective or inconsistent with any other provision herein or to
cure any ambiguity or correct any mistake or to modify any other provision
with respect to matters or questions arising under this Agreement,
provided that any such action shall not materially adversely affect the
interests of the Investors; or
(2) to comply with any requirement of the SEC, applicable law, rules
or regulations of any exchange or quotation system on which the
Certificates are listed or any regulatory body; or
(3) to evidence and provide for the acceptance of appointment under
this Agreement of a successor Escrow Agent, successor Paying Agent or
successor Pass Through Trustee.
SECTION 9. Notices. Unless otherwise expressly provided herein, any
notice or other communication under this Agreement shall be in writing
(including by facsimile) and shall be deemed to be given and effective upon
receipt thereof. All notices shall be sent to (a) in the case of the Investors,
as their respective addresses shall appear in the Register, (b) in the case of
the Escrow Agent, First Union Trust Company, National Association, One Rodney
Square, 920 King Street, Suite 102, Wilmington, Delaware 19801, Attention:
Corporate Trust Administration (Telecopier: (302) 888-7544), (c) in the case of
the Pass Through Trustee, The First National Bank of Maryland, 25 South Charles
Street, Mail Code 101-591, Baltimore, Maryland 21201, Attention: Corporate Trust
Department (Telecopier: (410) 244-4236) or (d) in the case of the Paying Agent,
The First National Bank of Maryland, 25 South Charles Street,
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<PAGE>
Mail Code 101-591, Baltimore, Maryland 21201, Attention: Corporate Trust
Department (Telecopier: (410) 244-4236), in each case with a copy to Midway,
Midway Airlines Corporation, 300 W. Morgan St. Suite 1200, Durham, North
Carolina 27701, Attention: General Counsel (Telecopier: (919) 956-7568) (or at
such other address as any such party may specify from time to time in a written
notice to the other parties). On or prior to the execution of this Agreement,
the Pass Through Trustee has delivered to the Escrow Agent a certificate
containing specimen signatures of the representatives of the Pass Through
Trustee who are authorized to give notices and instructions with respect to this
Agreement. The Escrow Agent may conclusively rely on such certificate until the
Escrow Agent receives written notice from the Pass Through Trustee to the
contrary.
SECTION 10. Transfer. No party hereto shall be entitled to assign or
otherwise transfer this Agreement (or any interest herein) other than (in the
case of the Escrow Agent) to a successor escrow agent under Section 1.06 hereof
or (in the case of the Paying Agent) to a successor paying agent under Section
2.04 hereof, and any purported assignment in violation thereof shall be void.
This Agreement shall be binding upon the parties hereto and their respective
successors and (in the case of the Escrow Agent and the Paying Agent) their
respective permitted assigns. Upon the occurrence of the Transfer (as defined
below) contemplated by the Assignment and Assumption Agreement (as defined
below), the Pass Through Trustee shall (without further act) be deemed to have
transferred all of its right, title and interest in and to this Agreement to the
trustee of the Successor Trust (as defined below) and, thereafter, the trustee
of the Successor Trust shall be deemed to be the "Pass Through Trustee"
hereunder with the rights and obligations of the "Pass Through Trustee"
hereunder and each reference herein to "Midway Airlines Pass Through Trust"
1998-1C-O" shall be deemed to be a reference to "Midway Airlines Pass Through
Trust 1998-1C-S". The parties hereto hereby acknowledge and consent to the
Transfer contemplated by the Assignment and Assumption Agreement. As used
herein, "Transfer" means the transfers of the assets to the Successor Trust
contemplated by the Assignment and Assumption Agreement; "Assignment and
Assumption Agreement" means the Assignment and Assumption Agreement to be
entered into between the Pass Through Trustee and the trustee of the Successor
Trust, substantially in the form of Exhibit C to the Trust Supplement;
"Successor Trust" means the Midway Airlines Pass Through Trust 1998-1C-S.
SECTION 11. Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and understandings among the Escrow
Agent, the Paying Agent, the Underwriters and the Pass Through Trustee with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
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<PAGE>
SECTION 13. Waiver of Jury Trial Right. EACH OF THE ESCROW AGENT,
THE PAYING AGENT, THE INVESTORS AND THE PASS THROUGH TRUSTEE ACKNOWLEDGES AND
ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.
SECTION 14. Counterparts. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.
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<PAGE>
IN WITNESS WHEREOF, the Escrow Agent, the Paying Agent, the Initial
Purchasers and the Pass Through Trustee have caused this Escrow and Paying Agent
Agreement (Class C) to be duly executed as of the day and year first above
written.
MORGAN STANLEY & CO.
INCORPORATED; and
CREDIT SUISSE FIRST BOSTON
CORPORATION,
as Initial Purchasers
By: MORGAN STANLEY & CO.
INCORPORATED
By: /s/ Tom Cahill
------------------------------------
Name: Tom Cahill
Title: Principal
THE FIRST NATIONAL BANK OF MARYLAND, not
in its individual capacity, but solely
as Pass Through Trustee for and on
behalf of Midway Airlines Pass Through
Trust 1998-1C-O
By: /s/ Robert D. Brown
------------------------------------
Name: Robert D. Brown
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF MARYLAND, as
Paying Agent
By: /s/ Stephen J. Kaba
------------------------------------
Name: Stephen J. Kaba
Title: Vice President
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<PAGE>
EXHIBIT A
MIDWAY AIRLINES 1998-1C ESCROW RECEIPT
No. _
This Escrow Receipt evidences a fractional undivided interest in
amounts ("Account Amounts") from time to time deposited into a certain paying
agent account (the "Paying Agent Account") described in the Escrow and Paying
Agent Agreement (Class C) dated as of August 13, 1998 (as amended, modified or
supplemented from time to time, the "Escrow and Paying Agent Agreement") among
First Union Trust Company, National Association, as Escrow Agent (in such
capacity, together with its successors in such capacity, the "Escrow Agent"),
Morgan Stanley & Co. Incorporated and Credit Suisse First Boston Corporation, as
Initial Purchasers, The First National Bank of Maryland, as Pass Through Trustee
(in such capacity, together with its successors in such capacity, the "Pass
Through Trustee") and The First National Bank of Maryland, as paying agent (in
such capacity, together with its successors in such capacity, the "Paying
Agent"). Capitalized terms not defined herein shall have the meanings assigned
to them in the Escrow and Paying Agent Agreement.
This Escrow Receipt is issued under and is subject to the terms,
provisions and conditions of the Escrow and Paying Agent Agreement. By virtue of
its acceptance hereof the holder of this Escrow Receipt assents and agrees to be
bound by the provisions of the Escrow and Paying Agent Agreement and this Escrow
Receipt.
This Escrow Receipt represents a fractional undivided interest in
amounts deposited from time to time in the Paying Agent Account, and grants or
represents no rights, benefits or interests of any kind in respect of any assets
or property other than such amounts. This Escrow Receipt evidences the same
percentage interest in the Account Amounts as the Fractional Undivided Interest
in the Pass Through Trust evidenced by the Certificate to which this Escrow
Receipt is affixed.
All payments and distributions made to Receiptholders in respect of
the Escrow Receipt shall be made only from Account Amounts deposited in the
Paying Agent Account. The holder of this Escrow Receipt, by its acceptance of
this Escrow Receipt, agrees that it will look solely to the Account Amounts for
any payment or distribution due to it pursuant to this Escrow Receipt and that
it will not have any recourse to Midway, the Pass Through Trustee, the Paying
Agent or the Escrow Agent, except as expressly provided herein or in the Pass
Through Trust Agreement. No Receiptholder of this Escrow Receipt shall have any
right to vote or in any manner otherwise control the operation and management of
the Paying Agent Account, nor shall anything set forth herein, or contained in
the terms of this Escrow Receipt, be construed so as to constitute the
Receiptholders from time to time as partners or members of an association.
<PAGE>
This Escrow Receipt may not be assigned or transferred except in
connection with the assignment or transfer of the Certificate to which this
Escrow Receipt is affixed. After payment to the holder hereof of its Escrow
Interest in the Final Distribution, upon the request of the Pass Through
Trustee, the holder hereof will return this Escrow Receipt to the Pass Through
Trustee.
The Paying Agent may treat the person in whose name the Certificate
to which this Escrow Receipt is attached as the owner hereof for all purposes,
and the Paying Agent shall not be affected by any notice to the contrary.
THIS ESCROW RECEIPT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
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<PAGE>
IN WITNESS WHEREOF, the Escrow Agent has caused this Escrow Receipt
to be duly executed.
Dated: August ___, 1998
First Union Trust Company, National
Association, as Escrow Agent
By
-------------------------------------
Name:
Title:
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<PAGE>
EXHIBIT B
WITHDRAWAL CERTIFICATE
(Class C)
First Union Trust Company, National Association
as Escrow Agent
Dear Sirs:
Reference is made to the Escrow and Paying Agent Agreement, dated as
of August 13, 1998 (the "Agreement"). We hereby certify to you that the
conditions to the obligations of the undersigned to execute a Participation
Agreement pursuant to the Note Purchase Agreement have been satisfied. Pursuant
to Section 1.02(c) of the Agreement, please execute the attached Notice of
Withdrawal and immediately transmit by facsimile to the Depositary, at First
Union National Bank, Attention: Peter J. Lancos (facsimile no. 704-383-9139).
Very truly yours,
THE FIRST NATIONAL BANK OF MARYLAND, not
in its individual capacity but solely as
Pass Through Trustee
By
-------------------------------------
Name:
Title:
Dated: _______________, 199__
================================================================================
ESCROW AND PAYING AGENT AGREEMENT
(Class D)
Dated as of August 13, 1998
among
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
as Escrow Agent
MORGAN STANLEY & CO. INCORPORATED
and
CREDIT SUISSE FIRST BOSTON CORPORATION
as Initial Purchasers
THE FIRST NATIONAL BANK OF MARYLAND
not in its individual capacity,
but solely as Pass Through Trustee
for and on behalf of
Midway Airlines Pass Through Trust 1998-1D-O
as Pass Through Trustee
and
THE FIRST NATIONAL BANK OF MARYLAND
as Paying Agent
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Escrow Agent................................................... 2
Section 1.01. Appointment of Escrow Agent........................... 2
Section 1.02. Instruction; Etc...................................... 3
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts.... 3
Section 1.04. Payments to Receiptholders............................ 4
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt... 4
Section 1.06. Additional Escrow Amounts............................. 5
Section 1.07. Resignation or Removal of Escrow Agent................ 5
Section 1.08. Persons Deemed Owners................................. 6
Section 1.09. Further Assurances.................................... 6
SECTION 2. Paying Agent................................................... 6
Section 2.01. Appointment of Paying Agent........................... 6
Section 2.02. Establishment of Paying Agent Account................. 6
Section 2.03. Payments from Paying Agent Account.................... 6
Section 2.04. Withholding Taxes..................................... 7
Section 2.05. Resignation or Removal of Paying Agent................ 8
Section 2.06. Notice of Final Withdrawal............................ 8
SECTION 3. Payments....................................................... 9
SECTION 4. Other Actions.................................................. 9
SECTION 5. Representations and Warranties of the Escrow Agent............. 9
SECTION 6. Representations and Warranties of the Paying Agent............. 10
SECTION 7. Indemnification................................................ 12
SECTION 8. Amendment, Etc................................................. 12
SECTION 9. Notices........................................................ 12
SECTION 10. Transfer...................................................... 13
SECTION 11. Entire Agreement.............................................. 13
SECTION 12. Governing Law................................................. 13
i
<PAGE>
SECTION 13. Waiver of Jury Trial Right.................................... 14
SECTION 14. Counterparts.................................................. 14
EXHIBIT A Escrow Receipt
EXHIBIT B Withdrawal Certificate
ii
<PAGE>
ESCROW AND PAYING AGENT AGREEMENT (Class D) dated as of August 13,
1998 (as amended, modified or supplemented from time to time, this "Agreement")
among FIRST UNION TRUST COMPANY, National Association, a national banking
association, as Escrow Agent (in such capacity, together with its successors in
such capacity, the "Escrow Agent"); MORGAN STANLEY & CO. INCORPORATED and CREDIT
SUISSE FIRST BOSTON CORPORATION, as Initial Purchasers of the Certificates
referred to below (the "Initial Purchasers" and together with their respective
transferees and assigns as registered owners of the Certificates, the
"Investors") under the Purchase Agreement referred to below; THE FIRST NATIONAL
BANK OF MARYLAND, a national banking association, not in its individual capacity
except as otherwise expressly provided herein, but solely as trustee (in such
capacity, together with its successors in such capacity, the "Pass Through
Trustee") under the Pass Through Trust Agreement referred to below; and THE
FIRST NATIONAL BANK OF MARYLAND, a national banking association, as paying agent
hereunder (in such capacity, together with its successors in such capacity, the
"Paying Agent").
W I T N E S S E T H
WHEREAS, Midway Airlines Corporation ("Midway") and the Pass Through
Trustee have entered into the Pass Through Trust Agreement, dated as of August
13, 1998 (together, as amended, modified or supplemented from time to time in
accordance with the terms thereof, the "Pass Through Trust Agreement") relating
to Midway Airlines Pass Through Trust 1998-1D-O (the "Pass Through Trust")
pursuant to which the Midway Airlines Pass Through Trust, Series 1998-1D-O
Certificates referred to therein (the "Certificates") are being issued;
WHEREAS, Midway and the Initial Purchasers have entered into a
Purchase Agreement dated as of August 6, 1998 (as amended, modified or
supplemented from time to time in accordance with the terms thereof, the
"Purchase Agreement") pursuant to which the Pass Through Trustee will issue and
sell the Certificates to the Initial Purchasers;
WHEREAS, Midway, the Pass Through Trustee, certain other pass
through trustees and certain other persons concurrently herewith are entering
into the Note Purchase Agreement, dated as of the date hereof (the "Note
Purchase Agreement"), pursuant to which the Pass Through Trustee has agreed to
acquire from time to time on or prior to the Delivery Period Termination Date
(as defined in the Note Purchase Agreement) equipment notes (the "Equipment
Notes") issued to finance the acquisition of aircraft by Midway, as lessee or as
owner, utilizing a portion of the proceeds from the sale of the Certificates
(the "Net Proceeds");
WHEREAS, the Initial Purchasers and the Pass Through Trustee intend
that the Net Proceeds be held in escrow by the Escrow Agent on behalf of the
<PAGE>
Investors, subject to withdrawal upon request by the Pass Through Trustee and
satisfaction of the conditions set forth in the Note Purchase Agreement for the
purpose of purchasing Equipment Notes, and that pending such withdrawal the Net
Proceeds be deposited on behalf of the Escrow Agent with First Union National
Bank, as Depositary (the "Depositary") under the Deposit Agreement, dated as of
the date hereof between the Depositary and the Escrow Agent relating to the Pass
Through Trust (as amended, modified or supplemented from time to time in
accordance with the terms thereof, the "Deposit Agreement") pursuant to which,
among other things, the Depositary will pay interest for distribution to the
Investors and establish accounts from which the Escrow Agent shall make
withdrawals upon request of and proper certification by the Pass Through
Trustee;
WHEREAS, the Escrow Agent wishes to appoint the Paying Agent to pay
amounts required to be distributed to the Investors in accordance with this
Agreement; and
WHEREAS, capitalized terms used but not defined herein shall have
the meanings ascribed to such terms in the Pass Through Trust Agreement.
NOW, THEREFORE, in consideration of the obligations contained
herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
SECTION 1. Escrow Agent.
Section 1.01. Appointment of Escrow Agent. Each of the Initial
Purchasers, for and on behalf of each of the Investors, hereby irrevocably
appoints, authorizes and directs the Escrow Agent to act as escrow agent and
fiduciary hereunder and under the Deposit Agreement for such specific purposes
and with such powers as are specifically delegated to the Escrow Agent by the
terms of this Agreement, together with such other powers as are reasonably
incidental thereto. Any and all money received and held by the Escrow Agent
under this Agreement or the Deposit Agreement shall be held in escrow by the
Escrow Agent in accordance with the terms of this Agreement. This Agreement is
irrevocable and the Investors' rights with respect to any monies received and
held in escrow by the Escrow Agent under this Agreement or the Deposit Agreement
shall only be as provided under the terms and conditions of this Agreement and
the Deposit Agreement. The Escrow Agent (which term as used in this sentence
shall include reference to its affiliates and its own and its affiliates'
officers, directors, employees and agents): (a) shall have no duties or
responsibilities except those expressly set forth in this Agreement; (b) shall
not be responsible to the Pass Through Trustee or the Investors for any
recitals, statements, representations or warranties of any person other than
itself contained in this Agreement or the Deposit Agreement or for the failure
by the Pass Through Trustee, the Investors or any other person or entity (other
than the Escrow Agent) to perform any of its obligations hereunder (whether or
not the Escrow Agent shall have any knowledge thereof); and (c) shall not be
responsible for any action taken or omitted to be taken by it hereunder
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<PAGE>
or provided for herein or in connection herewith, except for its own willful
misconduct or gross negligence (or simple negligence in connection with the
handling of funds).
Section 1.02. Instruction; Etc. The Initial Purchasers, for and on
behalf of each of the Investors, hereby irrevocably instruct the Escrow Agent,
and the Escrow Agent agrees, (a) to enter into the Deposit Agreement, (b) to
appoint the Paying Agent as provided in this Agreement, (c) upon receipt at any
time and from time to time prior to the Termination Date (as defined below) of a
certificate substantially in the form of Exhibit B hereto (a "Withdrawal
Certificate") executed by the Pass Through Trustee, together with an attached
Notice of Purchase Withdrawal in substantially the form of Exhibit A to the
Deposit Agreement duly completed by the Pass Through Trustee (the "Applicable
Notice of Purchase Withdrawal") and the withdrawal to which it relates, a
"Purchase Withdrawal"), immediately to execute the Applicable Notice of Purchase
Withdrawal as Escrow Agent and transmit it to the Depositary by facsimile
transmission in accordance with the Deposit Agreement; provided that, upon the
request of the Pass Through Trustee after such transmission, the Escrow Agent
shall cancel such Applicable Notice of Purchase Withdrawal, and (d) if there are
any undrawn Deposits (as defined in the Deposit Agreement) on the "Termination
Date", which shall mean the earlier of (i) October 1, 1999 (provided that, if a
labor strike occurs at Bombardier, Inc. prior to such date (a "Labor Strike"),
such date shall be extended by adding thereto the number of days that such
strike continued in effect (the "Additional Days") and (ii) the day on which the
Escrow Agent receives notice from the Pass Through Trustee that the Pass Through
Trustee's obligation to purchase Equipment Notes under the Note Purchase
Agreement has terminated, to give notice to the Depositary (with a copy to the
Paying Agent) substantially in the form of Exhibit B to the Deposit Agreement
requesting a withdrawal of all of the remaining Deposits, together with accrued
and unpaid interest on such Deposits to the date of withdrawal, on the 35th day
after the date that such notice of withdrawal is given to the Depositary (or, if
not a Business Day, on the next succeeding Business Day) (a "Final Withdrawal"),
provided that if the day scheduled for the Final Withdrawal in accordance with
the foregoing is within 10 days before or after a Regular Distribution Date,
then the Escrow Agent shall request that such requested Final Withdrawal be made
on such Regular Distribution Date (the date of such requested withdrawal, the
"Final Withdrawal Date"). If for any reason the Escrow Agent shall have failed
to give the Final Withdrawal Notice to the Depositary on or before October 7,
1999 (provided that if a Labor Strike occurs, such date shall be extended by the
Additional Days) and there are unwithdrawn Deposits on such date, the Final
Withdrawal Date shall be deemed to be October 31, 1999 (provided that if a Labor
Strike occurs, such date shall be extended by the Additional Days).
Section 1.03. Initial Escrow Amount; Issuance of Escrow Receipts.
The Escrow Agent hereby directs the Initial Purchasers to, and the Initial
Purchasers hereby acknowledge that on the date hereof they shall, irrevocably
deliver to the Depositary on behalf of the Escrow Agent, an amount in U.S.
dollars ("Dollars") and immediately available funds equal to $5,502,000 for
deposit on behalf of the Escrow Agent with the Depositary in accordance with
Section 2.1 of the Deposit Agreement.
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<PAGE>
The Initial Purchasers hereby instruct the Escrow Agent, upon receipt of such
sum from the Initial Purchasers, to confirm such receipt by executing and
delivering to the Pass Through Trustee an Escrow Receipt in the form of Exhibit
A hereto (an "Escrow Receipt"), (a) to be affixed by the Pass Through Trustee to
each Certificate and (b) to evidence the same percentage interest (the "Escrow
Interest") in the Account Amounts (as defined below) as the Fractional Undivided
Interest in the Pass Through Trust evidenced by the Certificate to which it is
to be affixed. The Escrow Agent shall provide to the Pass Through Trustee for
attachment to each Certificate newly issued under and in accordance with the
Pass Through Trust Agreement an executed Escrow Receipt as the Pass Through
Trustee may from time to time request of the Escrow Agent. Each Escrow Receipt
shall be registered by the Escrow Agent in a register (the "Register")
maintained by the Escrow Agent in the same name and same manner as the
Certificate to which it is attached and may not thereafter be detached from such
Certificate to which it is to be affixed prior to the distribution of the Final
Withdrawal (the "Final Distribution"). After the Final Distribution, no
additional Escrow Receipts shall be issued and the Pass Through Trustee shall
request the return to the Escrow Agent for cancellation of all outstanding
Escrow Receipts.
Section 1.04. Payments to Receiptholders. All payments and
distributions made to holders of an Escrow Receipt (collectively
"Receiptholders") in respect of the Escrow Receipt shall be made only from
amounts deposited in the Paying Agent Account (as defined below) ("Account
Amounts"). Each Receiptholder, by its acceptance of an Escrow Receipt, agrees
that (a) it will look solely to the Account Amounts for any payment or
distribution due to such Receiptholder pursuant to the terms of the Escrow
Receipt and this Agreement and (b) it will have no recourse to Midway, the Pass
Through Trustee, the Paying Agent or the Escrow Agent, except as expressly
provided herein or in the Pass Through Trust Agreement. No Receiptholder shall
have any right to vote or in any manner otherwise control the operation and
management of the Paying Agent Account or the obligations of the parties hereto,
nor shall anything set forth herein, or contained in the terms of the Escrow
Receipt, be construed so as to constitute the Receiptholders from time to time
as partners or members of an association.
Section 1.05. Mutilated, Destroyed, Lost or Stolen Escrow Receipt.
If (a) any mutilated Escrow Receipt is surrendered to the Escrow Agent or the
Escrow Agent receives evidence to its satisfaction of the destruction, loss or
theft of any Escrow Receipt and (b) there is delivered to the Escrow Agent and
the Pass Through Trustee such security, indemnity, or bond, as may be required
by them to hold each of them harmless, then, absent notice to the Escrow Agent
or the Pass Through Trustee that such destroyed, lost or stolen Escrow Receipt
has been acquired by a bona fide purchaser, and provided that the requirements
of Section 8-405 of the Uniform Commercial Code in effect in any applicable
jurisdiction are met, the Escrow Agent shall execute, authenticate and deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Escrow Receipt, a new Escrow Receipt or Escrow Receipts and of like Escrow
Interest in the Account Amounts and bearing a number not contemporaneously
outstanding.
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<PAGE>
In connection with the issuance of any new Escrow Receipt under this
Section 1.05, the Escrow Agent may 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 Pass
Through Trustee and the Escrow Agent) connected therewith.
Any duplicate Escrow Receipt issued pursuant to this Section 1.05
shall constitute conclusive evidence of the appropriate Escrow Interest in the
Account Amounts, as if originally issued, whether or not the lost, stolen or
destroyed Escrow Receipt shall be found at any time.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Escrow Receipts.
Section 1.06. Additional Escrow Amounts. On the date of any Purchase
Withdrawal, the Pass Through Trustee may re-deposit with the Depositary some or
all of the amounts so withdrawn in accordance with Section 2.4 of the Deposit
Agreement.
Section 1.07. Resignation or Removal of Escrow Agent. Subject to the
appointment and acceptance of a successor Escrow Agent as provided below, the
Escrow Agent may resign at any time by giving 30 days' prior written notice
thereof to the Pass Through Trustee, but may not otherwise be removed except for
cause by the written consent of the Investors with respect to Investors
representing Escrow Interests aggregating not less than a majority in interest
in the Account Amounts (an "Action of Investors"). Upon any such resignation or
removal, the Investors, by an Action of Investors, shall have the right to
appoint a successor Escrow Agent. If no successor Escrow Agent shall have been
so appointed and shall have accepted such appointment within 30 days after the
retiring Escrow Agent's giving of notice of resignation or the removal of the
retiring Escrow Agent, then the retiring Escrow Agent may appoint a successor
Escrow Agent. Any successor Escrow Agent shall be a bank which has an office in
the United States with a combined capital and surplus of at least $100,000,000.
Upon the acceptance of any appointment as Escrow Agent hereunder by a successor
Escrow Agent, such successor Escrow Agent shall enter into such documents as the
Pass Through Trustee shall require and shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Escrow
Agent, and the retiring Escrow Agent shall be discharged from its duties and
obligations hereunder. No resignation or removal of the Escrow Agent shall be
effective unless a written confirmation shall have been obtained from each of
Moody's Investors Service, Inc. and Standard & Poor's Rating Group, a division
of McGraw-Hill Inc., that the replacement of the Escrow Agent with the successor
Escrow Agent will not result in (a) a reduction of the rating for the
Certificates below the then current rating for the Certificates or (b) a
withdrawal or suspension of the rating of the Certificates.
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Section 1.08. Persons Deemed Owners. Prior to due presentment of a
Certificate for registration of transfer, the Escrow Agent and the Paying Agent
may treat the Person in whose name any Escrow Receipt is registered (as of the
day of determination) as the owner of such Escrow Receipt for the purpose of
receiving distributions pursuant to this Agreement and for all other purposes
whatsoever, and neither the Escrow Agent nor the Paying Agent shall be affected
by any notice to the contrary.
Section 1.09. Further Assurances. The Escrow Agent agrees to take
such actions, and execute such other documents, as may be reasonably requested
by the Pass Through Trustee in order to effectuate the purposes of this
Agreement and the performance by the Escrow Agent of its obligations hereunder.
SECTION 2. Paying Agent.
Section 2.01. Appointment of Paying Agent. The Escrow Agent hereby
irrevocably appoints and authorizes the Paying Agent to act as its paying agent
hereunder, for the benefit of the Investors, for such specific purposes and with
such powers as are specifically delegated to the Paying Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Any and all money received and held by the Paying Agent under this
Agreement or the Deposit Agreement shall be held in the Paying Agent Account for
the benefit of the Investors. The Paying Agent (which term as used in this
sentence shall include reference to its affiliates and its own and its
affiliates' officers, directors, employees and agents): (a) shall have no duties
or responsibilities except those expressly set forth in this Agreement, and
shall not by reason of this Agreement be a trustee for the Escrow Agent; (b)
shall not be responsible to the Escrow Agent for any recitals, statements,
representations or warranties of any person other than itself contained in this
Agreement or for the failure by the Escrow Agent or any other person or entity
(other than the Paying Agent) to perform any of its obligations hereunder
(whether or not the Paying Agent shall have any knowledge thereof); and (c)
shall not be responsible for any action taken or omitted to be taken by it
hereunder or provided for herein or in connection herewith, except for its own
willful misconduct or gross negligence (or simple negligence in connection with
the handling of funds).
Section 2.02. Establishment of Paying Agent Account. The Paying
Agent shall establish a deposit account (the "Paying Agent Account") at The
First National Bank of Maryland in the name of the Escrow Agent. It is expressly
understood by the parties hereto that the Paying Agent is acting as the paying
agent of the Escrow Agent hereunder and that no amounts on deposit in the Paying
Agent Account constitute part of the Trust Property.
Section 2.03. Payments from Paying Agent Account. The Escrow Agent
hereby irrevocably instructs the Paying Agent, and the Paying Agent agrees to
act, as follows:
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(a) On each Interest Payment Date (as defined in the Deposit
Agreement) or as soon thereafter as the Paying Agent has confirmed receipt
in the Paying Agent Account from the Depositary of any amount in respect
of accrued interest on the Deposits, the Paying Agent shall distribute out
of the Paying Agent Account the entire amount deposited therein by the
Depositary. There shall be so distributed to each Receiptholder of record
on the 15th day (whether or not a Business Day) preceding such Interest
Payment Date by check mailed to such Receiptholder, at the address
appearing in the Register, such Receiptholder's pro rata share (based on
the Escrow Interest in the Account Amounts held by such Receiptholder) of
the total amount of interest deposited by the Depositary in the Paying
Agent Account on such date, except that, with respect to Escrow Receipts
registered on the Record Date in the name of DTC, such distribution shall
be made by wire transfer in immediately available funds to the account
designated by DTC.
(b) Upon the confirmation by the Paying Agent of receipt in the
Paying Agent Account from the Depositary of any amount in respect of the
Final Withdrawal, the Paying Agent shall forthwith distribute the entire
amount of the Final Withdrawal deposited therein by the Depositary. There
shall be so distributed to each Receiptholder of record on the 15th day
(whether or not a Business Day) preceding the Final Withdrawal Date by
check mailed to such Receiptholder, at the address appearing in the
Register, such Receiptholder's pro rata share (based on the Escrow
Interest in the Account Amounts held by such Receiptholder) of the total
amount in the Paying Agent Account on account of such Final Withdrawal,
except that, with respect to Escrow Receipts registered on the Record Date
in the name of DTC, such distribution shall be made by wire transfer in
immediately available funds to the account designated by DTC.
(c) If any payment of interest or principal in respect of the Final
Withdrawal is not received by the Paying Agent within five days of the
applicable date when due, then it shall be distributed to Receiptholders
after actual receipt by the Paying Agent on the same basis as a Special
Payment is distributed under the Pass Through Trust Agreement.
(d) The Paying Agent shall include with any check mailed pursuant to
this Section any notice required to be distributed under the Pass Through
Trust Agreement that is furnished to the Paying Agent by the Pass Through
Trustee.
Section 2.04. Withholding Taxes. The Paying Agent shall exclude and
withhold from each distribution of accrued interest on the Deposits (as defined
in the Deposit Agreement) and any amount in respect of the Final Withdrawal any
and all withholding taxes applicable thereto as required by law. The Paying
Agent agrees to act as such withholding agent and, in connection therewith,
whenever any present or future taxes or similar charges are required to be
withheld with respect to any amounts payable in respect of the Deposits (as
defined in the Deposit Agreement) or the escrow amounts, to withhold such
amounts and timely pay the same to the appropriate
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authority in the name of and on behalf of the Receiptholders, 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
Receiptholder appropriate documentation showing the payment thereof, together
with such additional documentary evidence as such Receiptholder may reasonably
request from time to time. The Paying Agent agrees to file any other information
reports as it may be required to file under United States law.
Section 2.05. Resignation or Removal of Paying Agent. Subject to the
appointment and acceptance of a successor Paying Agent as provided below, the
Paying Agent may resign at any time by giving 30 days' prior written notice
thereof to the Escrow Agent, but may not otherwise be removed except for cause
by the Escrow Agent. Upon any such resignation or removal, the Escrow Agent
shall have the right to appoint a successor Paying Agent. If no successor Paying
Agent shall have been so appointed and shall have accepted such appointment
within 30 days after the retiring Paying Agent's giving of notice of resignation
or the removal of the retiring Paying Agent, then the retiring Paying Agent may
appoint a successor Paying Agent. Any Successor Paying Agent shall be a bank
which has an office in the United States with a combined capital and surplus of
at least $100,000,000. Upon the acceptance of any appointment as Paying Agent
hereunder by a successor Paying Agent, such successor Paying Agent shall enter
into such documents as the Escrow Agent shall require and shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Paying Agent, and the retiring Paying Agent shall be discharged
from its duties and obligations hereunder.
Section 2.06. Notice of Final Withdrawal. Promptly after receipt by
the Paying Agent of notice that the Escrow Agent has requested a Final
Withdrawal or that a Final Withdrawal will be made, the Paying Agent shall cause
notice of the distribution of the Final Withdrawal to be mailed to each of the
Receiptholders at its address as it appears in the Register. Such notice shall
be mailed not less than 15 days prior to the Final Withdrawal Date. Such notice
shall set forth:
(i) the Final Withdrawal Date and the date for determining
Receiptholders of record who shall be entitled to receive
distributions in respect of the Final Withdrawal,
(ii) the amount of the payment in respect of the Final
Withdrawal for each $1,000 face amount Certificate (based on
information provided by the Pass Through Trustee) and the amount
thereof constituting unused Deposits (as defined in the Deposit
Agreement) and interest thereon, and
(iii) if the Final Withdrawal Date is the same date as a
Regular Distribution Date, the total amount to be received on such
date for each $1,000 face amount
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Certificate (based on information provided by the Pass Through
Trustee).
Such mailing may include any notice required to be given to
Certificate holders in connection with such distribution pursuant to the Pass
Through Trust Agreement.
SECTION 3. Payments. If, notwithstanding the instructions in Section
4 of the Deposit Agreement that all amounts payable to the Escrow Agent under
the Deposit Agreement be paid by the Depositary directly to the Paying Agent or
the Pass Through Trustee (depending on the circumstances), the Escrow Agent
receives any payment thereunder, then the Escrow Agent shall forthwith pay such
amount in Dollars and in immediately available funds by wire transfer to (a) in
the case of a payment of accrued interest on the Deposits (as defined in the
Deposit Agreement) or any Final Withdrawal, directly to the Paying Agent Account
and (b) in the case of any Purchase Withdrawal, directly to the Pass Through
Trustee or its designee as specified and in the manner provided in the
Applicable Notice of Purchase Withdrawal. The Escrow Agent hereby waives any and
all rights of set-off, combination of accounts, right of retention or similar
right (whether arising under applicable law, contract or otherwise) it may have
against amounts payable to the Paying Agent howsoever arising.
SECTION 4. Other Actions. The Escrow Agent shall take such other
actions under or in respect of the Deposit Agreement (including, without
limitation, the enforcement of the obligations of the Depositary thereunder) as
the Investors, by an Action of Investors, may from time to time request.
SECTION 5. Representations and Warranties of the Escrow Agent. The
Escrow Agent represents and warrants to Midway, the Investors, the Paying Agent
and the Pass Through Trustee as follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America;
(ii) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement and the Deposit Agreement;
(iii) the execution, delivery and performance of each of this
Agreement and the Deposit Agreement have been duly authorized by all
necessary corporate action on the part of it and do not require any
stockholder approval, or approval or consent of any trustee or holder of
any indebtedness or obligations of it, and each such document has been
duly executed and delivered by it and constitutes its legal, valid and
binding obligations enforceable against it in accordance with the terms
hereof or thereof except as such enforceability may be limited by
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bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action by,
and no notice to or filing with, any United States federal or state
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement or the Deposit Agreement;
(v) neither the execution, delivery or performance by it of this
Agreement or the Deposit Agreement, nor compliance with the terms and
provisions hereof or thereof, conflicts or will conflict with or results
or will result in a breach or violation of any of the terms, conditions or
provisions of, or will require any consent or approval under, any law,
governmental rule or regulation or the charter documents, as amended, or
bylaws, as amended, of it or any similar instrument binding on it or any
order, writ, injunction or decree of any court or governmental authority
against it or by which it or any of its properties is bound or any
indenture, mortgage or contract or other agreement or instrument to which
it is a party or by which it or any of its properties is bound, or
constitutes or will constitute a default thereunder or results or will
result in the imposition of any lien upon any of its properties; and
(vi) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (A) would
adversely affect the ability of it to perform its obligations under this
Agreement or the Deposit Agreement or (B) would call into question or
challenge the validity of this Agreement or the Deposit Agreement or the
enforceability hereof or thereof in accordance with the terms hereof or
thereof, nor is the Escrow Agent in default with respect to any order of
any court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its obligations
under this Agreement or the Deposit Agreement.
SECTION 6. Representations and Warranties of the Paying Agent. The
Paying Agent represents and warrants to Midway, the Investors, the Escrow Agent
and the Pass Through Trustee as follows:
(i) it is a national banking association duly organized and validly
existing in good standing under the laws of the United States of America
incorporation;
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(ii) it has full power, authority and legal right to conduct its
business and operations as currently conducted and to enter into and
perform its obligations under this Agreement;
(iii) the execution, delivery and performance of this Agreement has
been duly authorized by all necessary corporate action on the part of it
and does not require any stockholder approval, or approval or consent of
any trustee or holder of any indebtedness or obligations of it, and such
document has been duly executed and delivered by it and constitutes its
legal, valid and binding obligations enforceable against it in accordance
with the terms hereof except as such enforceability may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) no authorization, consent or approval of or other action by,
and no notice to or filing with, any United States or State of Maryland
governmental authority or regulatory body is required for the execution,
delivery or performance by it of this Agreement;
(v) neither the execution, delivery or performance by it of this
Agreement, nor compliance with the terms and provisions hereof, conflicts
or will conflict with or results or will result in a breach or violation
of any of the terms, conditions or provisions of, or will require any
consent or approval under, any law, governmental rule or regulation or the
articles of association documents, as amended, or bylaws, as amended, of
it or any similar instrument binding on it or any order, writ, injunction
or decree of any court or governmental authority against it or by which it
or any of its properties is bound or any indenture, mortgage or contract
or other agreement or instrument to which it is a party or by which it or
any of its properties is bound, or constitutes or will constitute a
default thereunder or results or will result in the imposition of any lien
upon any of its properties; and
(vi) there are no pending or, to its knowledge, threatened actions,
suits, investigations or proceedings (whether or not purportedly on behalf
of it) against or affecting it or any of its property before or by any
court or administrative agency which, if adversely determined, (A) would
adversely affect the ability of it to perform its obligations under this
Agreement or (B) would call into question or challenge the validity of
this Agreement or the enforceability hereof in accordance with the terms
hereof, nor is the Paying Agent in default with respect to any order of
any court, governmental authority, arbitration board or administrative
agency so as to adversely affect its ability to perform its obligations
under this Agreement.
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SECTION 7. Indemnification. Except for actions expressly required of
the Escrow Agent or the Paying Agent hereunder, each of the Escrow Agent and the
Paying Agent shall in all cases be fully justified in failing or refusing to act
hereunder unless it shall have been indemnified by the party requesting such
action in a manner reasonably satisfactory to it against any and all liability
and expense which may be incurred by it by reason of taking or continuing to
take any such action. In the event Midway requests any amendment to any
Operative Agreement (as defined in the Note Purchase Agreement), the Pass
Through Trustee, solely to the extent of funds made available by Midway for such
purpose, agrees to pay all reasonable fees and expenses (including, without
limitation, fees and disbursements of counsel) of the Escrow Agent and the
Paying Agent in connection therewith.
SECTION 8. Amendment, Etc. Upon request of the Pass Through Trustee
and approval by an Action of Investors, the Escrow Agent shall enter into an
amendment to this Agreement, so long as such amendment does not adversely affect
the rights or obligations of the Escrow Agent or the Paying Agent, provided that
upon request of the Pass Through Trustee and without any consent of the
Investors, the Escrow Agent shall enter into an amendment to this Agreement for
any of the following purposes:
(1) to correct or supplement any provision in this Agreement which
may be defective or inconsistent with any other provision herein or to
cure any ambiguity or correct any mistake or to modify any other provision
with respect to matters or questions arising under this Agreement,
provided that any such action shall not materially adversely affect the
interests of the Investors; or
(2) to comply with any requirement of the SEC, applicable law, rules
or regulations of any exchange or quotation system on which the
Certificates are listed or any regulatory body; or
(3) to evidence and provide for the acceptance of appointment under
this Agreement of a successor Escrow Agent, successor Paying Agent or
successor Pass Through Trustee.
SECTION 9. Notices. Unless otherwise expressly provided herein, any
notice or other communication under this Agreement shall be in writing
(including by facsimile) and shall be deemed to be given and effective upon
receipt thereof. All notices shall be sent to (a) in the case of the Investors,
as their respective addresses shall appear in the Register, (b) in the case of
the Escrow Agent, First Union Trust Company, National Association, One Rodney
Square, 920 King Street, Suite 102, Wilmington, Delaware 19801, Attention:
Corporate Trust Administration (Telecopier: (302) 888-7544), (c) in the case of
the Pass Through Trustee, The First National Bank of Maryland, 25 South Charles
Street, Mail Code 101-591, Baltimore, Maryland 21201, Attention: Corporate Trust
Department (Telecopier: (410) 244-4236) or (d) in the case of the Paying Agent,
The First National Bank of Maryland, 25 South Charles Street,
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Mail Code 101-591, Baltimore, Maryland 21201, Attention: Corporate Trust
Department (Telecopier: (410) 244-4236), in each case with a copy to Midway,
Midway Airlines Corporation, 300 W. Morgan St. Suite 1200, Durham, North
Carolina 27701, Attention: General Counsel (Telecopier: (919) 956-7568) (or at
such other address as any such party may specify from time to time in a written
notice to the other parties). On or prior to the execution of this Agreement,
the Pass Through Trustee has delivered to the Escrow Agent a certificate
containing specimen signatures of the representatives of the Pass Through
Trustee who are authorized to give notices and instructions with respect to this
Agreement. The Escrow Agent may conclusively rely on such certificate until the
Escrow Agent receives written notice from the Pass Through Trustee to the
contrary.
SECTION 10. Transfer. No party hereto shall be entitled to assign or
otherwise transfer this Agreement (or any interest herein) other than (in the
case of the Escrow Agent) to a successor escrow agent under Section 1.06 hereof
or (in the case of the Paying Agent) to a successor paying agent under Section
2.04 hereof, and any purported assignment in violation thereof shall be void.
This Agreement shall be binding upon the parties hereto and their respective
successors and (in the case of the Escrow Agent and the Paying Agent) their
respective permitted assigns. Upon the occurrence of the Transfer (as defined
below) contemplated by the Assignment and Assumption Agreement (as defined
below), the Pass Through Trustee shall (without further act) be deemed to have
transferred all of its right, title and interest in and to this Agreement to the
trustee of the Successor Trust (as defined below) and, thereafter, the trustee
of the Successor Trust shall be deemed to be the "Pass Through Trustee"
hereunder with the rights and obligations of the "Pass Through Trustee"
hereunder and each reference herein to "Midway Airlines Pass Through Trust"
1998-1D-O" shall be deemed to be a reference to "Midway Airlines Pass Through
Trust 1998-1D-S". The parties hereto hereby acknowledge and consent to the
Transfer contemplated by the Assignment and Assumption Agreement. As used
herein, "Transfer" means the transfers of the assets to the Successor Trust
contemplated by the Assignment and Assumption Agreement; "Assignment and
Assumption Agreement" means the Assignment and Assumption Agreement to be
entered into between the Pass Through Trustee and the trustee of the Successor
Trust, substantially in the form of Exhibit C to the Trust Supplement;
"Successor Trust" means the Midway Airlines Pass Through Trust 1998-1D-S.
SECTION 11. Entire Agreement. This Agreement sets forth all of the
promises, covenants, agreements, conditions and understandings among the Escrow
Agent, the Paying Agent, the Underwriters and the Pass Through Trustee with
respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and undertakings, inducements or conditions, express
or implied, oral or written.
SECTION 12. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
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SECTION 13. Waiver of Jury Trial Right. EACH OF THE ESCROW AGENT,
THE PAYING AGENT, THE INVESTORS AND THE PASS THROUGH TRUSTEE ACKNOWLEDGES AND
ACCEPTS THAT IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT SUCH PARTY IRREVOCABLY WAIVES ITS RIGHT TO A TRIAL BY JURY.
SECTION 14. Counterparts. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.
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IN WITNESS WHEREOF, the Escrow Agent, the Paying Agent, the Initial
Purchasers and the Pass Through Trustee have caused this Escrow and Paying Agent
Agreement (Class D) to be duly executed as of the day and year first above
written.
MORGAN STANLEY & CO.
INCORPORATED; and
CREDIT SUISSE FIRST BOSTON
CORPORATION,
as Initial Purchasers
By: MORGAN STANLEY & CO.
INCORPORATED
By:/s/Tom Cahill
------------------------------
Name: Tom Cahill
Title: Principal
THE FIRST NATIONAL BANK OF MARYLAND,
not in its individual capacity, but
solely as Pass Through Trustee for and
on behalf of Midway Airlines Pass
Through Trust 1998-1D-O
By:/s/Robert D. Brown
------------------------------
Name: Robert D. Brown
Title: Assistant Vice President
THE FIRST NATIONAL BANK OF
MARYLAND, as Paying Agent
By:/s/Stephen J. Kaba
------------------------------
Name: Stephen J. Kaba
Title: Vice President
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EXHIBIT A
MIDWAY AIRLINES 1998-1D ESCROW RECEIPT
No. _
This Escrow Receipt evidences a fractional undivided interest in
amounts ("Account Amounts") from time to time deposited into a certain paying
agent account (the "Paying Agent Account") described in the Escrow and Paying
Agent Agreement (Class D) dated as of August 13, 1998 (as amended, modified or
supplemented from time to time, the "Escrow and Paying Agent Agreement") among
First Union Trust Company, National Association, as Escrow Agent (in such
capacity, together with its successors in such capacity, the "Escrow Agent"),
Morgan Stanley & Co. Incorporated and Credit Suisse First Boston Corporation, as
Initial Purchasers, The First National Bank of Maryland, as Pass Through Trustee
(in such capacity, together with its successors in such capacity, the "Pass
Through Trustee") and The First National Bank of Maryland, as paying agent (in
such capacity, together with its successors in such capacity, the "Paying
Agent"). Capitalized terms not defined herein shall have the meanings assigned
to them in the Escrow and Paying Agent Agreement.
This Escrow Receipt is issued under and is subject to the terms,
provisions and conditions of the Escrow and Paying Agent Agreement. By virtue of
its acceptance hereof the holder of this Escrow Receipt assents and agrees to be
bound by the provisions of the Escrow and Paying Agent Agreement and this Escrow
Receipt.
This Escrow Receipt represents a fractional undivided interest in
amounts deposited from time to time in the Paying Agent Account, and grants or
represents no rights, benefits or interests of any kind in respect of any assets
or property other than such amounts. This Escrow Receipt evidences the same
percentage interest in the Account Amounts as the Fractional Undivided Interest
in the Pass Through Trust evidenced by the Certificate to which this Escrow
Receipt is affixed.
All payments and distributions made to Receiptholders in respect of
the Escrow Receipt shall be made only from Account Amounts deposited in the
Paying Agent Account. The holder of this Escrow Receipt, by its acceptance of
this Escrow Receipt, agrees that it will look solely to the Account Amounts for
any payment or distribution due to it pursuant to this Escrow Receipt and that
it will not have any recourse to Midway, the Pass Through Trustee, the Paying
Agent or the Escrow Agent, except as expressly provided herein or in the Pass
Through Trust Agreement. No Receiptholder of this Escrow Receipt shall have any
right to vote or in any manner otherwise control the operation and management of
the Paying Agent Account, nor shall anything set forth herein, or contained in
the terms of this Escrow Receipt, be construed so as to constitute the
Receiptholders from time to time as partners or members of an association.
<PAGE>
This Escrow Receipt may not be assigned or transferred except in
connection with the assignment or transfer of the Certificate to which this
Escrow Receipt is affixed. After payment to the holder hereof of its Escrow
Interest in the Final Distribution, upon the request of the Pass Through
Trustee, the holder hereof will return this Escrow Receipt to the Pass Through
Trustee.
The Paying Agent may treat the person in whose name the Certificate
to which this Escrow Receipt is attached as the owner hereof for all purposes,
and the Paying Agent shall not be affected by any notice to the contrary.
THIS ESCROW RECEIPT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the Escrow Agent has caused this Escrow Receipt
to be duly executed.
Dated: August ___, 1998
First Union Trust Company, National
Association, as Escrow
Agent
By
------------------------------------
Name:
Title:
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EXHIBIT B
WITHDRAWAL CERTIFICATE
(Class D)
First Union Trust Company, National Association
as Escrow Agent
Dear Sirs:
Reference is made to the Escrow and Paying Agent Agreement, dated as
of August 13, 1998 (the "Agreement"). We hereby certify to you that the
conditions to the obligations of the undersigned to execute a Participation
Agreement pursuant to the Note Purchase Agreement have been satisfied. Pursuant
to Section 1.02(c) of the Agreement, please execute the attached Notice of
Withdrawal and immediately transmit by facsimile to the Depositary, at First
Union National Bank, Attention: Peter J. Lancos (facsimile no. 704-383-9139).
Very truly yours,
THE FIRST NATIONAL BANK OF
MARYLAND, not in its individual capacity but
solely as Pass Through Trustee
By
------------------------------------
Name
Dated:____________________ , 199_
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into on August 13, 1998, among MIDWAY AIRLINES CORPORATION, a Delaware
corporation (the "Company"), THE FIRST NATIONAL BANK OF MARYLAND, as Trustee
under each of the Trust Agreements (as defined below), MORGAN STANLEY & CO.
INCORPORATED and CREDIT SUISSE FIRST BOSTON CORPORATION (the "Placement
Agents").
This Agreement is made pursuant to the Purchase Agreement dated
August 6, 1998, between the Company and the Placement Agents (the "Purchase
Agreement"),which provides for the sale by the Trustee to the Placement Agents
of (i) $58,426,000 aggregate principal amount of 7.14% 1998-1A Pass Through
Certificates (the "Class A Certificates"), (ii) $25,266,000 aggregate principal
amount of 8.14% 1998-1B Pass Through Certificates (the "Class B Certificates"),
(iii) $20,528,000 aggregate principal amount of 8.92% 1998-1C Pass Through
Certificates (the "Class C Certificates") and (iv) $5,502,000 aggregate
principal amount of 8.86% 1998-1D Pass Through Certificates (the "Class D
Certificates", and together with the Class A Certificates, the Class B
Certificates and the Class C Certificates, the "Certificates"). In order to
induce the Placement Agents to enter into the Purchase Agreement, the Company
has agreed to provide to the Placement Agents and their direct and indirect
transferees the registration rights set forth in this Agreement. The execution
of this Agreement is a condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from
time to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Applicable Trust Agreement" shall mean, (i) with respect to the
Class A Certificates, the Class A Holders or the Class A Trustee, the
Class A Trust Agreement, (ii) with respect to the Class B Certificates,
the Class B Holders or the Class B Trustee, the Class B Trust Agreement,
(iii) with respect to the Class C Certificates, the Class C Holders or the
Class C Trustee, the Class C Trust Agreement and (iv) with respect to the
Class D Certificates, the Class D Holders or the Class D Trustee, the
Class D Trust Agreement.
<PAGE>
"Certificates" shall have the meaning set forth in the second
paragraph of this Agreement.
"Class A Certificates" shall have the meaning set forth in the
second paragraph of this Agreement.
"Class A Exchange Certificates" shall mean securities issued under
the Class A Trust Agreement of equal outstanding principal amount as and
containing terms identical to the Class A Certificates (except that (i)
interest thereon shall accrue from the last date on which interest was
paid on the Class A Certificates or, if no such interest has been paid,
from August 13, 1998, (ii) the transfer restrictions thereon shall be
modified or eliminated, as appropriate and (iii) certain provisions
relating to an increase in the stated rate of interest thereon shall be
eliminated), to be offered to Holders of the Class A Certificates in
exchange for such Class A Certificates pursuant to the Exchange Offer.
"Class A Holder" shall mean any Placement Agent, for so long as it
owns any Class A Registrable Certificates, and each of its successors,
assigns and direct and indirect transferees who become registered owners
of Class A Registrable Certificates under the Class A Trust Agreement;
provided that for purposes of Sections 4 and 5 of this Agreement, the term
"Class A Holder" shall include Participating Broker-Dealers (as defined in
Section 4(a)).
"Class A Registrable Certificates" shall mean the Class A
Certificates; provided, however, that the Class A Certificates shall cease
to be Class A Registrable Certificates upon the earliest to occur of (i)
the consummation of the Exchange Offer, (ii) a Registration Statement with
respect to such Class A Certificates shall have been declared effective
under the 1933 Act and such Class A Certificates shall have been disposed
of pursuant to such Registration Statement, (iii) such Class A
Certificates shall have been sold to the public pursuant to Rule 144(k)
(or any similar provision then in force, but not Rule 144A) under the 1933
Act or (iv) such Class A Certificates shall have ceased to be outstanding.
"Class A Trust Agreement" shall mean the Pass Through Trust
Agreement relating to the Class A Certificates dated as of August 13, 1998
among the Company and the Class A Trustee, as the same may be amended from
time to time in accordance with the terms thereof.
"Class A Trustee" shall mean The First National Bank of Maryland,
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 under the terms of the
Class A Trust Agreement.
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<PAGE>
"Class B Certificates" shall have the meaning set forth in the
second paragraph of this Agreement.
"Class B Exchange Certificates" shall mean securities issued under
the Class B Trust Agreement of equal outstanding principal amount as and
containing terms identical to the Class B Certificates (except that (i)
interest thereon shall accrue from the last date on which interest was
paid on the Class B Certificates or, if no such interest has been paid,
from August 13, 1998, (ii) the transfer restrictions thereon shall be
modified or eliminated, as appropriate and (iii) certain provisions
relating to an increase in the stated rate of interest thereon shall be
eliminated), to be offered to Holders of the Class B Certificates in
exchange for such Class B Certificates pursuant to the Exchange Offer.
"Class B Holder" shall mean any Placement Agent, for so long as it
owns any Class B Registrable Certificates, and each of its successors,
assigns and direct and indirect transferees who become registered owners
of Class B Registrable Certificates under the Class B Trust Agreement;
provided that for purposes of Sections 4 and 5 of this Agreement, the term
"Class B Holder" shall include Participating Broker-Dealers (as defined in
Section 4(a)).
"Class B Registrable Certificates" shall mean the Class B
Certificates; provided, however, that the Class B Certificates shall cease
to be Class B Registrable Certificates upon the earliest to occur of (i)
the consummation of the Exchange Offer, (ii) a Registration Statement with
respect to such Class B Certificates shall have been declared effective
under the 1933 Act and such Class B Certificates shall have been disposed
of pursuant to such Registration Statement, (iii) such Class B
Certificates shall have been sold to the public pursuant to Rule 144(k)
(or any similar provision then in force, but not Rule 144A) under the 1933
Act or (iv) such Class B Certificates shall have ceased to be outstanding.
"Class B Trust Agreement" shall mean the Pass Through Trust
Agreement relating to the Class B Certificates dated as of August 13, 1998
among the Company and the Class B Trustee, as the same may be amended from
time to time in accordance with the terms thereof.
"Class B Trustee" shall mean The First National Bank of Maryland,
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 under the terms of the
Class B Trust Agreement.
"Class C Certificates" shall have the meaning set forth in the
second paragraph of this Agreement.
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<PAGE>
"Class C Exchange Certificates" shall mean securities issued under
the Class C Trust Agreement of equal outstanding principal amount as and
containing terms identical to the Class C Certificates (except that (i)
interest thereon shall accrue from the last date on which interest was
paid on the Class C Certificates or, if no such interest has been paid,
from August 13, 1998, (ii) the transfer restrictions thereon shall be
modified or eliminated, as appropriate and (iii) certain provisions
relating to an increase in the stated rate of interest thereon shall be
eliminated), to be offered to Holders of the Class C Certificates in
exchange for such Class C Certificates pursuant to the Exchange Offer.
"Class C Holder" shall mean any Placement Agent, for so long as it
owns any Class C Registrable Certificates, and each of its successors,
assigns and direct and indirect transferees who become registered owners
of Class C Registrable Certificates under the Class C Trust Agreement;
provided that for purposes of Sections 4 and 5 of this Agreement, the term
"Class C Holder" shall include Participating Broker-Dealers (as defined in
Section 4(a)).
"Class C Registrable Certificates" shall mean the Class C
Certificates; provided, however, that the Class C Certificates shall cease
to be Class C Registrable Certificates upon the earliest to occur of (i)
the consummation of the Exchange Offer, (ii) a Registration Statement with
respect to such Class C Certificates shall have been declared effective
under the 1933 Act and such Class C Certificates shall have been disposed
of pursuant to such Registration Statement, (iii) such Class C
Certificates shall have been sold to the public pursuant to Rule 144(k)
(or any similar provision then in force, but not Rule 144A) under the 1933
Act or (iv) such Class C Certificates shall have ceased to be outstanding.
"Class C Trust Agreement" shall mean the Pass Through Trust
Agreement relating to the Class C Certificates dated as of August 13, 1998
among the Company and the Class C Trustee, as the same may be amended from
time to time in accordance with the terms thereof.
"Class C Trustee" shall mean The First National Bank of Maryland,
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 under the terms of the
Class C Trust Agreement.
"Class D Certificates" shall have the meaning set forth in the
second paragraph of this Agreement.
"Class D Exchange Certificates" shall mean securities issued under
the Class D Trust Agreement of equal outstanding principal amount as and
containing terms identical to the Class D Certificates (except that (i)
interest thereon shall accrue from the last date on which interest was
paid on the Class D Certificates or, if no such interest has been paid,
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<PAGE>
from August 13, 1998, (ii) the transfer restrictions thereon shall be
modified or eliminated, as appropriate and (iii) certain provisions
relating to an increase in the stated rate of interest thereon shall be
eliminated), to be offered to Holders of the Class D Certificates in
exchange for such Class D Certificates pursuant to the Exchange Offer.
"Class D Holder" shall mean any Placement Agent, for so long as it
owns any Class D Registrable Certificates, and each of its successors,
assigns and direct and indirect transferees who become registered owners
of Class D Registrable Certificates under the Class D Trust Agreement;
provided that for purposes of Sections 4 and 5 of this Agreement, the term
"Class D Holder" shall include Participating Broker-Dealers (as defined in
Section 4(a)).
"Class D Registrable Certificates" shall mean the Class D
Certificates; provided, however, that the Class D Certificates shall cease
to be Class D Registrable Certificates upon the earliest to occur of (i)
the consummation of the Exchange Offer, (ii) a Registration Statement with
respect to such Class D Certificates shall have been declared effective
under the 1933 Act and such Class D Certificates shall have been disposed
of pursuant to such Registration Statement, (iii) such Class D
Certificates shall have been sold to the public pursuant to Rule 144(k)
(or any similar provision then in force, but not Rule 144A) under the 1933
Act or (iv) such Class D Certificates shall have ceased to be outstanding.
"Class D Trust Agreement" shall mean the Pass Through Trust
Agreement relating to the Class D Certificates dated as of August 13, 1998
among the Company and the Class D Trustee, as the same may be amended from
time to time in accordance with the terms thereof.
"Class D Trustee" shall mean The First National Bank of Maryland,
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 under the terms of the
Class D Trust Agreement.
"Closing Date" shall mean the Closing Date as defined in the
Purchase Agreement.
"Company" shall have the meaning set forth in the preamble and shall
also include the Company's successors.
"Exchange Certificates" shall mean, together, the Class A Exchange
Certificates, the Class B Exchange Certificates, the Class C Exchange
Certificates and the Class D Exchange Certificates.
"Exchange Offer" shall mean the exchange offer by the Company of
Exchange Certificates for Registrable Certificates pursuant to Section
2(a) hereof.
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<PAGE>
"Exchange Offer Registration" shall mean a registration under the
1933 Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another
appropriate form) and all amendments and supplements to such registration
statement, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Holder" shall mean a Class A Holder, a Class B Holder, a Class C
Holder or a Class D Holder; provided that for purposes of Sections 4 and 5
of this Agreement, the term "Holder" shall include Participating
Broker-Dealers (as defined in Section 4(a)).
"Majority Holders" shall mean, together, the Holders of a majority
in aggregate principal amount of the Registrable Certificates then
outstanding; provided that whenever the consent or approval of Holders of
a specified percentage of Registrable Certificates is required hereunder,
Registrable Certificates held by the Company or any of its affiliates (as
such term is defined in Rule 405 under the 1933 Act) (other than the
Placement Agents or subsequent holders of Registrable Certificates if such
subsequent holders are deemed to be such affiliates solely by reason of
their holding of such Registrable Certificates) shall not be counted in
determining whether such consent or approval was given by the Holders of
such required percentage or amount.
"Person" shall mean an individual, partnership, corporation, trust
or unincorporated organization, or a government or agency or political
subdivision thereof.
"Placement Agents" shall have the meaning set forth in the preamble.
"Purchase Agreement" shall have the meaning set forth in the
preamble.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus
as amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Certificates covered by a Shelf Registration
Statement, and by all other amendments and supplements to such prospectus,
and in each case including all material incorporated by reference therein.
"Registrable Certificates" shall mean, together, the Class A
Registrable Certificates, the Class B Registrable Certificates, the Class
C Registrable Certificates and the Class D Registrable Certificates.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company and the Trustees with this
Agreement, including without
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<PAGE>
limitation: (i) all SEC, stock exchange or National Association of
Securities Dealers, Inc. registration and filing fees, (ii) all fees and
expenses incurred in connection with compliance with state securities or
blue sky laws (including reasonable fees and disbursements of counsel for
any underwriters or Holders in connection with blue sky qualification of
any of the Exchange Certificates or Registrable Certificates), (iii) all
expenses of any Persons in preparing or assisting in preparing, word
processing, printing and distributing any Registration Statement, any
Prospectus, any amendments or supplements thereto, any underwriting
agreements, securities sales agreements and other documents relating to
the performance of and compliance with this Agreement, (iv) all rating
agency fees, (v) all fees and disbursements relating to the qualification
of the Trust Agreements under applicable securities laws, (vi) the fees
and disbursements of the Trustees and their counsel, (vii) the fees and
disbursements of counsel for the Company and, in the case of a Shelf
Registration Statement, the fees and disbursements of one counsel for the
Holders (which counsel shall be selected by the Majority Holders and which
counsel may also be counsel for the Placement Agents) and (viii) the fees
and disbursements of the independent public accountants of the Company,
including the expenses of any special audits or "cold comfort" letters
required by or incident to such performance and compliance, but excluding
fees and expenses of counsel to the underwriters (other than fees and
expenses set forth in clause (ii) above) or the Holders and underwriting
discounts and commissions and transfer taxes, if any, relating to the sale
or disposition of Registrable Certificates by a Holder.
"Registration Statement" shall mean any registration statement of
the Company that covers any of the Exchange Certificates or Registrable
Certificates pursuant to the provisions of this Agreement and all
amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected pursuant to
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2(b) of
this Agreement which covers all of the Registrable Certificates (but no
other securities unless approved by the Holders whose Registrable
Certificates are covered by such Shelf Registration Statement) on an
appropriate form under Rule 415 under the 1933 Act, or any similar rule
that may be adopted by the SEC, and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
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<PAGE>
"Trust Agreement" shall mean the Class A Trust Agreement, the Class
B Trust Agreement, the Class C Trust Agreement or the Class D Trust
Agreement, as applicable, and when used in the plural shall mean,
together, the Class A Trust Agreement, the Class B Trust Agreement, the
Class C Trust Agreement and the Class D Trust Agreement.
"Trustee" shall mean the Class A Trustee, the Class B Trustee, the
Class C Trustee or the Class D Trustee, as applicable, and when used in
the plural shall mean, together, the Class A Trustee, the Class B Trustee,
the Class C Trustee and the Class D Trustee.
"Underwritten Registration" or "Underwritten Offering" shall mean a
registration in which Registrable Certificates are sold to an Underwriter
(as hereinafter defined) for reoffering to the public.
2. Registration Under the 1933 Act. To the extent not prohibited by
any applicable law or applicable interpretation of the Staff of the SEC, the
Company shall use its best efforts (A) to file with the SEC within 120 days
after the Closing Date an Exchange Offer Registration Statement covering the
offer by the Company to the Holders to exchange all of the Registrable
Certificates for Exchange Certificates and (B) to cause such Exchange Offer
Registration Statement to be declared effective by the SEC within 180 days after
the Closing Date. The Company shall commence the Exchange Offer promptly after
the Exchange Offer Registration Statement has been declared effective by the
SEC. The Company shall commence the Exchange Offer by mailing the related
exchange offer Prospectus and accompanying documents to each Holder stating, in
addition to such other disclosures as are required by applicable law:
(i) that the Exchange Offer is being made pursuant to this
Registration Rights Agreement and that all Registrable Certificates
validly tendered will be accepted for exchange;
(ii) the period for exchange (which shall be a period of at
least 20 consecutive business days from the date such notice is
mailed) (such days being the "Exchange Dates");
(iii) that any Registrable Certificate not tendered will
remain outstanding and continue to accrue interest, but will not
retain any rights under this Registration Rights Agreement;
(iv) that Holders electing to have a Registrable Certificate
exchanged pursuant to the Exchange Offer will be required to
surrender such Registrable Certificate, together with the enclosed
letters of transmittal, to the institution and at the office
specified in the notice prior to the close of business on the last
Exchange Date; and
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<PAGE>
(v) that Holders will be entitled to withdraw their election,
not later than the close of business on the last Exchange Date, by
sending to the institution and at the office specified in the
notice, a telegram, telex, facsimile transmission or letter setting
forth the name of such Holder, the principal amount of Registrable
Certificates delivered for exchange, and a statement that such
Holder is withdrawing his election to have such Certificates
exchanged.
As soon as practicable after the last Exchange Date, the Company
shall or shall cause the Trustees to:
(i) accept for exchange Registrable Certificates or portions
thereof tendered and not validly withdrawn pursuant to the Exchange
Offer;
(ii) deliver, or cause to be delivered, to the Class A Trustee
for cancellation all Class A Registrable Certificates or portions
thereof so accepted for exchange by the Company, and issue, and
cause the Class A Trustee to promptly authenticate and mail to each
Class A Holder, Class A Exchange Certificates equal in principal
amount to the principal amount of the Class A Registrable
Certificates surrendered by such Class A Holder;
(iii) deliver, or cause to be delivered, to the Class B
Trustee for cancellation all Class B Registrable Certificates or
portions thereof so accepted for exchange by the Company, and issue,
and cause the Class B Trustee to promptly authenticate and mail to
each Class B Holder, Class B Exchange Certificates equal in
principal amount to the principal amount of the Class B Registrable
Certificates surrendered by such Class B Holder;
(iv) deliver, or cause to be delivered, to the Class C Trustee
for cancellation all Class C Registrable Certificates or portions
thereof so accepted for exchange by the Company, and issue, and
cause the Class C Trustee to promptly authenticate and mail to each
Class C Holder, Class C Exchange Certificates equal in principal
amount to the principal amount of the Class C Registrable
Certificates surrendered by such Class C Holder; and
(v) deliver, or cause to be delivered, to the Class D Trustee
for cancellation all Class D Registrable Certificates or portions
thereof so accepted for exchange by the Company, and issue, and
cause the Class D Trustee to promptly authenticate and mail to each
Class D Holder, Class D Exchange Certificates equal in principal
amount to the principal amount of the Class D Registrable
Certificates surrendered by such Class D Holder.
The Company shall use its best efforts to complete the Exchange Offer as
provided above and shall comply with the applicable requirements of the 1933
Act, the 1934 Act and other applicable
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<PAGE>
laws and regulations in connection with the Exchange Offer. The Exchange Offer
shall not be subject to any conditions, other than that the Exchange Offer does
not violate applicable law or any applicable interpretation of the Staff of the
SEC. The Company shall inform the Placement Agents of the names and addresses of
the Holders to whom the Exchange Offer is made, and the Placement Agents shall
have the right, subject to applicable law, to contact such Holders and otherwise
facilitate the tender of Registrable Certificates in the Exchange Offer.
(a) In the event that (i) the Company determines that the Exchange
Offer Registration provided for in Section 2(a) above is not available or may
not be consummated as soon as practicable after the last Exchange Date because
it would violate applicable law or the applicable interpretations of the Staff
of the SEC, (ii) the Exchange Offer Registration Statement is not declared
effective by within 180 days after the Closing Date, (iii) the Exchange Offer is
not for any other reason consummated by March 11, 1999 or (iv) the Exchange
Offer has been completed and in the opinion of counsel for the Placement Agents
a Registration Statement must be filed and a Prospectus must be delivered by the
Placement Agents in connection with any offering or sale of Registrable
Certificates, the Company shall file as soon as practicable after such
determination, date or notice of such opinion of counsel is given to the
Company, as the case may be, a Shelf Registration Statement providing for the
sale by the Holders of all of the Registrable Certificates, and shall use its
best efforts to have such Shelf Registration Statement declared effective by the
SEC by the 180th day after the Closing Date. The Company agrees to use its best
efforts to keep the Shelf Registration Statement continuously effective until
the second anniversary of the Closing Date or such shorter period that will
terminate when all of the Registrable Certificates covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement. The Company further agrees to supplement or amend the Shelf
Registration Statement, if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration Statement or by the 1933 Act or by any other rules and regulations
thereunder for shelf registration or if reasonably requested by a Holder with
respect to information relating to such Holder, and to use its best efforts to
cause any such amendment to become effective and such Shelf Registration
Statement to become usable as soon as thereafter practicable. The Company agrees
to furnish to the Holders of Registrable Certificates copies of any such
supplement or amendment promptly after its being used or filed with the SEC.
(b) The Company shall pay all Registration Expenses in connection
with the registration pursuant to Section 2(a) or Section 2(b). Each Holder
shall pay all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Certificates
pursuant to the Shelf Registration Statement.
(c) An Exchange Offer Registration Statement pursuant to Section
2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof
will not be deemed to have become effective unless it has been declared
effective by the SEC; provided, however, that if, after it has been declared
effective, the offering of Registrable Certificates pursuant to a Shelf
Registration Statement is interfered with by any stop order, injunction or other
order or
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<PAGE>
requirement of the SEC or any other governmental agency or court, such Shelf
Registration Statement will be deemed not to have become effective during the
period of such interference until the offering of Registrable Certificates
pursuant to such Registration Statement may legally resume. As provided for in
the Trust Agreements, the interest rate on the Class A Certificates, the Class B
Certificates, the Class C Certificates and the Class D Certificates shall be
7.14%, 8.14%, 8.92% and 8.86% per annum, respectively; however, in the event
that the Exchange Offer is not consummated and, if a Shelf Registration
Statement is required hereby, the Shelf Registration Statement is not declared
effective on or prior to March 11, 1999, the interest rate will increase by
0.50% per annum until the Exchange Offer is consummated or a Shelf Registration
Statement is declared effective.
(d) Without limiting the remedies available to the Placement Agents
and the Holders, the Company acknowledges that any failure by the Company to
comply with its obligations under Section 2(a) and Section 2(b) hereof may
result in material irreparable injury to the Placement Agents or the Holders for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Placement Agents or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations under Section 2(a)
and Section 2(b) hereof.
3. Registration Procedures. In connection with the obligations of
the Company with respect to the Registration Statements pursuant to Section 2(a)
and Section 2(b) hereof, the Company shall as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the 1933 Act, which form (x) shall be selected by
the Company and (y) shall, in the case of a Shelf Registration, be
available for the sale of the Registrable Certificates by the selling
Holders thereof and (z) shall comply as to form in all material respects
with the requirements of the applicable form and include all financial
statements required by the SEC to be filed therewith, and use its best
efforts to cause such Registration Statement to become effective and
remain effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to (x) keep
such Registration Statement effective for the applicable period under this
Registration Rights Agreement, and (y) cause each Prospectus to be
supplemented by any required prospectus supplement and, as so
supplemented, to be filed pursuant to Rule 424 under the 1933 Act and (z)
keep each Prospectus current during the period described under Section
4(3) and Rule 174 under the 1933 Act that is applicable to transactions by
brokers or dealers with respect to the Registrable Certificates or
Exchange Certificates;
(c) in the case of a Shelf Registration, furnish to each Holder of
Registrable Certificates, to counsel for the Placement Agents, to counsel
for the Holders and to each Underwriter of an Underwritten Offering of
Registrable Certificates, if any, and each such
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Underwriter's Counsel, without charge, as many copies of each Prospectus,
including each preliminary Prospectus, and any amendment or supplement
thereto and such other documents as such Holder or Underwriter may
reasonably request, in order to facilitate the public sale or other
disposition of the Registrable Certificates; and the Company consents to
the use of such Prospectus and any amendment or supplement thereto in
accordance with applicable law by each of the selling Holders of
Registrable Certificates and any such Underwriters in connection with the
offering and sale of the Registrable Certificates covered by and in the
manner described in such Prospectus or any amendment or supplement thereto
in accordance with applicable law;
(d) use their best efforts to register or qualify the Registrable
Certificates under all applicable state securities or "blue sky" laws of
such jurisdictions as any Holder of Registrable Certificates covered by a
Registration Statement shall reasonably request in writing by the time the
applicable Registration Statement is declared effective by the SEC, to
cooperate with such Holders in connection with any filings required to be
made with the National Association of Securities Dealers, Inc. and do any
and all other acts and things which may be reasonably necessary or
advisable to enable such Holder to consummate the disposition in each such
jurisdiction of such Registrable Certificates owned by such Holder;
provided, however, that the Company shall not be required to (i) qualify
as a foreign corporation or as a dealer in securities in any jurisdiction
where it would not otherwise be required to qualify but for this Section
3(d), (ii) file any general consent to service of process or (iii) subject
itself to taxation in any such jurisdiction if it is not so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Certificates, counsel for the Holders and counsel for the
Placement Agents promptly and, if requested by any such Holder or counsel,
confirm such advice in writing, (i) when a Registration Statement has
become effective and when any post-effective amendment thereto has been
filed and become effective, (ii) of any request by the SEC or any state
securities authority for amendments and supplements to a Registration
Statement and Prospectus or for additional information, in each case after
the Registration Statement has become effective, (iii) of the issuance by
the SEC or any state securities authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose, (iv) if, between the effective date of a
Registration Statement and the closing of any sale of Registrable
Certificates covered thereby, the representations and warranties of the
Company contained in any underwriting agreement, securities sales
agreement or other similar agreement, if any, relating to such offering
cease to be true and correct in all material respects or if the Company
receives any notification with respect to the suspension of the
qualification of the Registrable Certificates for sale in any jurisdiction
or the initiation of any proceeding for such purpose, (v) of the happening
of any event during the period a Shelf Registration Statement is effective
which makes any statement made in such Registration Statement or the
related Prospectus untrue in any material respect or which requires the
making of any changes in
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<PAGE>
such Registration Statement or Prospectus in order to make the statements
therein not misleading, and (vi) of any determination by the Company that
a post-effective amendment to a Registration Statement would be
appropriate;
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the
earliest possible moment and provide immediate notice to each Holder of
the withdrawal of any such order;
(g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Certificates, without charge, at least one conformed copy of
each Registration Statement and any post-effective amendment thereto
(without documents incorporated therein by reference or exhibits thereto,
unless requested)
(h) in the case of a Shelf Registration, cooperate and cause the
Trustee to cooperate with the selling Holders of Registrable Certificates
to facilitate the timely preparation and delivery of certificates
representing Registrable Certificates to be sold and not bearing any
restrictive legends and enable such Registrable Certificates to be in such
denominations (consistent with the provisions of the Applicable Trust
Agreement) and registered in such names as the selling Holders may
reasonably request at least two business days prior to the closing of any
sale of Registrable Certificates;
(i) in the case of a Shelf Registration, upon the occurrence of any
event contemplated by Section 3(e)(v) hereof, use its best efforts to
prepare and file with the SEC a supplement or post-effective amendment to
a Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable
Certificates, such Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; the Company agrees to notify the Holders to suspend
use of the Prospectus as promptly as practicable after the occurrence of
such an event, and the Holders hereby agree to suspend use of the
Prospectus until the Company has amended or supplemented the Prospectus to
correct such misstatement or omission;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus
(other than filings pursuant to the 1934 Act) after initial filing of a
Registration Statement, provide copies of such document to the Placement
Agents and their counsel (and, in the case of a Shelf Registration
Statement, the Holders and their counsel) and make such of the
representatives of the Company as shall be reasonably requested by the
Placement Agents or their counsel (and, in the case of a Shelf
Registration Statement, the Holders or their counsel) available for
discussion of such document, and shall not at any time file or make any
amendment to the Registration
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Statement, any Prospectus or any amendment of or supplement to a
Registration Statement or a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus,
of which the Placement Agents and their counsel (and, in the case of a
Shelf Registration Statement, the Holders and their counsel) shall not
have previously been advised and furnished a copy or to which the
Placement Agents or their counsel (and, in the case of a Registration
Statement, the Holders or their counsel) shall object;
(k) obtain a CUSIP number for all Exchange Certificates or
Registrable Certificates, as the case may be, not later than the effective
date of a Registration Statement and provide the Trustees with printed
certificates evidencing the Exchange Certificates or the Registrable
Certificates, as the case may be, held in book entry form in a form
eligible for deposit with The Depository Trust Company;
(l) cause the Trust Agreements to be qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), in connection with the
registration of the Exchange Certificates or Registrable Certificates, as
the case may be, cooperate with the Trustees and the Holders to effect
such changes to the Trust Agreements as may be required for the Trust
Agreements to be so qualified in accordance with the terms of the TIA and
execute, and use its best efforts to cause the Trustees to execute, all
documents as may be required to effect such changes, and all other forms
and documents required to be filed with the SEC to enable the Trust
Agreements to be so qualified in a timely manner;
(m) in the case of a Shelf Registration, make available for
inspection by a representative of the Holders of the Registrable
Certificates, any Underwriter participating in any disposition pursuant to
such Shelf Registration Statement, and attorneys and accountants
designated by the Holders, at reasonable times and in a reasonable manner,
all financial and other records, pertinent documents and properties of the
Company, and cause the respective officers, directors and employees of the
Company to supply all information reasonably requested by any such
representative, Underwriter, attorney or accountant in connection with a
Shelf Registration Statement;
(n) in the case of a Shelf Registration, use its best efforts to
cause all Registrable Certificates to be listed on any securities exchange
or any automated quotation system on which similar securities issued by
the Company are then listed if requested by the Majority Holders, to the
extent such Registrable Certificates satisfy applicable listing
requirements;
(o) use its best efforts to cause the Exchange Certificates or
Registrable Certificates, as the case may be, to be rated by two
nationally recognized statistical rating organizations (as such term is
defined in Rule 436(g)(2) under the 1933 Act);
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<PAGE>
(p) if reasonably requested by any Holder of Registrable
Certificates covered by a Registration Statement, (i) promptly incorporate
in a Prospectus supplement or post-effective amendment such information
with respect to such Holder as such Holder reasonably requests to be
included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as the Company has
received satisfactory notification of the matters to be incorporated in
such filing; and
(q) in the case of a Shelf Registration, enter into such customary
agreements and take all such other actions in connection therewith
(including those requested by the Holders of a majority of the class of
Registrable Certificates being sold) in order to expedite or facilitate
the disposition of such Registrable Certificates including, but not
limited to, an Underwritten Offering and in such connection, (i) to the
extent possible, make such representations and warranties to the Holders
and any Underwriters of such Registrable Certificates with respect to the
business of the Company, the Registration Statement, Prospectus and
documents incorporated by reference or deemed incorporated by reference,
if any, in each case, in form, substance and scope as are customarily made
by issuers to underwriters in similar underwritten offerings and confirm
the same if and when requested, (ii) obtain an opinion of counsel to the
Company (which counsel and opinion, in form, scope and substance, shall be
reasonably satisfactory to the Holders and such Underwriters and their
respective counsel) addressed to each selling Holder and Underwriter of
Registrable Certificates, covering the matters customarily covered in
opinions requested in similar underwritten offerings, (iii) obtain "cold
comfort" letters from the independent certified public accountants of the
Company addressed to each selling Holder and Underwriter of Registrable
Certificates, such letters to be in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection with
underwritten offerings, and (iv) deliver such documents and certificates
as may be reasonably requested by the Holders of a majority in principal
amount of the Registrable Certificates being sold or the Underwriters, and
which are customarily delivered in underwritten offerings, to evidence the
continued validity of the representations and warranties of the Company
made pursuant to clause (i) above and to evidence compliance with any
customary conditions contained in an underwriting agreement.
In the case of a Shelf Registration Statement, the Company may
require each Holder of Registrable Certificates to furnish to the Company such
information regarding the Holder and the proposed distribution by such Holder of
such Registrable Certificates as the Company may from time to time reasonably
request in writing.
In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 3(e)(v) hereof, such Holder will forthwith
discontinue disposition of Registrable Certificates pursuant to a Shelf
Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof, and, if
so directed
15
<PAGE>
by the Company, such Holder will deliver to the Company (at its expense) all
copies in its possession, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Certificates current at
the time of receipt of such notice. If the disposition of Registrable
Certificates pursuant to a Shelf Registration Statement shall be suspended for
more than an aggregate of 60 days, whether or not consecutive, during any
12-month period, the interest rate per annum borne by the Certificates will be
increased by 0.50% from the 61st day of the applicable 12-month period until
such time as disposition of Registrable Certificates is no longer suspended. If
the Company shall give any such notice to suspend the disposition of Registrable
Certificates pursuant to a Registration Statement, the Company shall extend the
period during which the Registration Statement shall be maintained effective
pursuant to this Registration Rights Agreement by the number of days during the
period from and including the date of the giving of such notice to and including
the date when the Holders shall have received copies of the supplemented or
amended Prospectus necessary to resume such dispositions.
The Holders of Registrable Certificates covered by a Shelf
Registration Statement who desire to do so may sell such Registrable
Certificates in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers (the
"Underwriters") that will administer the offering will be selected by the
Majority Holders of the Registrable Certificates included in such offering.
4. Participation of Broker-Dealers in Exchange Offer. (a) The Staff
of the SEC has taken the position that any broker-dealer that receives Exchange
Certificates for its own account in the Exchange Offer in exchange for
Certificates that were acquired by such broker-dealer as a result of market
making or other trading activities (a "Participating Broker-Dealer") may be
deemed to be an "underwriter" within the meaning of the 1933 Act and must
deliver a prospectus meeting the requirements of the 1933 Act in connection with
any resale of such Exchange Certificates.
The Company understands that it is the Staff's position that if the
Prospectus contained in the Exchange Offer Registration Statement includes a
plan of distribution containing a statement to the above effect and the means by
which Participating Broker-Dealers may resell the Exchange Certificates, without
naming the Participating Broker-Dealers or specifying the amount of Exchange
Certificates owned by them, such Prospectus may be delivered by Participating
Broker-Dealers to satisfy their prospectus delivery obligation under the 1933
Act in connection with resales of Exchange Certificates for their own accounts,
so long as the Prospectus otherwise meets the requirements of the 1933 Act.
(b) In light of Section 4(a) above, notwithstanding the other
provisions of this Registration Rights Agreement, the Company agrees that the
provisions of this Registration Rights Agreement as they relate to a Shelf
Registration shall also apply to an Exchange Offer Registration to the extent,
and with such reasonable modifications thereto as may be reasonably requested by
the Placement Agents or by one or more Participating Broker-Dealers, in each
case
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as provided in clause (ii) below, in order to expedite or facilitate the
disposition of any Exchange Certificates by Participating Broker-Dealers
consistent with the positions of the Staff recited in Section 4(a) above;
provided that:
(i) the Company shall not be required to amend or supplement
the Prospectus contained in the Exchange Offer Registration
Statement, as would otherwise be contemplated by Section 3(i), for a
period exceeding 90 days after the last Exchange Date (as such
period may be extended pursuant to the penultimate paragraph of
Section 3 of this Agreement) and Participating Broker-Dealers shall
not be authorized by the Company to deliver and shall not deliver
such Prospectus after such period in connection with the resales
contemplated by this Section 4; and
(ii) the application of the Shelf Registration procedures set
forth in Section 3 of this Registration Rights Agreement to an
Exchange Offer Registration, to the extent not required by the
positions of the Staff of the SEC or the 1933 Act and the rules and
regulations thereunder, will be in conformity with the reasonable
request to the Company by the Placement Agents or with the
reasonable request in writing to the Company by one or more
broker-dealers who certify to the Placement Agents and the Company
in writing that they anticipate that they will be Participating
Broker-Dealers; provided that in connection with such application of
the Shelf Registration procedures set forth in Section 3 to an
Exchange Offer Registration, the Company shall be obligated (x) to
deal only with one entity representing the Participating
Broker-Dealers, which shall be Morgan Stanley & Co. Incorporated
unless it elects not to act as such representative, (y) to pay the
fees and expenses of only one counsel representing the Participating
Broker-Dealers, which shall be counsel to the Placement Agents
unless such counsel elects not to so act, and (z) to cause to be
delivered only one, if any, "cold comfort" letter with respect to
the Prospectus in the form existing on the last Exchange Date and
with respect to each subsequent amendment or supplement, if any,
effected during the period specified in clause (i) above.
(c) The Placement Agents shall have no liability to the Company or
any Holder with respect to any request that it may make pursuant to Section 4(b)
above.
5. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Placement Agent, each Holder and each person,
if any, who controls any Placement Agent or any Holder within the meaning of
either Section 15 of the 1933 Act or Section 20 of the 1934 Act, or is under
common control with, or is controlled by, any Placement Agent or any Holder,
from and against all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred by any Placement
Agent, any Holder 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
17
<PAGE>
fact contained in any Registration Statement (or any amendment thereto) pursuant
to which Exchange Certificates or Registrable Certificates were registered under
the 1933 Act, including all documents incorporated therein by reference, 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 any Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact necessary
to make the statements therein in light of the circumstances under which they
were made not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Placement
Agent or any Holder furnished to the Company in writing by such Placement Agent
or any selling Holder expressly for use therein; provided, however, that the
foregoing indemnity agreement with respect to any preliminary prospectus shall
not inure to the benefit of any Placement Agent from whom the person asserting
any such losses, claims, damages or liabilities purchased Certificates, or any
person controlling such Placement Agent, if a copy of the final Prospectus (as
then amended or supplemented if the Company shall have furnished any amendment
or supplements thereto) was not sent or given by or on behalf of such Placement
Agent to such person, if required by law so to have been delivered, at or prior
to the written confirmation of the sale of the Certificates to such person, and
if the final Prospectus (as so amended or supplemented) would have cured the
defect giving rise to such losses, claims, damages or liabilities, unless such
failure is the result of noncomplicance by the Company with Section 3 hereof. In
connection with any Underwritten Offering permitted by Section 3, the Company
will also indemnify the Underwriters, if any, selling brokers, dealers and
similar securities industry professionals participating in the distribution,
their officers and directors and each Person who controls such Persons (within
the meaning of the 1933 Act and the 1934 Act) to the same extent as provided
above with respect to the indemnification of the Holders, if requested in
connection with any Registration Statement.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, each Placement Agent and the other selling Holders,
and each of their respective directors, officers who sign the Registration
Statement and each Person, if any, who controls the Company, each Placement
Agent and any other selling Holder within the meaning of either Section 15 of
the 1933 Act or Section 20 of the 1934 Act to the same extent as the foregoing
indemnity from the Company to each Placement Agent and the Holders, but only
with reference to information relating to such Holder furnished to the Company
in writing by such Holder expressly for use in any Registration Statement (or
any amendment thereto) or any Prospectus (or any amendment or supplement
thereto).
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or paragraph (b) 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
18
<PAGE>
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 (a) the fees and expenses of more than one separate
firm (in addition to any local counsel) for the Placement Agents and all
persons, if any, who control any Placement Agent within the meaning of either
Section 15 of the 1933 Act or Section 20 of the 1934 Act, (b) the fees and
expenses of more than one separate firm (in addition to any local counsel) for
the Company, its directors, its officers who sign the Registration Statement and
each person, if any, who controls the Company within the meaning of either such
Section and (c) the fees and expenses of more than one separate firm (in
addition to any local counsel) for all Holders and all persons, if any, who
control any Holders within the meaning of either such Section, and that all such
fees and expenses shall be reimbursed as they are incurred. In such case
involving any Placement Agent and persons who control such Placement Agent, such
firm shall be designated in writing by Morgan Stanley & Co. Incorporated. In
such case involving the Holders and such persons who control Holders, such firm
shall be designated in writing by the Majority Holders. In all other cases, such
firm shall be designated by the Company. 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. 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 such 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.
(d) If the indemnification provided for in paragraph (a) or
paragraph (b) of this Section 4 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the indemnifying party or parties on the one hand and of the indemnified
party or parties on the other hand 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 fault of the
Company and the Holders 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 the
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<PAGE>
Company or by the Holders and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Holders' respective obligations to contribute pursuant to this Section 5(d)
are several in proportion to the respective number of Registrable Certificates
of such Holder that were registered pursuant to a Registration Statement.
(e) The Company and each Holder agree that it would not be just or
equitable if contribution pursuant to this Section 5 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages
and liabilities referred to in paragraph (d) 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 5, no Holder shall be required to indemnify or contribute any amount in
excess of the amount by which the total price at which Registrable Certificates
were sold by such Holder exceeds the amount of any damages that such Holder 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 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 5 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.
The indemnity and contribution provisions contained in this Section
5 shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Placement Agent, any Holder or any person controlling any Placement Agent or
any Holder, or by or on behalf of the Company, its officers or directors or any
person controlling the Company, (iii) acceptance of any of the Exchange
Certificates and (iv) any sale of Registrable Certificates pursuant to a Shelf
Registration Statement.
6. Miscellaneous. (a) No Inconsistent Agreements. The Company has
not entered into, and on or after the date of this Registration Rights Agreement
will not enter into, any agreement which is inconsistent with the rights granted
to the Holders of Registrable Certificates in this Registration Rights Agreement
or otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's other issued and outstanding
securities under any such agreements.
(b) Amendments and Waivers. The provisions of this Registration
Rights Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given unless the Company has obtained the written
consent of Holders of at least a majority in aggregate principal amount of the
outstanding Registrable Certificates affected by such
20
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amendment, modification, supplement, waiver or consent; provided, however, that
no amendment, modification, supplement, waiver or consent to any departure from
the provisions of Section 5 hereof shall be effective as against any Holder of
Registrable Certificates unless consented to in writing by such Holder.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 6(c), which address initially is, with respect to the Placement Agents,
the address set forth in the Purchase Agreement; and (ii) if to the Company,
initially at the Company's address set forth in the Purchase Agreement and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 6(c).
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications shall
be concurrently delivered by the person giving the same to each Trustee, at the
address specified in the Applicable Trust Agreement.
(d) Successors and Assigns. This Registration Rights Agreement shall
inure to the benefit of and be binding upon the successors, assigns and
transferees of each of the parties, including, without limitation and without
the need for an express assignment, subsequent Holders; provided that nothing
herein shall be deemed to permit any assignment, transfer or other disposition
of Registrable Certificates in violation of the terms of the Purchase Agreement
or the Trust Agreements. If any transferee of any Holder shall acquire
Registrable Certificates, in any manner, whether by operation of law or
otherwise, such Registrable Certificates shall be held subject to all of the
terms of this Registration Rights Agreement, and by taking and holding such
Registrable Certificates, such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Registration Rights Agreement and such Person shall be entitled to receive the
benefits hereof. The Placement Agents (in their capacity as Placement Agents)
shall have no liability or obligation to the Company with respect to any failure
by any other Holder to comply with, or any breach by any other Holder of, any of
the obligations of such other Holder under this Registration Rights Agreement.
(e) Purchases and Sales of Certificates. The Company shall not, and
shall use its best efforts to cause its affiliates (as defined in Rule 405 under
the 1933 Act), not to purchase and then resell or otherwise transfer any
Certificates.
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(f) Trustees. The Trustees shall take such action as may be
reasonably requested by the Company pursuant to Sections 2(a), 3(h), and 3(l)
hereof.
(g) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder and shall have the right to
enforce such agreements directly to the extent they deem such enforcement
necessary or advisable to protect their rights hereunder.
(h) Counterparts. This Registration Rights Agreement may be executed
in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
(i) Headings. The headings in this Registration Rights Agreement are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(j) Governing Law. This Registration Rights Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York
(k) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as of the date first written above.
MIDWAY AIRLINES CORPORATION
By /s/ Jonathan S. Waller
-----------------------------------
Name: Jonathan S. Waller
Title: Senior Vice President
General Counsel
THE FIRST NATIONAL BANK OF MARYLAND, not
in its individual capacity, but solely
as Trustee under each of the Trust
Agreements
By
-----------------------------------
Name: Robert D. Brown
Title: Assistrant Vice Pesident
Confirmed and accepted as of
the date first above written:
MORGAN STANLEY & CO. INCORPORATED
CREDIT SUISSE FIRST BOSTON
By Morgan Stanley & Co. Incorporated
By /s/ Tom Cahill
------------------------------------
Name: Tom Cahill
Title: Principal
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EXHIBIT B
Form of Opinion of
Fulbright & Jaworski L.L.P.
(i) No authorization, approval or other action by, and no notice to,
consent of, order of, or filing with, any United States Federal or New
York, governmental authority or regulatory body is required for the
consummation of the transactions contemplated by the Purchase Agreement,
except such as may be required under the blue sky laws of any jurisdiction
in connection with the purchase and distribution of the Certificates by
the Placement Agents and except for filings or recordings with the Federal
Aviation Administration and under the Uniform Commercial Code as in effect
in various jurisdictions, which filings or recordings shall have been
made, or duly presented for filing, on or prior to the respective Delivery
Date (as defined in the Note Purchase Agreement); the issuance and sale of
the Certificates to the Placement Agents pursuant to the Purchase
Agreement, the issuance of the Escrow Receipts attached to the
Certificates, the valid authorization, execution and delivery of the Pass
Through Trust Agreements and Note Purchase Agreement (the "Company Pass
Through Trust Documents") and the performance by the Company of its
respective obligations under the Company Pass Through Trust Documents do
not require the Company to obtain or effect any consent, approval,
authorization, registration or qualification of or with any governmental
agency or body of the United States or of the State of New York, except
such as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Certificates by the
Placement Agents;
(ii) The statements in the Final Memorandum under the caption "ERISA
Considerations" fairly summarize the matters therein described;
(iii) Assuming (i) the accuracy of the representations and
warranties of the Company and you set forth in the Purchase Agreement,
(ii) the due performance by the Company and you of the covenants and
agreements set forth in the Purchase Agreement, (iii) your compliance with
the offering and transfer procedures and restrictions described in the
Final Memorandum and (iv) the accuracy of the representations and
warranties made in accordance with the Purchase Agreement and the Final
Memorandum by purchasers to whom you initially resell the Certificates
(with attached Escrow Receipts), the offer, sale and delivery of the
Certificates (with attached Escrow Receipts) to you in the manner
contemplated by the Purchase Agreement and the Final Memorandum and the
initial resale of the Certificates (with attached Escrow Receipts) by you
in the manner contemplated in the Final Memorandum and the Purchase
Agreement, do not require registration under the Securities Act of 1933,
as amended, and the Pass Through Trust Agreements do not require
qualification under the Trust Indenture Act of 1939, as amended, it being
understood that no opinion is expressed as to any subsequent resale of any
Certificates;
<PAGE>
(iv) Neither the Company nor any of the Original Trusts is an
"investment company" within the meaning of the Investment Company Act of
1940, as amended (the "Investment Company Act"); as of the Successor Pass
Through Trust Effective Date, assuming that all facts and circumstances
relevant to such matter are the same as is the case on the date hereof,
none of the Successor Trusts will be an "investment company" within the
meaning of the Investment Company Act; and none of the Original Trusts or
Successor Trusts, after giving effect to the offering and sale of the
Certificates and the application of the proceeds thereof as described in
the Final Memorandum, will be an "investment company" as defined in the
Investment Company Act;
(v) The Purchase Agreement, the Registration Rights Agreement and
the Company Pass Through Trust Agreements constitute legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with each of their terms (subject to applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other
similar laws affecting creditors' rights generally from time to time in
effect and to general principles of equity, including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing,
regardless of whether such enforceability is considered in a proceeding in
equity or at law);
(vi) When each Successor Pass Through Trust Agreement becomes
effective in accordance with the terms of Section [___] of the related
successor Pass Through Trust Agreement (the "Successor Pass Through Trust
Effective Date"), the applicable conditions precedent set forth in Section
[___] of the corresponding Original Pass Through Trust Agreement and in
Section [___] of such Successor Pass Through Trust Agreement have been
satisfied and the related Assignment and Assumption Agreement has been
executed and delivered by each of the parties thereto, assuming that all
facts and circumstances relevant to such matter are the same as is the
case of the date hereof, each of the Certificates lawfully and validly
Outstanding (as such term is defined in the Original Pass Through Trust
Agreements) under the Original Pass Through Trust Agreement at such time
will be entitled to the benefits of such Successor Pass Through Trust
Agreement.
(vii) Assuming due authorization, execution and delivery of the Pass
Through Trust Agreements by the Trustee, each of the Successor Pass
Through Trust Agreements is a valid and biding obligation of the
applicable Successor Trustee enforceable against the applicable Successor
Trustee in accordance with its terms, in each case, enforceable in
accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
enforcement of creditors' rights generally and by general principles of
equity; when executed and delivered in accordance with the terms of the
Original Pass Through Trust Agreement and the Successor Pass Through Trust
Agreements and in the form of the applicable Form Assignment and
Assumption Agreement, properly completed, assuming that all facts and
circumstances relevant to such matter are the same as is the case on the
date hereof, each of the
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<PAGE>
assignment and assumption agreements contemplated under the Original Pass
Through Trust Agreements to be executed and delivered by the Trustees and
the Successor Trustees (collectively, the "Assignment and Assumption
Agreements") will be a valid and binding obligation of each of the parties
thereto enforceable against each of such parties in accordance with its
terms; each of the Escrow Agreements, the Deposit Agreements and the Note
Purchase Agreement is a valid and binding obligation of each Escrow Agent
that is a party thereto enforceable against each such Escrow Agent in
accordance with its terms; the Escrow Receipts are validly issued and
outstanding and are entitled to the benefits of the applicable Escrow
Agreement; each of the Escrow Agreements and the Note Purchase Agreement
is valid and binding obligation of the Paying Agent that is a party
thereto enforceable against such Paying Agent in accordance with its
terms;
(viii) The statements set forth under the headings "Summary",
"Description of the Certificates", "Description of the Deposit
Agreements", "Description of the Escrow Agreements", "Description of the
Liquidity Facilities", "Description of the Intercreditor
Agreement","Description of the Equipment Notes" and "Exchange Offer;
Registration Rights" in the Final Memorandum, insofar as such statements
purport to summarize certain provisions of the Certificates, the Pass
Through Trust Agreements, the Deposit Agreements, the Escrow Agreements,
the Escrow Receipts, the Liquidity Facilities, the Intercreditor
Agreement, the Equipment Notes and the forms of "Leased Aircraft
Indenture", "Leased Aircraft Participation Agreement", "Lease", "Owned
Aircraft Indenture", "Owned Aircraft Participation Agreement" and "Special
Indenture" attached to the Note Purchase Agreement (collectively, the
"Form Aircraft Financing Documents"), and the Registration Rights
Agreement, fairly summarize such provisions referred to therein; Section
1110 of the Bankruptcy Code conforms in all material respects to the
description thereof contained in "Description of the Equipment Notes -
Remedies" in the Final Memorandum; and the statements in the Final
Memorandum under the caption "Certain U.S. Federal Income Tax
Consequences" insofar as they purport to describe the material tax
consequences of an investment in the Certificates (with attached Escrow
Receipts) fairly summarize the matters therein described;
(ix) While there is no authority addressing the characterization of
entities that are similar to the Trusts in all material respects, each of
the Original Trusts should be classified as a grantor trust for U.S.
federal income tax purposes. If, as may be the case, the Original Trusts
are not classified as grantor trusts, they will be classified as
partnerships for U.S. federal income tax purposes and will not be
classified as publicly traded partnerships taxable as corporations,
provided that at least 90% of each such Original Trust's gross income for
each taxable year of its existence is "qualifying income" within the
meaning of the Section 7704(b) of the Internal Revenue Code of 1986, as
amended; each of the Successor Trusts will be classified as a grantor
trust for U.S. federal income tax purposes;
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<PAGE>
(x) Each of the Escrow Agreements creates a valid escrow under New
York law and a valid equitable interest in the escrowed property in favor
of the corresponding Trustee; neither a New York court nor a United States
Federal Court applying New York law or the U.S. Bankruptcy Code, if
properly presented with the issue and after having properly considered
such issue, would permit any holder of an Escrow Receipt to terminate the
related Escrow Agreement, except in accordance with its terms;
(xi) So long as an Escrow Agreement has not been terminated,
creditors of any person that is a holder of an Escrow Receipt thereunder
or holders of a lien against the assets of any such person, such as
trustees, receivers or liquidators (whether or not any insolvency
proceeding has been commenced) (collectively, the "Creditors"), may
acquire valid claims and liens, as to the Deposits established thereunder
and as to the related Deposit Agreement and Escrow Agreement, only against
the rights of the holder of such Escrow Receipt under such Escrow
Agreement, and do not have, and may not through the enforcement of such
Creditors' rights acquire, any greater right than the holder of such
Escrow Receipt with respect to such Deposits, Deposit Agreement or Escrow
Agreement;
(xii) No creditor of the Company or any of its subsidiaries, and no
holder of a lien against the assets of any such person, such a trustees,
receivers or liquidators (whether or not any insolvency proceeding has
been commenced), may acquire valid claims or liens as to the Deposits and
the related Deposit Agreements and Escrow Agreements;
and to such further effect with respect to other legal matters relating to the
Purchase Agreement, the Financing Agreements, the Pass Through Trust Agreements
and other Operative Documents and the sale of the Certificates thereunder as
counsel for the Placement Agents may reasonably request.
Such opinion shall also state that, in connection with the preparation of
the Final Memorandum, such counsel has participated in conferences with certain
officers of, and with the accountants and counsel for, the Company concerning
the preparation of the Final Memorandum. Such opinion may state that although
such counsel has made certain inquiries and investigations in connection with
the preparation of the Final Memorandum, the limitations inherent in the role of
outside counsel are such that such counsel cannot does not assume responsibility
for the accuracy or completeness of the statements made in the Final Memorandum,
except insofar as the statements relate to such counsel and except to the extent
set forth in paragraph (ii) of such counsel's opinion dated the date hereof.
Subject to the foregoing, such opinion shall state that such counsel advises the
Placement Agents that their work in connection with this matter did not disclose
any information that gave such counsel reason to the believe that the Final
Memorandum (except the financial statements and other information of a
statistical, accounting or financial nature included therein, as to which such
counsel does not express any view) as of its date or the date hereof, included
or includes an untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
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<PAGE>
In such opinion, such counsel may assume that each of the parties to each
of the applicable documents, other than the Company, has full power, authority
and legal right to enter into such documents and that each such document has
been duly authorized, executed and delivered by each of such parties. In
addition, such counsel may rely upon the opinion of counsel for the Company and
counsel for the Trustee and may state that their opinion is limited to matters
governed by the laws of the State of New York and the federal law of the United
States.
B-5
<PAGE>
EXHIBIT C
Form of Opinion of the General Counsel
of the Company
(i) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the state of its incorporation with
corporate power and authority under such laws to own, lease and operate
its properties and conduct its business as described in the Final
Memorandum and to perform its obligations under the Purchase Agreement,
the Pass Through Trust Agreements, the Note Purchase Agreement and the
Registration Rights Agreement;
(ii) The Company is duly qualified to transact business as a foreign
corporation and is in good standing in each other jurisdiction in which it
owns or leases property of a nature, or transacts business of a type, that
would make such qualification necessary, except to the extent that the
failure to so qualify or be in good standing would not have a Material
Adverse Effect;
(iii) The Company is a "citizen of the United States" (as defined in
Section 40102(a)(15) of Title 49 of the United States Code, as amended)
and is an air carrier operating under a 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. There is in force with respect to the
Company an air carrier operating certificate issued pursuant to Part 121
of the regulations under the Federal Aviation Act; [all of the outstanding
shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable and are owned by the
Company, free and clear of any pledge, lien, security interest, charge,
claim, equity or encumbrance of any kind];
(iv) No consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
valid authorization, issuance and delivery of the Certificates or the
Escrow Receipts, the valid authorization, execution, delivery and
performance by the Company of the Purchase Agreement, the Pass Through
Trust Agreements, the Note Purchase Agreement and the Registration Rights
Agreement (the "Subject Documents") or the consummation by the Company of
the transactions contemplated by such Subject Documents, except such as
may be required by the securities or blue sky laws of the various states
in connection with the offer and sale of the Certificates;
(v) The execution and delivery by the Company of the Subject
Documents, the issuance and sale of the Certificates (with attached Escrow
Receipts), the consummation by the Company of the transactions
contemplated in Subject Documents and compliance by the Company with the
terms thereof will not contravene (i) any provision of applicable
law, (ii) the certificate of incorporation or by-laws of the Company,
(iii) to such counsel's
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<PAGE>
knowledge, any agreement or other instrument binding upon the Company that
is material to the Company or (iv) to such counsel's knowledge, any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Company; assuming that all facts and circumstances
relevant to such matter are the same on the Successor Pass Through Trust
Effective Date as is the case on the date hereof, neither the execution
and delivery of the Assignment and Assumption Agreements on such Successor
Pass Through Trust Effective Date in accordance with the terms of the
Original Pass Through Trust Agreements and the Successor Pass Through
Trust Agreements and in the form of the applicable Form Assignment and
Assumption Agreement, nor the consummation by the parties thereto of the
transactions contemplated to be consummated thereunder on such Successor
Pass Through Trust Effective Date, will violate any law or governmental
rule or regulation applicable to the transactions contemplated by the
Assignment and Assumption Agreements;
(vi) The Subject Documents have each been duly authorized, executed
and delivered by the Company;
(vii) The sale of the Certificates (with the attached Escrow
Receipts) by the Company pursuant to the Purchase Agreement has been duly
authorized; and
(viii) There are no legal or governmental proceedings pending or
threatened to which the Company is a party or to which any of the
properties of the Company is subject other than proceedings accurately
described in all material respects in the Final Memorandum and proceedings
that would not have a Material Adverse Effect, or a Material Adverse
Effect on the power or ability of the Company to perform its obligations
under any Subject Document to which it is a party, or to consummate the
transactions contemplated by the Final Memorandum.
In addition, counsel shall state that such counsel or lawyers on his staff
have participated in the preparation of the Final Memorandum and nothing has
come to such counsel's attention that leads him to believe that the Final
Memorandum as of the date of the Purchase Agreement or at the Closing Date
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact necessary in order to make the statements therein in
the light of the circumstances under which they were made not misleading, except
that such counsel need express no opinion with respect to the financial
statements, schedules and other financial data included in the Final Memorandum.
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<PAGE>
EXHIBIT D
Form of Opinion of
Ober, Kaler, Grimes & Shriver
(i) The First National Bank of Maryland ("First National") is a
national banking association duly organized and validly existing in good
standing under the laws of the United States and, in its individual
capacity, or as Pass Through Trustee, Indenture Trustee [,Paying Agent] or
Subordination Agent, has the full corporate power and authority to
execute, deliver and perform its obligations under the Pass Through Trust
Agreements, the Intercreditor Agreement, the Note Purchase Agreement, the
Liquidity Facilities, and the Escrow Agreements (collectively, the
"Transaction Documents") [and First National is a "citizen of the United
States" as defined in 49 U.S.C. ss. 40102];
(ii) Each of the Transaction Documents has been duly authorized,
executed and delivered by First National, in its individual capacity, or
as Pass Through Trustee, Indenture Trustee [,Paying Agent] or
Subordination Agent, as the case may be, and constitutes the legal, valid
and binding obligation of First National, in its individual capacity, or
as Pass Through Trustee, Indenture Trustee [,Paying Agent], or
Subordination Agent, as the case may be, enforceable against First
National, in its individual capacity, or as Pass Through Trustee,
Indenture Trustee [,Paying Agent], or Subordination Agent, as the case may
be, in accordance with their respective terms; each of the Original Pass
Through Trust Agreements is a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms;
(iii) The Certificates to be issued and dated the Closing Date have
been duly authenticated and delivered by First National pursuant to the
terms of the Original Pass Through Trust Agreements;
(iv) The Certificates are the legal, valid and binding obligations
of the Original Trusts, enforceable against the Original Trusts in
accordance with their terms and the terms of the Original Pass Through
Trust Agreements and are entitled to the benefits of the related Pass
Through Trust Agreements; the Exchange Certificates when issued in
accordance with the terms of the Original Pass Through Trust Agreements
and the Registration Rights Agreement, will be entitled to the benefits
and security afforded by the Original Pass Through Trust Agreements in
accordance with the terms of the Original Pass Through Trust Agreements;
(v) The execution, delivery and performance by First National, in
its individual capacity, or as Pass Through Trustee or as Indenture
Trustee [,Paying Agent] or Subordination Agent, as the case may be, of the
Transaction Documents or the Certificates will not contravene (i) any
provision of applicable law of the United States or the State of Maryland
governing the banking or trust powers of First National, (ii) the
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<PAGE>
certificate of incorporation or by-laws of First National, (iii) to such
counsel's knowledge, any agreement or other instrument binding upon First
National or any of its subsidiaries that is material to First National and
its subsidiaries, taken as a whole, or (iv) to such counsel's knowledge,
any judgment, order or decree of any governmental body, agency or court
having jurisdiction over First National or any subsidiary;
(vi) No authorization, consent or approval of, notice to or order
of, or filing with, any governmental authority or agency of the United
States or the State of Maryland governing the banking or trust powers of
First National is required for the execution, delivery or performance by
First National, in its individual capacity, or as Pass Through Trustee,
Indenture Trustee [,Paying Agent] or Subordination Agent, as the case may
be, of the Transaction Documents or the Certificates;
(vii) Assuming that the Trusts will not be taxable as corporations,
but, rather, will be classified as grantor trusts under subpart E, Part I
of Subchapter J of (or as a partnership under) the United States Internal
Revenue Code of 1986, as amended, (i) the Trusts will not be subject to
any tax (including, without limitation, net or gross income, tangible or
intangible property, net worth, capital, franchise or doing business tax),
fee or other governmental charge under the laws of the State of Maryland
or any political subdivision thereof and (ii) Certificateholders that are
not residents of or otherwise subject to tax in Maryland will not be
subject to any tax (including, without limitation, net or gross income,
tangible or intangible property, net worth, capital, franchise or doing
business tax), fee or other governmental charge under the laws of the
State of Maryland or any political subdivision thereof as a result of
purchasing, holding (including receiving payments with respect to) or
selling an Certificate;
(viii) To such counsel's knowledge, there are no proceedings pending
or threatened against or affecting First National in any court or before
any governmental authority, agency, arbitration board or tribunal which,
if adversely determined, individually or in the aggregate, would
materially and adversely affect any Trust or question the right, power and
authority of First National, in its individual capacity, or as Pass
Through Trustee, Indenture Trustee, [Paying Agent] or Subordination Agent,
as the case may be, to enter into or perform its obligation under the
Transaction Documents; and
(ix) Each of the Equipment Notes to be delivered to and registered
in the name of the Subordination Agent pursuant to the Participation
Agreements shall be held by the Subordination Agent as the trustee of the
Trustee under each Trust on behalf of the Certificateholders of such
Trust.
D-2
EXECUTION COPY
MIDWAY AIRLINES CORPORATION
PURCHASE AGREEMENT
August 6, 1998
Morgan Stanley & Co. Incorporated
Credit Suisse First Boston
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036-8293
Dear Sirs and Mesdames:
Midway Airlines Corporation, a Delaware corporation (the "Company"),
in connection with the financing of eight (8) new Canadair Regional Jet Series
200-ER aircraft, proposes that The First National Bank of Maryland, as trustee
(the "Trustee"), issue and sell to the placement agents named in Schedule II
hereto its Pass Through Certificates, Series 1998-1 in the aggregate principal
amounts and with the interest rates and final distribution dates set forth on
Schedule I hereto (the "Certificates") on the terms and conditions stated
herein. As used herein, unless the context otherwise requires, the term
"Placement Agents" shall mean the firms named as Placement Agents in Schedule II
hereto, and the term "you" shall mean Morgan Stanley & Co. Incorporated.
The Certificates will be issued pursuant to four separate pass
through trust agreements each to be dated as of August 13, 1998 (collectively
the "Original Pass Through Trust Agreements") between the Company and the
Trustee. The Pass Through Trust Agreements are related to the creation and
administration of Midway Airlines Corporation Pass Through Trust Series
1998-1A-0 (the "Class A Trust"), Midway Airlines Corporation Pass Through Trust
Series 1998-1B-0 (the "Class B Trust"), Midway Airlines Corporation Pass Through
Trust Series 1998-1C-0 (the "Class C Trust") and Midway Airlines Corporation
Pass Through Trust Series 1998-1D-0 (the "Class D Trust"; and together with the
Class A Trust, the Class B Trust and Class C Trust, the "Original Trusts").
The cash proceeds of the offering of Certificates by each Original
Trust will be paid to First Union Trust Company, National Association, as escrow
agent (the "Escrow Agent"), under an Escrow and Paying Agent Agreement among the
Escrow Agent, the Placement Agents, the Trustee of such Original Trust and The
First National Bank of Maryland, as paying agent (the
<PAGE>
"Paying Agent"), for the benefit of the holders of Certificates issued by such
Original Trust (each, an "Escrow Agreement"). The Escrow Agent will deposit such
cash proceeds (each, a "Deposit") with First Union National Bank (the
"Depositary"), in accordance with a Deposit Agreement relating to such Original
Trust (each, a "Deposit Agreement"), and will withdraw Deposits upon request to
allow the Trustee to purchase Equipment Notes (as defined in the Note Purchase
Agreement referred to herein) referred to herein from time to time pursuant to a
Note Purchase Agreement to be dated as of the Closing Date (the "Note Purchase
Agreement") among the Company, The First National Bank of Maryland, as Trustee
of each of the Original Trusts, as Subordination Agent (as hereinafter defined)
and as Paying Agent, and the Escrow Agent. Each Escrow Agent will issue receipts
to be attached to each related Certificate ("Escrow Receipts") representing each
holder's fractional undivided interest in amounts deposited with such Escrow
Agent and will pay to such holders through the related Paying Agent interest
accrued on the Deposits and received by such Paying Agent pursuant to the
related Deposit Agreement at a rate per annum equal to the interest rate
applicable to the corresponding Certificates.
On the earlier of (i) the first Business Day after September 30,
1999, or, if later, the fifth Business Day after the Delivery Period Termination
Date (as defined in the Note Purchase Agreement) and (ii) the fifth Business Day
after the occurrence of a Triggering Event (as defined in the Intercreditor
Agreement) (such Business Day, the "Trust Transfer Date"), each of the Original
Trusts will transfer and assign all of its assets and rights to a newly-created
successor trust with substantially identical terms except as described in the
Offering Memorandum (as hereinafter defined) (each, a "Successor Trust" and,
together with the Original Trusts, the "Trusts") governed by four separate pass
through trust agreements, dated as of August 13, 1998, between the Company and
the Trustee, with respect to each series of Certificates (each, a "Successor
Pass Through Trust Agreement" and, together with the Original Pass Through Trust
Agreements, the "Designated Agreements"). Each Certificate outstanding on the
Trust Transfer Date will represent the same interest in the Successor Trust as
the Certificate represented in the Original Trust. The First National Bank of
Maryland initially will also act as trustee of the Successor Trusts (each, a
"Successor Trustee").
Certain amounts of interest payable on the 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. ABN AMRO
Bank, N.V., acting through its Chicago branch (the "Liquidity Provider"), will
enter into three separate revolving credit agreements (each, a "Liquidity
Facility") to be dated as of August 13, 1998 for the benefit of the holders of
the Certificates issued by the Class A Trust, the Class B Trust and the Class C
Trust, respectively. The Liquidity Provider and the holders of the Certificates
will be entitled to the benefits of an Intercreditor Agreement to be dated as of
August 13, 1998 (the "Intercreditor Agreement") among the Trusts, the First
National Bank of Maryland, as Subordination Agent (the "Subordination Agent"),
and the Liquidity Provider.
The Certificates will be offered without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance on
exemptions therefrom.
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<PAGE>
The Placement Agents and their direct and indirect transferees will
be entitled to the benefits of a Registration Rights Agreement (the
"Registration Rights Agreement"), to be dated the Closing Date (as defined
below) and to be substantially in the form attached hereto as Exhibit A,
pursuant to which the Company will file a registration statement (the
"Registration Statement") with the Securities and Exchange Commission (the
"Commission") registering the Exchange Certificates referred to in such
Registration Rights Agreement (the "Exchange Certificates") or the Certificates
under the Securities Act.
In connection with the sale of the Certificates, the Company has
prepared a preliminary offering memorandum (the "Preliminary Memorandum") and
will prepare a final offering memorandum (the "Final Memorandum" and, with the
Preliminary Memorandum, each a "Memorandum") setting forth or including a
description of the terms of the Certificates, the terms of the offering and a
description of the Company and its business. As used herein, the term
"Memorandum" shall include in each case the documents incorporated by reference
therein.
Capitalized terms not otherwise defined in this Agreement shall have
the meanings specified therefor in the Original Pass Through Trust Agreements or
in the Note Purchase Agreement or Intercreditor Agreement referred to in the
Designated Agreements; provided that, as used in this Agreement, the term
"Operative Documents" shall mean this Agreement, the Indentures, the Leases, the
Note Purchase Agreement, the Participation Agreements, the Designated
Agreements, the Deposit Agreements, the Escrow Agreements, and the Registration
Rights Agreement.
1. Representations and Warranties. The Company represents and
warrants to, and agrees with, you that as of the date hereof:
(a) The Preliminary Memorandum does not contain and the Final
Memorandum, in the form used by the Placement Agents to confirm sales and on the
Closing Date, will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading, except that the
representations and warranties set forth in this Section 1(a) do not apply to
statements or omissions in either Memorandum based upon information relating to
any Placement Agent furnished to the Company in writing by such Placement Agent
through Morgan Stanley & Co. Incorporated expressly for use therein.
(b) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and to
conduct its business as described in each Memorandum and to perform its
obligations under this Agreement and the Operative Documents to which it is, or
is to be, a party; and the Company is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification, except to the
extent that the failure
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<PAGE>
to be so qualified or be in good standing would not have a material adverse
effect on the Company (a "Material Adverse Effect").
(c) This Agreement has been duly authorized, executed and delivered
by the Company. The 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 or the applicable Transfer Date or Delivery Date, as the case may be.
(d) [Reserved]
(e) The Company has no subsidiaries.
(f) On or prior to the Closing Date, the issuance of the
Certificates will be duly authorized by the Trustee. When executed,
authenticated, issued and delivered in the manner provided for in the related
Original Pass Through Trust Agreement and sold and paid for as provided in this
Agreement, each of the Certificates will be valid and binding obligations of the
Trustee entitled to the benefits of the related Original Pass Through Trust
Agreement, enforceable against the Trustee in accordance with its terms, except
as limited by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally and general equitable principles (whether considered in a proceeding
in equity or at law). Based on applicable law as in effect on the date hereof,
upon the execution and delivery of the Assignment and Assumption Agreements in
accordance with the Original Pass Through Trust Agreements, the Certificates
will be legally and validly outstanding under the related Successor Pass Through
Trust Agreements, enforceable against the Trustee in accordance with their
terms, except as limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and general equitable principles (whether considered
in a proceeding in equity or at law). When executed, authenticated, issued and
delivered in the manner provided for in the Escrow Agreements, the Escrow
Receipts will be legally and validly issued and will be entitled to the benefits
of the related Escrow Agreements.
(g) [Reserved]
(h) The Operative Documents to which the Company is, or is to be, a
party, have each been duly authorized by the Company, are or will be
substantially in the form heretofore supplied to you and, when duly executed and
delivered by Company, will constitute valid and binding obligations of the
Company, except (i) as limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and general equitable principles (whether considered
in a proceeding in equity or at law) and (ii) in the case of each Lease, as
limited by applicable laws which may affect the remedies provided in such Lease,
which laws, however, do not make the remedies provided in such Lease inadequate
for the practical realization of the rights and benefits provided thereby. On
each Delivery Date, the related Leases and the other Operative Documents to
which the Company
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<PAGE>
is, or is to be, a party will constitute the valid and binding obligations of
the Company, except (i) as limited by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally and general equitable principles (whether
considered in a proceeding in equity or at law) and (ii) in the case of each
Lease, as limited by applicable laws which may affect the remedies provided in
such Lease, which laws, however, do not make the remedies provided in such Lease
inadequate for the practical realization of the rights and benefits provided
thereby. The Certificates, the Equipment Notes, the Indentures, the Leases and
the other Operative Documents to which the Company is, or is to be, a party will
conform in all material respects to the descriptions thereof in the Final
Memorandum
(i) The execution and delivery by the Company of this Agreement and
the Operative Documents to which the Company is, or is to be, a party, the
consummation by the Company of the transactions contemplated in this Agreement
and such Operative Documents, and compliance by the Company with the terms of
this Agreement and such Operative Documents will not contravene (i) any
provision of applicable law or the certificate of incorporation or by-laws of
the Company, (ii) any agreement or other instrument binding upon the Company or
(iii) any judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company other than, in the case of clauses (ii) and
(iii) above, such contraventions that would not individually or in the aggregate
have a Material Adverse Effect, and no consent, approval, authorization or order
of, or qualification with, any governmental body or agency is required for the
valid authorization, execution, delivery and performance by the Company of this
Agreement and the Operative Documents to which the Company is, or is to be, a
party, or the consummation by the Company of the transactions contemplated by
this Agreement and such Operative Documents, except (x) such as may be required
by the securities or Blue Sky laws of the various states in connection with the
offer and sale of the Certificates and the Equipment Notes, (y) such as may be
required under the Securities Act, the Trust Indenture Act or rules of the
National Association of Securities Dealers in connection with the registration
of the Certificates or the Exchange Certificates under the Securities Act
pursuant to the Registration Rights Agreement and (z) filings or recordings with
the Federal Aviation Administration (the "FAA") and under the Uniform Commercial
Code as in effect in North Carolina and Utah, which filings or recordings
referred to in this clause (z) shall have been made or obtained in connection
with the purchase of Equipment Notes relating to each Aircraft on or prior to
the Delivery Date for such Aircraft.
(j) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the condition,
financial or otherwise, or in the earnings, business or operations of the
Company from that set forth in the Preliminary Memorandum.
(k) There are no legal or governmental proceedings pending or, to
the best knowledge of the Company, threatened to which the Company is a party or
to which any of the properties of the Company is subject other than proceedings
accurately described in all material respects in each Memorandum and proceedings
that would not have a Material Adverse Effect or adversely affect the power or
ability of the Company to perform its obligations under this
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Agreement or any of the Operative Documents, to which it is, or is to be, a
party, or to consummate the transactions contemplated by the Final Memorandum.
(l) 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 Final Memorandum, except to
the extent that the failure to obtain such consents, authorizations, approvals,
orders, certificates and permits or make such declarations and filings would not
have a Material Adverse Effect on the Company. The Company has not received any
notice of proceedings relating to the revocation or modification of any such
consent, authorization, approval, order, certificate or permit which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a material adverse change in the condition, financial or
otherwise, or in the earnings, business or operations of the Company, except as
described in or contemplated by the Final Memorandum.
(m) Neither the Company nor any of the Original Trusts is, nor
(based on applicable law as in effect on the date hereof) will any of the
Successor Trusts be as of the execution and delivery of the Assignment and
Assumption Agreements in accordance with the Original Pass Through Trust
Agreements, an "investment company", within the meaning of the Investment
Company Act of 1940, as amended (the "Investment Company Act"); and after giving
effect to the offering and sale of the Certificates and the application of the
proceeds thereof as described in the Final Memorandum, neither the Original
Trusts will be, nor (based on applicable law as in effect on the date hereof)
will any of the Successor Trusts be as of the execution and delivery of the
Assignment and Assumption Agreements in accordance with the Original Pass
Through Trust Agreements, nor will the escrow arrangements contemplated by the
Escrow Agreements result in the creation of, an "investment company", as defined
in the Investment Company Act.
(n) The Company (i) is in compliance with any and all applicable
foreign, federal, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), (ii)
has received all permits, licenses or other approvals required of it under
applicable Environmental Laws to conduct its business and (iii) is in compliance
with all terms and conditions of any such permit, license or approval, except
where such noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the terms and
conditions of such permits, licenses or approvals would not, singly or in the
aggregate, have a Material Adverse Effect on the Company.
(o) There are no costs or liabilities associated with Environmental
Laws (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) for which
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<PAGE>
the Company is now liable which would, singly or in the aggregate, have a
Material Adverse Effect on the Company.
(p) 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 agreement or
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.
(q) Subsequent to the dates as of which information is given in each
of the Memorandum, (i) the Company has not incurred any material liability or
obligation, direct or contingent, nor entered into any material transaction not
in the ordinary course of business; (ii) the Company has not purchased any of
its outstanding capital stock, nor declared, paid or otherwise made any dividend
or distribution of any kind on its capital stock; and (iii) there has not been
any material change in the capital stock, short-term debt or long-term debt of
the Company except in each case as described in or contemplated by the Final
Memorandum.
(r) The Company has good and marketable title in fee simple to all
real property and good and marketable title to all personal property owned by it
which is material to the business of the Company, in each case free and clear of
all liens, encumbrances and defects except such as are described in the Final
Memorandum or such as do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of such property by the
Company; and any real property and buildings held under lease by the Company are
held by it under valid, subsisting and enforceable leases with such exceptions
as are not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company, in each case except as
described in or contemplated by the Final Memorandum.
(s) The Company owns or possesses, or can acquire on reasonable
terms, all material patents, patent rights, licenses, inventions, copyrights,
know-how (including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks and trade names currently employed by it in connection with the
business now operated by it, and the Company has not received any notice of
infringement of or conflict with asserted rights of others with respect to any
of the foregoing which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in any material adverse
change in the condition, financial or otherwise, or in the earnings, business or
operations of the Company.
(t) No material labor dispute with the employees of the Company
exists, except as described in or contemplated by the Final Memorandum, or, to
the knowledge of the Company, is imminent; and the Company is not aware of any
existing, threatened or imminent labor disturbance by the employees of any of
its principal suppliers, manufacturers or contractors
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<PAGE>
that could result in any material adverse change in the condition, financial or
otherwise, or in the earnings, business or operations of the Company.
(u) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D under the Securities Act, an "Affiliate") of the Company has
directly, or through any agent, (i) sold, offered for sale, solicited offers to
buy or otherwise negotiated in respect of, any security (as defined in the
Securities Act) which is or will be integrated with the sale of the Certificates
in a manner that would require the registration under the Securities Act of the
Certificates or (ii) engaged in any form of general solicitation or general
advertising in connection with the offering of the Certificates (as those terms
are used in Regulation D under the Securities Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities Act.
(v) None of the Company, its Affiliates or any person acting on its
or their behalf (other than the Placement Agents) has engaged in any directed
selling efforts (as that term is defined in Regulation S under the Securities
Act ("Regulation S")) with respect to the Certificates and the Company and its
Affiliates and any person acting on its or their behalf (other than the
Placement Agents) have complied with the offering restrictions requirement of
Regulation S.
(w) The Company is subject to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
(x) The Certificates satisfy the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(y) It is not necessary in connection with the offer, sale and
delivery of the Certificates to the Placement Agents in the manner contemplated
by this Agreement to register the Certificates under the Securities Act or to
qualify any of the Indentures or the Designated Agreements under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
(z) The accountants that examined and issued an auditors report with
respect to the financial statements of the Company included in the Final
Memorandum are independent public accountants within the meaning of the
Securities Act and the regulations thereunder.
(aa) The financial statements included in the Final Memorandum
present fairly the financial position of the Company as of the dates indicated
and the results of operations and cash flows or changes in financial position of
the Company for the periods specified. Such financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis throughout the periods involved. The financial statement
schedules, if any, included in the Final Memorandum present fairly the
information required to be stated therein.
8
<PAGE>
(bb) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the businesses in which it is engaged; the Company has not been
refused any insurance coverage sought or applied for; and the Company has no
reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would not materially and adversely affect the condition, financial or otherwise,
or the earnings, business or operations of the Company, except as described in
or contemplated by the Final Memorandum.
(cc) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in
accordance with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(dd) The Company has no customer sales which account for ten percent
or more of the Company's revenues.
(ee) The Company is a "citizen of the United States" (as defined in
Section 40102(a)(15) of Title 49 of the United States Code, as amended) and is
an air carrier operating under a certificate of public convenience and necessity
issued by the Secretary of Transportation pursuant to Section 41102 of Title 49,
United States Code. There is in force with respect to the Company an air carrier
operating certificate issued by the Federal Aviation Administration pursuant to
14 C.F.R. Part 119.
(ff) No Appraiser is an affiliate of the Company or, to the
knowledge of the Company, has a substantial interest, direct or indirect, in the
Company. To the knowledge of the Company, 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.
The representations and warranties contained in this Agreement shall
be true and correct as of the date of this Agreement and as of the Closing Date.
2. Offering. The Placement Agents have advised the Company that the
Placement Agents will make an offering of the Certificates purchased by the
Placement Agents hereunder on the terms to be set forth in the Final Memorandum
as soon as practicable after this Agreement is entered into as in your judgment
is advisable.
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<PAGE>
3. Purchase and Delivery. The Company hereby agrees to cause the
Trustee to sell to the several Placement Agents, and the Placement Agents, upon
the basis of the representations and warranties herein contained, but subject to
the conditions hereinafter stated, agree, severally and not jointly, to purchase
from the Trustee the principal amount of Certificates set forth in Schedule II
hereto opposite their names at a purchase price of 100% of the principal amount
thereof. Concurrently with the issuance of the Certificates, the Escrow Agents
shall issue and deliver to the Trustees the Escrow Receipts in accordance with
the terms of the Escrow Agreements, which Escrow Receipts shall be attached to
the related Certificates. Payment for the Certificates (with attached Escrow
Receipts) shall be made against delivery of the Certificates (with attached
Escrow Receipts) at a closing (the "Closing") to be held at the office of
Fulbright & Jaworski L.L.P., 666 Fifth Avenue, New York, New York, at 10:00
A.M., local time, on August 13, 1998, or at such other time on the same or such
other date, not later than August 20, 1998, as shall be designated in writing by
you (such date of Closing being the "Closing Date"). The time and date of such
payment are herein referred to as the Closing Date. Delivery of the Certificates
(with attached Escrow Receipts) shall be made to your respective accounts at The
Depository Trust Company against payment by the Placement Agents of the purchase
price thereof to or upon the order of the Trustee by wire transfer. The
Certificates (with attached Escrow Receipts) shall be in definitive or global
form and registered in the name of Cede & Co. or in such other names, and in
such denominations as you may request in writing at least one full business day
in advance of the Closing Date in definitive or global form. The Company agrees
to have the Certificates (with attached Escrow Receipts) available for
inspection, checking and packaging by you in New York, New York not later than
1:00 P.M. on the business day prior to the Closing Date.
As compensation to the Placement Agents for their commitments and
obligations hereunder in respect of the Certificates, including their
undertakings to distribute the Certificates, the Company will pay to each
Placement Agent an amount equal to that percentage of the aggregate principal
amount of Certificates purchased by it as set forth in Schedule B. Such payment
shall be made on the Closing Date simultaneously with the issuance and sale of
the Certificates (with attached Escrow Receipts) to the Placement Agents and
shall be made by Federal funds check or other immediately available funds.
4. Conditions to Closing. The several obligations of the Placement
Agents under this Agreement to purchase the Certificates will be subject to the
following conditions:
(a) Subsequent to the date of this Agreement and prior to the
Closing Date,
(i) 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,
including the Certificates, by any "nationally recognized statistical
rating organization," as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and
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<PAGE>
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or otherwise,
or in the earnings, business or operations, of the Company from that set
forth in the Preliminary Memorandum that, in your judgment, is material
and adverse and that makes it, in your judgment, impracticable to market
the Certificates on the terms and in the manner contemplated in the Final
Memorandum.
(b) You shall have received on the Closing Date a certificate, dated
the Closing Date and signed by an executive officer of the Company, to the
effect set forth in clause (a)(i) above and to the effect that the
representations and warranties of the Company contained in this Agreement are
true and correct as of the Closing Date and that the Company has complied with
all of the agreements and satisfied all of the conditions on its part to be
performed or satisfied on or before the Closing Date.
The officer signing and delivering such certificate may rely upon
the best of his knowledge as to proceedings threatened.
(c) You shall have received on the Closing Date (i) an opinion of
Fulbright & Jaworski L.L.P., independent counsel for the Company, dated the
Closing Date, to the effect set forth in Exhibit B, (ii) an opinion of General
Counsel of the Company, dated the Closing Date, to the effect set forth in
Exhibit C, (iii) an opinion of Ober, Kaler, Grimes and Shriver, independent
counsel for the Trustee and Paying Agent, dated the Closing Date, to the effect
set forth in Exhibit D, (iv) an opinion of Morris, James, Hitchens & Williams,
counsel for the Escrow Agent, dated the Closing Date, to the effect set forth in
Exhibit E and (v) an opinion of Rogers & Wells, counsel for the Depositary,
dated the Closing Date, to the effect set forth in Exhibit F.
(d) You shall have received on the Closing Date an opinion of
Shearman & Sterling, counsel for the Placement Agents, dated the Closing Date,
in form and substance satisfactory to you.
(e) You shall have received on each of the date hereof and the
Closing Date a letter, dated the date hereof or the Closing Date, as the case
may be, in form and substance satisfactory to you, from Ernst & Young L.L.P.,
the Company's independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort letters" to
underwriters with respect to the financial statements and certain financial
information contained in or incorporated by reference into the Final Memorandum.
(f) The Company shall have furnished to you and to counsel for the
Placement Agents, in form and substance satisfactory to you, such other
documents, certificates and opinions as such counsel may reasonably request in
order to pass upon the matters referred to in Section 4(d) and in order to
evidence the accuracy and completeness of any of the representations,
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<PAGE>
warranties or statements, the performance of any covenant by the Company
theretofore to be performed, or the compliance with any of the conditions herein
contained.
(g) Each of the Appraisers shall have furnished to you a letter from
such Appraiser, addressed to the Company and dated the Closing Date, confirming
that such Appraiser and each of its directors and officers (i) is not an
affiliate of the Company or any of its affiliates, (ii) does not have any
substantial interest, direct or indirect, in the Company or any of its
affiliates, (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 and (iv) is undertaking to provide its
consent to the use of its appraisal in the Registration Statement.
(h) At the Closing Date, each of the Operative Documents (other than
the Indentures, Leases and Participation Agreements) shall have been duly
executed and delivered by each of the parties thereto; the representations and
warranties of the Company contained in each of such executed Operative Documents
shall be true and correct as of the Closing Date (except to the extent that they
relate solely to an earlier date in which case they shall be true and correct as
of such earlier date) and you shall have received a certificate of a Vice
President of the Company, dated as of the Closing Date, to such effect.
(i) On the Closing Date, the Certificates shall be rated "A-" in the
case of the Certificates of the Class A Trust, "BBB-" in the case of the
Certificates of the Class B Trust, "BB-" in the case of the Certificates of the
Class C Trust and "B" in the case of the Certificates of the Class D Trust, by
Standard & Poor's Ratings Group; and "Baa1" in the case of the Certificates of
the Class A Trust, "Ba1" in the case of the Certificates of the Class B Trust,
"Ba3" in the case of the Certificates of the Class C Trust and "B2" in the case
of the Certificates of the Class D Trust by Moody's Investors Service, Inc.
(j) At the Closing Date, the Registration Rights Agreement, attached
as Exhibit A hereto, shall have been duly executed and delivered and be in full
force and effect.
5. Covenants of the Company. In further consideration of the
agreements of the Placement Agents contained in this Agreement, the Company
covenants as follows:
(a) To furnish to you, without charge, during the period mentioned
in paragraph (c) below, as many copies of the Final Memorandum and any
supplements and amendments thereto as you may reasonably request and to
use its best efforts to deliver such copies to you by 5 p.m. (New York
time) or the business day next following the execution of this Agreement.
(b) Before amending or supplementing either Memorandum, to furnish
to you a copy of each such proposed amendment or supplement and not to use
any such proposed amendment or supplement to which you reasonably object.
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<PAGE>
(c) If, during such period after the date hereof and prior to the
Closing Date, any event shall occur or condition exist as a result of
which it is necessary in your judgment to amend or supplement the Final
Memorandum in order to make the statements therein, in the light of the
circumstances when such Memorandum is delivered to a purchaser, not
misleading, or if, with the opinion of counsel to the Placement Agents it
is necessary to amend or supplement such Memorandum to comply with
applicable law, forthwith to prepare and furnish, at their own expense, to
the Placement Agents, either amendments or supplements to such Memorandum
so that the statements in such Memorandum as so amended or supplemented
will not, in the light of the circumstances when such Memorandum is
delivered to a purchaser, be misleading or so that such Memorandum, as so
amended or supplemented, will comply with applicable law.
(d) To endeavor to qualify the Certificates for offer and sale under
the securities or Blue Sky laws of such jurisdictions as you shall
reasonably request.
(e) The Company agrees to furnish to the Placement Agents, promptly
after the applicable Delivery Date (as defined in the applicable
Participation Agreement), a copy of each opinion required to be delivered
under the applicable Participation Agreement addressed to the Placement
Agents and of such other documents furnished in connection with the
fulfillment of the conditions precedent therein as the Placement Agents or
counsel for the Placement Agents may reasonably request.
(f) Whether or not any sale of such Certificates is consummated, to
pay all expenses incident to the performance of their obligations under
this Agreement, including: (i) the preparation of each Memorandum and all
amendments and supplements thereto, (ii) the preparation, issuance and
delivery of the Certificates, (iii) the fees and disbursements of the
Company's counsel and accountants and the Indenture Trustee, the
Subordination Agent, the Escrow Agent, the Depositary, the Trustees and
their counsel, (iv) the qualification of such Certificates under
securities or Blue Sky laws in accordance with the provisions of Section
5(d), including filing fees and the fees and disbursements of counsel for
the Placement Agents in connection therewith and in connection with the
preparation of any Blue Sky or legal investment memoranda, (v) the
printing and delivery to the Placement Agents in quantities as hereinabove
stated of copies of the Memorandum and any amendments or supplements
thereto, (vi) any fees charged by rating agencies for the rating of such
Certificates, (vii) all document production charges and expenses of
counsel to the Placement Agents (but not including their fees for
professional services) in connection with the preparation of this
Agreement, (viii) the fees and expenses, if any, incurred in connection
with the admission of such Certificates for trading in PORTAL or any other
appropriate market system, (ix) the costs and expenses of the Company
relating to investor presentations on any "road show" undertaken in
connection with the marketing of the Certificates, including, without
limitation, expenses associated with the production of road show slides
and graphics, fees and expenses of any consultants engaged in connection
with the road show presentations with the prior approval of the Company,
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<PAGE>
travel and lodging expense of the representatives and officers of the
Company and any such consultants, and the cost of any aircraft chartered
in connection with the road show, and (x) all other costs and expenses
incident to the performance of the obligations of the Company hereunder
for which provision is not otherwise made in this Section.
(g) Neither the Company nor any Affiliate will sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any security
(as defined in the Securities Act) which could be integrated with the sale
of the Certificates in a manner which would require the registration under
the Securities Act of such Certificates.
(h) Not to solicit any offer to buy or offer or sell the
Certificates by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities
Act) or in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act.
(i) While any of the Certificates remain outstanding, to make
available, upon request, to any seller of such Certificates the
information specified in Rule 144A(d)(4) under the Securities Act, unless
the Company is then subject to Section 13 or 15(d) of the Exchange Act.
(j) None of the Company, its Affiliates or any person acting on its
or their behalf (other than the Placement Agents) will engage in any
directed selling efforts (as that term is defined in Regulation S) with
respect to the Certificates, and the Company and their Affiliates and each
person acting on its or their behalf (other than the Placement Agents)
will comply with the offering restrictions of Regulation S.
(k) For a period of five years after the Closing Date, upon request,
to make available to the Placement Agents, copies of all annual reports,
quarterly reports and current reports filed by the Company with the
Securities and Exchange Commission (the "Commission") on Forms 10-K, 10-Q
and 8-K, or such other similar forms as may be designated by the
Commission, and such other documents, reports and information as shall be
furnished by the Company to the holders of Certificates or the Company to
its security holders generally.
(l) During the period of two years after the Closing Date, upon
request, to furnish to the Placement Agent and any holder of Offered
Certificates a copy of the restrictions on transfer applicable to the
Offered Certificates.
(m) During the period of two years after the Closing Date, not to,
and not to permit any of its Affiliates to, resell any of the Offered
Certificates that have been reacquired by any of them.
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<PAGE>
(n) During the period of two years after the Closing Date, not to
become an open-end investment company, unit investment trust or
face-amount certificate company that is or is required to be registered
under Section 8 of the Investment Company Act, or a closed-end investment
company required to be registered, but not registered, under the
Investment Company Act.
(o) In connection with the offering, until the Placement Agents
shall have notified the Company of the completion of the resale of the
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 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
Certificates.
(p) Between the date of this Agreement and the Closing Date, the
Company will not without your prior written consent offer, sell, or enter
into any agreement to sell, any public debt securities registered under
the Securities Act or any debt securities which may be resold in a
transaction exempt from the registration requirements of the Securities
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
Securities Act (other than the Certificates).
(q) If requested by you, to use its best efforts to permit the
Certificates to be designated PORTAL securities in accordance with the
rules and regulations adopted by the National Association of Securities
Dealers, Inc. relating to trading in the PORTAL Market; unless so
requested by you, the Company will not take any action to permit the
Certificates to be designated PORTAL securities without your prior
consent, which shall not be unreasonably withheld.
6. Offering of Certificates; Restrictions on Transfer. (a) Each
Placement Agent, severally and not jointly, represents and warrants that such
Placement Agent is a qualified institutional buyer as defined in Rule 144A under
the Securities Act (a "QIB"). Each Placement Agent, severally and not jointly,
agrees with the Company that (i) it will not solicit offers for, or offer or
sell, such Certificates by any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act and (ii) it will solicit offers for such Certificates only
from, and will offer such Certificates only to, persons that it reasonably
believes to be (A) in the case of offers inside the United States, (x) QIBs or
(y) other institutional accredited investors (as defined in Rule 501(a) (1),
(2), (3) or (7) under the Securities Act) ("institutional accredited investors")
that, prior to their purchase of the Certificates, deliver to such Placement
Agent a letter containing the representations and agreements set forth in Annex
III to the Final Memorandum and (B) in the case of offers outside the United
States, to persons other than U.S. persons ("foreign purchasers", which term
shall include dealers or other
15
<PAGE>
professional fiduciaries in the United States acting on a discretionary basis
for foreign beneficial owners (other than an estate or trust)) that, in each
case, in purchasing such Certificates are deemed to have represented and agreed
as provided in the Final Memorandum under the caption "Transfer Restrictions."
(b) Each Placement Agent, severally and not jointly, represents,
warrants, and agrees with respect to offers and sales outside the United States
that:
(i) it understands that no action has been or will be taken in any
jurisdiction by the Company that would permit a public offering of the
Certificates, or possession or distribution of either Memorandum or any
other offering or publicity material relating to the Certificates, in any
country or jurisdiction where action for that purpose is required;
(ii) such Placement Agent will comply with all applicable laws and
regulations in each jurisdiction in which it acquires, offers, sells or
delivers Certificates or has in its possession or distributes either
Memorandum or any such other material, in all cases at its own expense;
(iii) the Certificates have not been and will not be registered
under the Securities Act and may not be offered or sold within the United
States or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S under the Securities Act or pursuant to an
exemption from the registration requirements of the Securities Act;
(iv) such Placement Agent has offered the Certificates and will
offer and sell the Certificates (A) as part of its distribution at any
time and (B) otherwise until 40 days after the later of the commencement
of the offering of the Certificates and the Closing Date, only in
accordance with Rule 903 of Regulation S or another exemption from the
registration requirements of the Securities Act. Accordingly, neither such
Placement Agent, its Affiliates nor any persons acting on its or their
behalf have engaged or will engage in any directed selling efforts (within
the meaning of Regulation S) with respect to the Certificates, and any
such Placement Agent, its Affiliates and any such persons have complied
and will comply with the offering restrictions requirements of Regulation
S;
(v) such Placement Agent (A) has not offered or sold and will not
offer or sell any Certificates to persons in the United Kingdom prior to
the expiring of the period six months from the issue date of the
Certificates except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or
agent) for the purposes of their businesses or otherwise in circumstances
which have not resulted and will not result in an offer to the public in
the United Kingdom within the meaning of the Public Offers of Securities
Regulations 1995 (the "Regulations"); (B) has complied and will comply
with all applicable provisions of the Financial Services Act 1986 and the
Regulations with respect to anything done by it in relation to the
Certificates in,
16
<PAGE>
from or otherwise involving the United Kingdom; and (C) has only issued or
passed on and will only issue or pass on in the United Kingdom any
document received by it in connection with the issue of the Certificates
to a person who is of a kind described in Article 11(3) of the Financial
Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or
is a person to whom such document may otherwise lawfully be issued or
passed on; and
(vi) such Placement Agent understands that the Certificates have not
been and will not be registered under the Securities and Exchange Law of
Japan, and represents that it has not offered or sold, and agrees that it
will not offer or sell, any Certificates, directly or indirectly in Japan
or to any resident of Japan except (A) pursuant to an exemption from the
registration requirements of the Securities and Exchange Law of Japan and
(B) in compliance with any other applicable requirements of Japanese law.
Terms used in this Section 6 have the meanings given to them by Regulation S.
7. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Placement Agent, and each person, if any, who
controls such Placement Agent within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, or is under common control
with, or is controlled by, such Placement Agent, from and against any and all
losses, claims, damages and liabilities (including, without limitation, any
legal or other expenses reasonably incurred by any Placement Agent 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 either Memorandum (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated or necessary to make the statements therein
not misleading, except insofar as such losses, claims, damages or liabilities
are caused by any such untrue statement or omission or alleged untrue statement
or omission based upon information relating to any Placement Agent furnished to
the Company in writing by such Placement Agent through Morgan Stanley & Co.
Incorporated expressly for use therein; provided, however, that the foregoing
indemnity agreement with respect to any Preliminary Memorandum shall not inure
to the benefit of any Placement Agent from whom the person asserting any such
losses, claims, damages or liabilities purchased Certificates, or any person
controlling such Placement Agent, if a copy of the Final Memorandum (as then
amended or supplemented if the Company shall have furnished any amendment or
supplements thereto) was not sent or given by or on behalf of such Placement
Agent to such person, if required by law so to have been delivered, at or prior
to the written confirmation of the sale of the Certificates to such person, and
if the Final Memorandum (as so amended or supplemented) would have cured the
defect giving rise to such losses, claims, damages from liabilities, unless such
failure is the result of noncomplicance by the Company with Section 5(a) hereof.
17
<PAGE>
(b) Each Placement Agent agrees, severally and not jointly, to
indemnify and hold harmless the Company, each of its directors, its officers and
each person, if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act from and
against any and all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred 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 either
Memorandum, 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, but only with reference to information relating to any
Placement Agent furnished to the Company in writing by such Placement Agent
through Morgan Stanley & Co. Incorporated expressly for use in either
Memorandum.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or (b) 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 respect of the legal expenses of an indemnified party 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 Morgan Stanley & Co. Incorporated in the case of
parties indemnified pursuant to paragraph (a) above and by the Company in the
case of parties indemnified pursuant to paragraph (b) 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. 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.
18
<PAGE>
(d) To the extent the indemnification provided for in paragraph (a)
or (b) of this Section 7 is unavailable to an indemnified party or insufficient
in respect of any losses, claims, damages or liabilities, then each indemnifying
party under such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Placement Agents, on the other hand, from the
offering of such 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 the Company on the one hand and the Placement Agents
on the other hand 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 on the
one hand and the Placement Agents on the other hand in connection with the
offering of such Certificates shall be deemed to be in the same respective
proportions as the net proceeds from the offering of such Certificates (before
deducting expenses) received by the Trusts and the total discounts and
commissions received by the Placement Agents in respect thereof bear to the
aggregate offering price of such Certificates. The relative fault of the Company
on the one hand and of the Placement Agents on the other hand 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 the Company or by the
Placement Agents and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
(e) The Company and the Placement Agents agree that it would not be
just or equitable if contribution pursuant to this Section 7 were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in paragraph (d) above. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in paragraph (d) 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 7, no Placement Agent shall be required to contribute
any amount in excess of the amount by which the total price at which the
Certificates resold by it in the initial placement of such Certificates were
offered to investors exceeds the amount of any damages that such Placement Agent
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 Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The indemnity and contribution provisions
contained in this Section 7 and the representations and warranties of the
Company contained in this Agreement 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 Placement Agents or any person
controlling any Placement Agent or by or on behalf of the Company, its officers
or directors or any person controlling the Company and (iii) acceptance of and
payment for any of the Certificates. The remedies provided for in this
19
<PAGE>
Section 7 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.
8. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a)(i) through (iv), such event singly or
together with any other such event makes it, in your judgment, impracticable to
market the Certificates on the terms and in the manner contemplated in the Final
Memorandum. If this Agreement is terminated by the Placement Agents in
accordance with the provisions of this Section 8, the Company shall reimburse
the Placement Agents for all their reasonable out-of-pocket expenses, including
the fees and disbursements of counsel for the Placement Agents.
9. Default by a Placement Agent. If, on the Closing Date, any one or
more of the Placement Agents shall fail or refuse to purchase Certificates that
it or they have agreed to purchase hereunder on such date, and the aggregate
principal amount of Certificates which such defaulting Placement Agent or
Placement Agents agreed but failed or refused to purchase is not more than
one-tenth of the aggregate principal amount of Certificates to be purchased on
such date, the non-defaulting Placement Agent shall be obligated to purchase the
Certificates that such defaulting Placement Agent has agreed but failed or
refused to purchase on such date; provided that in no event shall the principal
amount of Certificates that any Placement Agent has agreed to purchase pursuant
to this Agreement be increased pursuant to this Section 9 by an amount in excess
of one-ninth of such principal amount of Certificates without the written
consent of such Placement Agent. If, on the Closing Date any Placement Agent or
Placement Agents shall fail or refuse to purchase Certificates which it or they
have agreed to purchase hereunder on such date and the aggregate principal
amount of Certificates with respect to which such default occurs is more than
one-tenth of the aggregate principal amount of Certificates to be purchased on
such date, and arrangements satisfactory to you and the Company for the purchase
of such Certificates are not made within 36 hours after such default, this
Agreement shall terminate without liability on the part of any non-defaulting
Placement Agent or the Company. In any such case either you or the Company shall
have the right to postpone the Closing Date, but in no event for longer than
seven days, in order that the required changes, if any, in the Final Memorandum
or in any other documents or arrangements may be effected. Any action taken
under this paragraph shall not relieve any defaulting Placement Agent from
liability in respect of any default of such Placement Agent under this
Agreement.
20
<PAGE>
10. Notices. All notices and other communications under this
Agreement shall be in writing, and, if sent to the Placement Agents, shall be
mailed, delivered or sent by facsimile transmission to:
Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attention: Bruce Paone
Facsimile number: (212) 761-0786
or, if sent to the Company, will be mailed, delivered or sent by facsimile
transmission to it at:
Midway Airlines Corporation
300 W. Morgan Street, Suite 1200
Durham, North Carolina 27701
Attention: Jonathan S. Waller
Facsimile number: (919) 956-7568
with a copy to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10023
Attention: William C. Clark, Esq.
Facsimile number: (212) 752-5958
11. Miscellaneous. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
If this Agreement shall be terminated by the Placement Agents, or
any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company shall be unable to perform its obligations under
this Agreement, the Company will reimburse the Placement Agents or such
Placement Agents as have so terminated this Agreement with respect to
themselves, severally, for all out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by such Placement Agents in
connection with this Agreement or the offering contemplated hereunder.
This Agreement shall be governed by and construed in accordance with
the internal laws of the State of New York.
The headings of the sections of this Agreement have been inserted
for convenience of reference only and shall not be deemed a part of this
Agreement.
21
<PAGE>
Please confirm your agreement to the foregoing by signing in the
space provided below for that purpose and returning to us a copy hereof,
whereupon this Agreement shall constitute a binding agreement between us.
Very truly yours,
MIDWAY AIRLINES CORPORATION
By /s/Jonathan S. Waller
------------------------------------
Name: Jonathan S. Waller
Title: Senior Vice President
General Counsel
Agreed, August 6, 1998
MORGAN STANLEY & CO. INCORPORATED
CREDIT SUISSE FIRST BOSTON
By Morgan Stanley & Co. Incorporated
By /s/ Tom Cahill
-----------------------------------
Name: Tom Cahill
Title: Principal
22
<PAGE>
SCHEDULE I
Pass Through Aggregate Final
Certificate Principal Interest Distribution
Designation Amounts Rate Date
------------ --------- -------- ------------
1998-1A $58,426,000 7.14% January 2, 2015
1998-1B 25,266,000 8.14 January 2, 2013
1998-1C 20,528,000 8.92 January 2, 2008
1998-1D 5,502,000 8.86 January 2, 2003
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
Principal Amount of Certificates
To Be Purchased
--------------------------------
Class A Class B Class C Class D
Placement Agent Certificates Certificates Certificates Certificates
- - --------------- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Morgan Stanley & Co.
Incorporated .................... $29,213,000 $12,633,000 $10,264,000 $2,751,000
Credit Suisse First
Boston Corporation .............. 29,213,000 12,633,000 10,264,000 2,751,000
----------- ----------- ----------- ----------
Total ......................... $58,426,000 $25,266,000 $20,528,000 $5,502,000
----------- ----------- ----------- ----------
</TABLE>
24
<PAGE>
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and
entered into on August 13, 1998, among MIDWAY AIRLINES CORPORATION, a Delaware
corporation (the "Company"), THE FIRST NATIONAL BANK OF MARYLAND, as Trustee
under each of the Trust Agreements (as defined below), MORGAN STANLEY & CO.
INCORPORATED and CREDIT SUISSE FIRST BOSTON CORPORATION (the "Placement
Agents").
This Agreement is made pursuant to the Purchase Agreement dated
August 6, 1998, between the Company and the Placement Agents (the "Purchase
Agreement"),which provides for the sale by the Trustee to the Placement Agents
of (i) $58,426,000 aggregate principal amount of 7.14% 1998-1A Pass Through
Certificates (the "Class A Certificates"), (ii) $25,266,000 aggregate principal
amount of 8.14% 1998-1B Pass Through Certificates (the "Class B Certificates"),
(iii) $20,528,000 aggregate principal amount of 8.92% 1998-1C Pass Through
Certificates (the "Class C Certificates") and (iv) $5,502,000 aggregate
principal amount of 8.86% 1998-1D Pass Through Certificates (the "Class D
Certificates", and together with the Class A Certificates, the Class B
Certificates and the Class C Certificates, the "Certificates"). In order to
induce the Placement Agents to enter into the Purchase Agreement, the Company
has agreed to provide to the Placement Agents and their direct and indirect
transferees the registration rights set forth in this Agreement. The execution
of this Agreement is a condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as
follows:
1. Definitions.
As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"1933 Act" shall mean the Securities Act of 1933, as amended from
time to time.
"1934 Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Applicable Trust Agreement" shall mean, (i) with respect to the
Class A Certificates, the Class A Holders or the Class A Trustee, the
Class A Trust Agreement, (ii) with respect to the Class B Certificates,
the Class B Holders or the Class B Trustee, the Class B Trust Agreement,
(iii) with respect to the Class C Certificates, the Class C Holders or the
Class C Trustee, the Class C Trust Agreement and (iv) with respect to the
A-1
<PAGE>
Class D Certificates, the Class D Holders or the Class D Trustee, the
Class D Trust Agreement.
"Certificates" shall have the meaning set forth in the second
paragraph of this Agreement.
"Class A Certificates" shall have the meaning set forth in the
second paragraph of this Agreement.
"Class A Exchange Certificates" shall mean securities issued under
the Class A Trust Agreement of equal outstanding principal amount as and
containing terms identical to the Class A Certificates (except that (i)
interest thereon shall accrue from the last date on which interest was
paid on the Class A Certificates or, if no such interest has been paid,
from August 13, 1998, (ii) the transfer restrictions thereon shall be
modified or eliminated, as appropriate and (iii) certain provisions
relating to an increase in the stated rate of interest thereon shall be
eliminated), to be offered to Holders of the Class A Certificates in
exchange for such Class A Certificates pursuant to the Exchange Offer.
"Class A Holder" shall mean any Placement Agent, for so long as it
owns any Class A Registrable Certificates, and each of its successors,
assigns and direct and indirect transferees who become registered owners
of Class A Registrable Certificates under the Class A Trust Agreement;
provided that for purposes of Sections 4 and 5 of this Agreement, the term
"Class A Holder" shall include Participating Broker-Dealers (as defined in
Section 4(a)).
"Class A Registrable Certificates" shall mean the Class A
Certificates; provided, however, that the Class A Certificates shall cease
to be Class A Registrable Certificates upon the earliest to occur of (i)
the consummation of the Exchange Offer, (ii) a Registration Statement with
respect to such Class A Certificates shall have been declared effective
under the 1933 Act and such Class A Certificates shall have been disposed
of pursuant to such Registration Statement, (iii) such Class A
Certificates shall have been sold to the public pursuant to Rule 144(k)
(or any similar provision then in force, but not Rule 144A) under the 1933
Act or (iv) such Class A Certificates shall have ceased to be outstanding.
"Class A Trust Agreement" shall mean the Pass Through Trust
Agreement relating to the Class A Certificates dated as of August 13, 1998
among the Company and the Class A Trustee, as the same may be amended from
time to time in accordance with the terms thereof.
"Class A Trustee" shall mean The First National Bank of Maryland,
not in its individual capacity except as expressly set forth in the Class
A Trust Agreement, but solely
A-2
<PAGE>
as Trustee under the Class A Trust Agreement, together with any successor
Trustee under the terms of the Class A Trust Agreement.
"Class B Certificates" shall have the meaning set forth in the
second paragraph of this Agreement.
"Class B Exchange Certificates" shall mean securities issued under
the Class B Trust Agreement of equal outstanding principal amount as and
containing terms identical to the Class B Certificates (except that (i)
interest thereon shall accrue from the last date on which interest was
paid on the Class B Certificates or, if no such interest has been paid,
from August 13, 1998, (ii) the transfer restrictions thereon shall be
modified or eliminated, as appropriate and (iii) certain provisions
relating to an increase in the stated rate of interest thereon shall be
eliminated), to be offered to Holders of the Class B Certificates in
exchange for such Class B Certificates pursuant to the Exchange Offer.
"Class B Holder" shall mean any Placement Agent, for so long as it
owns any Class B Registrable Certificates, and each of its successors,
assigns and direct and indirect transferees who become registered owners
of Class B Registrable Certificates under the Class B Trust Agreement;
provided that for purposes of Sections 4 and 5 of this Agreement, the term
"Class B Holder" shall include Participating Broker-Dealers (as defined in
Section 4(a)).
"Class B Registrable Certificates" shall mean the Class B
Certificates; provided, however, that the Class B Certificates shall cease
to be Class B Registrable Certificates upon the earliest to occur of (i)
the consummation of the Exchange Offer, (ii) a Registration Statement with
respect to such Class B Certificates shall have been declared effective
under the 1933 Act and such Class B Certificates shall have been disposed
of pursuant to such Registration Statement, (iii) such Class B
Certificates shall have been sold to the public pursuant to Rule 144(k)
(or any similar provision then in force, but not Rule 144A) under the 1933
Act or (iv) such Class B Certificates shall have ceased to be outstanding.
"Class B Trust Agreement" shall mean the Pass Through Trust
Agreement relating to the Class B Certificates dated as of August 13, 1998
among the Company and the Class B Trustee, as the same may be amended from
time to time in accordance with the terms thereof.
"Class B Trustee" shall mean The First National Bank of Maryland,
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 under the terms of the
Class B Trust Agreement.
A-3
<PAGE>
"Class C Certificates" shall have the meaning set forth in the
second paragraph of this Agreement.
"Class C Exchange Certificates" shall mean securities issued under
the Class C Trust Agreement of equal outstanding principal amount as and
containing terms identical to the Class C Certificates (except that (i)
interest thereon shall accrue from the last date on which interest was
paid on the Class C Certificates or, if no such interest has been paid,
from August 13, 1998, (ii) the transfer restrictions thereon shall be
modified or eliminated, as appropriate and (iii) certain provisions
relating to an increase in the stated rate of interest thereon shall be
eliminated), to be offered to Holders of the Class C Certificates in
exchange for such Class C Certificates pursuant to the Exchange Offer.
"Class C Holder" shall mean any Placement Agent, for so long as it
owns any Class C Registrable Certificates, and each of its successors,
assigns and direct and indirect transferees who become registered owners
of Class C Registrable Certificates under the Class C Trust Agreement;
provided that for purposes of Sections 4 and 5 of this Agreement, the term
"Class C Holder" shall include Participating Broker-Dealers (as defined in
Section 4(a)).
"Class C Registrable Certificates" shall mean the Class C
Certificates; provided, however, that the Class C Certificates shall cease
to be Class C Registrable Certificates upon the earliest to occur of (i)
the consummation of the Exchange Offer, (ii) a Registration Statement with
respect to such Class C Certificates shall have been declared effective
under the 1933 Act and such Class C Certificates shall have been disposed
of pursuant to such Registration Statement, (iii) such Class C
Certificates shall have been sold to the public pursuant to Rule 144(k)
(or any similar provision then in force, but not Rule 144A) under the 1933
Act or (iv) such Class C Certificates shall have ceased to be outstanding.
"Class C Trust Agreement" shall mean the Pass Through Trust
Agreement relating to the Class C Certificates dated as of August 13, 1998
among the Company and the Class C Trustee, as the same may be amended from
time to time in accordance with the terms thereof.
"Class C Trustee" shall mean The First National Bank of Maryland,
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 under the terms of the
Class C Trust Agreement.
"Class D Certificates" shall have the meaning set forth in the
second paragraph of this Agreement.
A-4
<PAGE>
"Class D Exchange Certificates" shall mean securities issued under
the Class D Trust Agreement of equal outstanding principal amount as and
containing terms identical to the Class D Certificates (except that (i)
interest thereon shall accrue from the last date on which interest was
paid on the Class D Certificates or, if no such interest has been paid,
from August 13, 1998, (ii) the transfer restrictions thereon shall be
modified or eliminated, as appropriate and (iii) certain provisions
relating to an increase in the stated rate of interest thereon shall be
eliminated), to be offered to Holders of the Class D Certificates in
exchange for such Class D Certificates pursuant to the Exchange Offer.
"Class D Holder" shall mean any Placement Agent, for so long as it
owns any Class D Registrable Certificates, and each of its successors,
assigns and direct and indirect transferees who become registered owners
of Class D Registrable Certificates under the Class D Trust Agreement;
provided that for purposes of Sections 4 and 5 of this Agreement, the term
"Class D Holder" shall include Participating Broker-Dealers (as defined in
Section 4(a)).
"Class D Registrable Certificates" shall mean the Class D
Certificates; provided, however, that the Class D Certificates shall cease
to be Class D Registrable Certificates upon the earliest to occur of (i)
the consummation of the Exchange Offer, (ii) a Registration Statement with
respect to such Class D Certificates shall have been declared effective
under the 1933 Act and such Class D Certificates shall have been disposed
of pursuant to such Registration Statement, (iii) such Class D
Certificates shall have been sold to the public pursuant to Rule 144(k)
(or any similar provision then in force, but not Rule 144A) under the 1933
Act or (iv) such Class D Certificates shall have ceased to be outstanding.
"Class D Trust Agreement" shall mean the Pass Through Trust
Agreement relating to the Class D Certificates dated as of August 13, 1998
among the Company and the Class D Trustee, as the same may be amended from
time to time in accordance with the terms thereof.
"Class D Trustee" shall mean The First National Bank of Maryland,
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 under the terms of the
Class D Trust Agreement.
"Closing Date" shall mean the Closing Date as defined in the
Purchase Agreement.
"Company" shall have the meaning set forth in the preamble and shall
also include the Company's successors.
A-5
<PAGE>
"Exchange Certificates" shall mean, together, the Class A Exchange
Certificates, the Class B Exchange Certificates, the Class C Exchange
Certificates and the Class D Exchange Certificates.
"Exchange Offer" shall mean the exchange offer by the Company of
Exchange Certificates for Registrable Certificates pursuant to Section
2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the
1933 Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another
appropriate form) and all amendments and supplements to such registration
statement, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Holder" shall mean a Class A Holder, a Class B Holder, a Class C
Holder or a Class D Holder; provided that for purposes of Sections 4 and 5
of this Agreement, the term "Holder" shall include Participating
Broker-Dealers (as defined in Section 4(a)).
"Majority Holders" shall mean, together, the Holders of a majority
in aggregate principal amount of the Registrable Certificates then
outstanding; provided that whenever the consent or approval of Holders of
a specified percentage of Registrable Certificates is required hereunder,
Registrable Certificates held by the Company or any of its affiliates (as
such term is defined in Rule 405 under the 1933 Act) (other than the
Placement Agents or subsequent holders of Registrable Certificates if such
subsequent holders are deemed to be such affiliates solely by reason of
their holding of such Registrable Certificates) shall not be counted in
determining whether such consent or approval was given by the Holders of
such required percentage or amount.
"Person" shall mean an individual, partnership, corporation, trust
or unincorporated organization, or a government or agency or political
subdivision thereof.
"Placement Agents" shall have the meaning set forth in the preamble.
"Purchase Agreement" shall have the meaning set forth in the
preamble.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus
as amended or supplemented by any prospectus supplement, including a
prospectus supplement with respect to the terms of the offering of any
portion of the Registrable Certificates covered by a Shelf Registration
Statement, and by all other amendments and supplements to such prospectus,
and in each case including all material incorporated by reference therein.
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<PAGE>
"Registrable Certificates" shall mean, together, the Class A
Registrable Certificates, the Class B Registrable Certificates, the Class
C Registrable Certificates and the Class D Registrable Certificates.
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company and the Trustees with this
Agreement, including without limitation: (i) all SEC, stock exchange or
National Association of Securities Dealers, Inc. registration and filing
fees, (ii) all fees and expenses incurred in connection with compliance
with state securities or blue sky laws (including reasonable fees and
disbursements of counsel for any underwriters or Holders in connection
with blue sky qualification of any of the Exchange Certificates or
Registrable Certificates), (iii) all expenses of any Persons in preparing
or assisting in preparing, word processing, printing and distributing any
Registration Statement, any Prospectus, any amendments or supplements
thereto, any underwriting agreements, securities sales agreements and
other documents relating to the performance of and compliance with this
Agreement, (iv) all rating agency fees, (v) all fees and disbursements
relating to the qualification of the Trust Agreements under applicable
securities laws, (vi) the fees and disbursements of the Trustees and their
counsel, (vii) the fees and disbursements of counsel for the Company and,
in the case of a Shelf Registration Statement, the fees and disbursements
of one counsel for the Holders (which counsel shall be selected by the
Majority Holders and which counsel may also be counsel for the Placement
Agents) and (viii) the fees and disbursements of the independent public
accountants of the Company, including the expenses of any special audits
or "cold comfort" letters required by or incident to such performance and
compliance, but excluding fees and expenses of counsel to the underwriters
(other than fees and expenses set forth in clause (ii) above) or the
Holders and underwriting discounts and commissions and transfer taxes, if
any, relating to the sale or disposition of Registrable Certificates by a
Holder.
"Registration Statement" shall mean any registration statement of
the Company that covers any of the Exchange Certificates or Registrable
Certificates pursuant to the provisions of this Agreement and all
amendments and supplements to any such Registration Statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all material incorporated by reference
therein.
"SEC" shall mean the Securities and Exchange Commission.
"Shelf Registration" shall mean a registration effected pursuant to
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company pursuant to the provisions of Section 2(b) of
this Agreement which covers all of the Registrable Certificates (but no
other securities unless approved by the Holders whose Registrable
Certificates are covered by such Shelf Registration Statement) on an
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<PAGE>
appropriate form under Rule 415 under the 1933 Act, or any similar rule
that may be adopted by the SEC, and all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Trust Agreement" shall mean the Class A Trust Agreement, the Class
B Trust Agreement, the Class C Trust Agreement or the Class D Trust
Agreement, as applicable, and when used in the plural shall mean,
together, the Class A Trust Agreement, the Class B Trust Agreement, the
Class C Trust Agreement and the Class D Trust Agreement.
"Trustee" shall mean the Class A Trustee, the Class B Trustee, the
Class C Trustee or the Class D Trustee, as applicable, and when used in
the plural shall mean, together, the Class A Trustee, the Class B Trustee,
the Class C Trustee and the Class D Trustee.
"Underwritten Registration" or "Underwritten Offering" shall mean a
registration in which Registrable Certificates are sold to an Underwriter
(as hereinafter defined) for reoffering to the public.
2. Registration Under the 1933 Act. To the extent not prohibited by
any applicable law or applicable interpretation of the Staff of the SEC, the
Company shall use its best efforts (A) to file with the SEC within 120 days
after the Closing Date an Exchange Offer Registration Statement covering the
offer by the Company to the Holders to exchange all of the Registrable
Certificates for Exchange Certificates and (B) to cause such Exchange Offer
Registration Statement to be declared effective by the SEC within 180 days after
the Closing Date. The Company shall commence the Exchange Offer promptly after
the Exchange Offer Registration Statement has been declared effective by the
SEC. The Company shall commence the Exchange Offer by mailing the related
exchange offer Prospectus and accompanying documents to each Holder stating, in
addition to such other disclosures as are required by applicable law:
(i) that the Exchange Offer is being made pursuant to this
Registration Rights Agreement and that all Registrable Certificates
validly tendered will be accepted for exchange;
(ii) the period for exchange (which shall be a period of at least 20
consecutive business days from the date such notice is mailed) (such days
being the "Exchange Dates");
(iii) that any Registrable Certificate not tendered will remain
outstanding and continue to accrue interest, but will not retain any
rights under this Registration Rights Agreement;
(iv) that Holders electing to have a Registrable Certificate
exchanged pursuant to the Exchange Offer will be required to surrender
such Registrable Certificate, together
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<PAGE>
with the enclosed letters of transmittal, to the institution and at the
office specified in the notice prior to the close of business on the last
Exchange Date; and
(v) that Holders will be entitled to withdraw their election, not
later than the close of business on the last Exchange Date, by sending to
the institution and at the office specified in the notice, a telegram,
telex, facsimile transmission or letter setting forth the name of such
Holder, the principal amount of Registrable Certificates delivered for
exchange, and a statement that such Holder is withdrawing his election to
have such Certificates exchanged.
As soon as practicable after the last Exchange Date, the Company
shall or shall cause the Trustees to:
(i) accept for exchange Registrable Certificates or portions thereof
tendered and not validly withdrawn pursuant to the Exchange Offer;
(ii) deliver, or cause to be delivered, to the Class A Trustee for
cancellation all Class A Registrable Certificates or portions thereof so
accepted for exchange by the Company, and issue, and cause the Class A
Trustee to promptly authenticate and mail to each Class A Holder, Class A
Exchange Certificates equal in principal amount to the principal amount of
the Class A Registrable Certificates surrendered by such Class A Holder;
(iii) deliver, or cause to be delivered, to the Class B Trustee for
cancellation all Class B Registrable Certificates or portions thereof so
accepted for exchange by the Company, and issue, and cause the Class B
Trustee to promptly authenticate and mail to each Class B Holder, Class B
Exchange Certificates equal in principal amount to the principal amount of
the Class B Registrable Certificates surrendered by such Class B Holder;
(iv) deliver, or cause to be delivered, to the Class C Trustee for
cancellation all Class C Registrable Certificates or portions thereof so
accepted for exchange by the Company, and issue, and cause the Class C
Trustee to promptly authenticate and mail to each Class C Holder, Class C
Exchange Certificates equal in principal amount to the principal amount of
the Class C Registrable Certificates surrendered by such Class C Holder;
and
(v) deliver, or cause to be delivered, to the Class D Trustee for
cancellation all Class D Registrable Certificates or portions thereof so
accepted for exchange by the Company, and issue, and cause the Class D
Trustee to promptly authenticate and mail to each Class D Holder, Class D
Exchange Certificates equal in principal amount to the principal amount of
the Class D Registrable Certificates surrendered by such Class D Holder.
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<PAGE>
The Company shall use its best efforts to complete the Exchange Offer as
provided above and shall comply with the applicable requirements of the 1933
Act, the 1934 Act and other applicable laws and regulations in connection with
the Exchange Offer. The Exchange Offer shall not be subject to any conditions,
other than that the Exchange Offer does not violate applicable law or any
applicable interpretation of the Staff of the SEC. The Company shall inform the
Placement Agents of the names and addresses of the Holders to whom the Exchange
Offer is made, and the Placement Agents shall have the right, subject to
applicable law, to contact such Holders and otherwise facilitate the tender of
Registrable Certificates in the Exchange Offer.
(b) In the event that (i) the Company determines that the Exchange
Offer Registration provided for in Section 2(a) above is not available or may
not be consummated as soon as practicable after the last Exchange Date because
it would violate applicable law or the applicable interpretations of the Staff
of the SEC, (ii) the Exchange Offer Registration Statement is not declared
effective by within 180 days after the Closing Date, (iii) the Exchange Offer is
not for any other reason consummated by March 11, 1999 or (iv) the Exchange
Offer has been completed and in the opinion of counsel for the Placement Agents
a Registration Statement must be filed and a Prospectus must be delivered by the
Placement Agents in connection with any offering or sale of Registrable
Certificates, the Company shall file as soon as practicable after such
determination, date or notice of such opinion of counsel is given to the
Company, as the case may be, a Shelf Registration Statement providing for the
sale by the Holders of all of the Registrable Certificates, and shall use its
best efforts to have such Shelf Registration Statement declared effective by the
SEC by the 180th day after the Closing Date. The Company agrees to use its best
efforts to keep the Shelf Registration Statement continuously effective until
the second anniversary of the Closing Date or such shorter period that will
terminate when all of the Registrable Certificates covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement. The Company further agrees to supplement or amend the Shelf
Registration Statement, if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration Statement or by the 1933 Act or by any other rules and regulations
thereunder for shelf registration or if reasonably requested by a Holder with
respect to information relating to such Holder, and to use its best efforts to
cause any such amendment to become effective and such Shelf Registration
Statement to become usable as soon as thereafter practicable. The Company agrees
to furnish to the Holders of Registrable Certificates copies of any such
supplement or amendment promptly after its being used or filed with the SEC.
(c) The Company shall pay all Registration Expenses in connection
with the registration pursuant to Section 2(a) or Section 2(b). Each Holder
shall pay all underwriting discounts and commissions and transfer taxes, if any,
relating to the sale or disposition of such Holder's Registrable Certificates
pursuant to the Shelf Registration Statement.
(d) An Exchange Offer Registration Statement pursuant to Section
2(a) hereof or a Shelf Registration Statement pursuant to Section 2(b) hereof
will not be deemed to have
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<PAGE>
become effective unless it has been declared effective by the SEC; provided,
however, that if, after it has been declared effective, the offering of
Registrable Certificates pursuant to a Shelf Registration Statement is
interfered with by any stop order, injunction or other order or requirement of
the SEC or any other governmental agency or court, such Shelf Registration
Statement will be deemed not to have become effective during the period of such
interference until the offering of Registrable Certificates pursuant to such
Registration Statement may legally resume. As provided for in the Trust
Agreements, the interest rate on the Class A Certificates, the Class B
Certificates, the Class C Certificates and the Class D Certificates shall be
7.14%, 8.14%, 8.92% and 8.86% per annum, respectively; however, in the event
that the Exchange Offer is not consummated and, if a Shelf Registration
Statement is required hereby, the Shelf Registration Statement is not declared
effective on or prior to March 11, 1999, the interest rate will increase by
0.50% per annum until the Exchange Offer is consummated or a Shelf Registration
Statement is declared effective.
(e) Without limiting the remedies available to the Placement Agents
and the Holders, the Company acknowledges that any failure by the Company to
comply with its obligations under Section 2(a) and Section 2(b) hereof may
result in material irreparable injury to the Placement Agents or the Holders for
which there is no adequate remedy at law, that it will not be possible to
measure damages for such injuries precisely and that, in the event of any such
failure, the Placement Agents or any Holder may obtain such relief as may be
required to specifically enforce the Company's obligations under Section 2(a)
and Section 2(b) hereof.
3. Registration Procedures. In connection with the obligations of
the Company with respect to the Registration Statements pursuant to Section 2(a)
and Section 2(b) hereof, the Company shall as expeditiously as possible:
(a) prepare and file with the SEC a Registration Statement on the
appropriate form under the 1933 Act, which form (x) shall be selected by
the Company and (y) shall, in the case of a Shelf Registration, be
available for the sale of the Registrable Certificates by the selling
Holders thereof and (z) shall comply as to form in all material respects
with the requirements of the applicable form and include all financial
statements required by the SEC to be filed therewith, and use its best
efforts to cause such Registration Statement to become effective and
remain effective in accordance with Section 2 hereof;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to (x) keep
such Registration Statement effective for the applicable period under this
Registration Rights Agreement, and (y) cause each Prospectus to be
supplemented by any required prospectus supplement and, as so
supplemented, to be filed pursuant to Rule 424 under the 1933 Act and (z)
keep each Prospectus current during the period described under Section
4(3) and Rule 174 under the 1933 Act that is applicable to transactions by
brokers or dealers with respect to the Registrable Certificates or
Exchange Certificates;
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<PAGE>
(c) in the case of a Shelf Registration, furnish to each Holder of
Registrable Certificates, to counsel for the Placement Agents, to counsel
for the Holders and to each Underwriter of an Underwritten Offering of
Registrable Certificates, if any, and each such Underwriter's Counsel,
without charge, as many copies of each Prospectus, including each
preliminary Prospectus, and any amendment or supplement thereto and such
other documents as such Holder or Underwriter may reasonably request, in
order to facilitate the public sale or other disposition of the
Registrable Certificates; and the Company consents to the use of such
Prospectus and any amendment or supplement thereto in accordance with
applicable law by each of the selling Holders of Registrable Certificates
and any such Underwriters in connection with the offering and sale of the
Registrable Certificates covered by and in the manner described in such
Prospectus or any amendment or supplement thereto in accordance with
applicable law;
(d) use their best efforts to register or qualify the Registrable
Certificates under all applicable state securities or "blue sky" laws of
such jurisdictions as any Holder of Registrable Certificates covered by a
Registration Statement shall reasonably request in writing by the time the
applicable Registration Statement is declared effective by the SEC, to
cooperate with such Holders in connection with any filings required to be
made with the National Association of Securities Dealers, Inc. and do any
and all other acts and things which may be reasonably necessary or
advisable to enable such Holder to consummate the disposition in each such
jurisdiction of such Registrable Certificates owned by such Holder;
provided, however, that the Company shall not be required to (i) qualify
as a foreign corporation or as a dealer in securities in any jurisdiction
where it would not otherwise be required to qualify but for this Section
3(d), (ii) file any general consent to service of process or (iii) subject
itself to taxation in any such jurisdiction if it is not so subject;
(e) in the case of a Shelf Registration, notify each Holder of
Registrable Certificates, counsel for the Holders and counsel for the
Placement Agents promptly and, if requested by any such Holder or counsel,
confirm such advice in writing, (i) when a Registration Statement has
become effective and when any post-effective amendment thereto has been
filed and become effective, (ii) of any request by the SEC or any state
securities authority for amendments and supplements to a Registration
Statement and Prospectus or for additional information, in each case after
the Registration Statement has become effective, (iii) of the issuance by
the SEC or any state securities authority of any stop order suspending the
effectiveness of a Registration Statement or the initiation of any
proceedings for that purpose, (iv) if, between the effective date of a
Registration Statement and the closing of any sale of Registrable
Certificates covered thereby, the representations and warranties of the
Company contained in any underwriting agreement, securities sales
agreement or other similar agreement, if any, relating to such offering
cease to be true and correct in all material respects or if the Company
receives any notification with respect to the suspension of the
qualification of the Registrable Certificates for sale in any jurisdiction
or the initiation of any proceeding for such purpose, (v) of the happening
of any event
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<PAGE>
during the period a Shelf Registration Statement is effective which makes
any statement made in such Registration Statement or the related
Prospectus untrue in any material respect or which requires the making of
any changes in such Registration Statement or Prospectus in order to make
the statements therein not misleading, and (vi) of any determination by
the Company that a post-effective amendment to a Registration Statement
would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of a Registration Statement at the
earliest possible moment and provide immediate notice to each Holder of
the withdrawal of any such order;
(g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Certificates, without charge, at least one conformed copy of
each Registration Statement and any post-effective amendment thereto
(without documents incorporated therein by reference or exhibits thereto,
unless requested)
(h) in the case of a Shelf Registration, cooperate and cause the
Trustee to cooperate with the selling Holders of Registrable Certificates
to facilitate the timely preparation and delivery of certificates
representing Registrable Certificates to be sold and not bearing any
restrictive legends and enable such Registrable Certificates to be in such
denominations (consistent with the provisions of the Applicable Trust
Agreement) and registered in such names as the selling Holders may
reasonably request at least two business days prior to the closing of any
sale of Registrable Certificates;
(i) in the case of a Shelf Registration, upon the occurrence of any
event contemplated by Section 3(e)(v) hereof, use its best efforts to
prepare and file with the SEC a supplement or post-effective amendment to
a Registration Statement or the related Prospectus or any document
incorporated therein by reference or file any other required document so
that, as thereafter delivered to the purchasers of the Registrable
Certificates, such Prospectus will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading; the Company agrees to notify the Holders to suspend
use of the Prospectus as promptly as practicable after the occurrence of
such an event, and the Holders hereby agree to suspend use of the
Prospectus until the Company has amended or supplemented the Prospectus to
correct such misstatement or omission;
(j) a reasonable time prior to the filing of any Registration
Statement, any Prospectus, any amendment to a Registration Statement or
amendment or supplement to a Prospectus or any document which is to be
incorporated by reference into a Registration Statement or a Prospectus
(other than filings pursuant to the 1934 Act) after initial filing of a
Registration Statement, provide copies of such document to the Placement
Agents and their counsel (and, in the case of a Shelf Registration
Statement, the Holders and their counsel) and make such of the
representatives of the Company as shall be reasonably
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<PAGE>
requested by the Placement Agents or their counsel (and, in the case of a
Shelf Registration Statement, the Holders or their counsel) available for
discussion of such document, and shall not at any time file or make any
amendment to the Registration Statement, any Prospectus or any amendment
of or supplement to a Registration Statement or a Prospectus or any
document which is to be incorporated by reference into a Registration
Statement or a Prospectus, of which the Placement Agents and their counsel
(and, in the case of a Shelf Registration Statement, the Holders and their
counsel) shall not have previously been advised and furnished a copy or to
which the Placement Agents or their counsel (and, in the case of a
Registration Statement, the Holders or their counsel) shall object;
(k) obtain a CUSIP number for all Exchange Certificates or
Registrable Certificates, as the case may be, not later than the effective
date of a Registration Statement and provide the Trustees with printed
certificates evidencing the Exchange Certificates or the Registrable
Certificates, as the case may be, held in book entry form in a form
eligible for deposit with The Depository Trust Company;
(l) cause the Trust Agreements to be qualified under the Trust
Indenture Act of 1939, as amended (the "TIA"), in connection with the
registration of the Exchange Certificates or Registrable Certificates, as
the case may be, cooperate with the Trustees and the Holders to effect
such changes to the Trust Agreements as may be required for the Trust
Agreements to be so qualified in accordance with the terms of the TIA and
execute, and use its best efforts to cause the Trustees to execute, all
documents as may be required to effect such changes, and all other forms
and documents required to be filed with the SEC to enable the Trust
Agreements to be so qualified in a timely manner;
(m) in the case of a Shelf Registration, make available for
inspection by a representative of the Holders of the Registrable
Certificates, any Underwriter participating in any disposition pursuant to
such Shelf Registration Statement, and attorneys and accountants
designated by the Holders, at reasonable times and in a reasonable manner,
all financial and other records, pertinent documents and properties of the
Company, and cause the respective officers, directors and employees of the
Company to supply all information reasonably requested by any such
representative, Underwriter, attorney or accountant in connection with a
Shelf Registration Statement;
(n) in the case of a Shelf Registration, use its best efforts to
cause all Registrable Certificates to be listed on any securities exchange
or any automated quotation system on which similar securities issued by
the Company are then listed if requested by the Majority Holders, to the
extent such Registrable Certificates satisfy applicable listing
requirements;
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<PAGE>
(o) use its best efforts to cause the Exchange Certificates or
Registrable Certificates, as the case may be, to be rated by two
nationally recognized statistical rating organizations (as such term is
defined in Rule 436(g)(2) under the 1933 Act);
(p) if reasonably requested by any Holder of Registrable
Certificates covered by a Registration Statement, (i) promptly incorporate
in a Prospectus supplement or post-effective amendment such information
with respect to such Holder as such Holder reasonably requests to be
included therein and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as the Company has
received satisfactory notification of the matters to be incorporated in
such filing; and
(q) in the case of a Shelf Registration, enter into such customary
agreements and take all such other actions in connection therewith
(including those requested by the Holders of a majority of the class of
Registrable Certificates being sold) in order to expedite or facilitate
the disposition of such Registrable Certificates including, but not
limited to, an Underwritten Offering and in such connection, (i) to the
extent possible, make such representations and warranties to the Holders
and any Underwriters of such Registrable Certificates with respect to the
business of the Company, the Registration Statement, Prospectus and
documents incorporated by reference or deemed incorporated by reference,
if any, in each case, in form, substance and scope as are customarily made
by issuers to underwriters in similar underwritten offerings and confirm
the same if and when requested, (ii) obtain an opinion of counsel to the
Company (which counsel and opinion, in form, scope and substance, shall be
reasonably satisfactory to the Holders and such Underwriters and their
respective counsel) addressed to each selling Holder and Underwriter of
Registrable Certificates, covering the matters customarily covered in
opinions requested in similar underwritten offerings, (iii) obtain "cold
comfort" letters from the independent certified public accountants of the
Company addressed to each selling Holder and Underwriter of Registrable
Certificates, such letters to be in customary form and covering matters of
the type customarily covered in "cold comfort" letters in connection with
underwritten offerings, and (iv) deliver such documents and certificates
as may be reasonably requested by the Holders of a majority in principal
amount of the Registrable Certificates being sold or the Underwriters, and
which are customarily delivered in underwritten offerings, to evidence the
continued validity of the representations and warranties of the Company
made pursuant to clause (i) above and to evidence compliance with any
customary conditions contained in an underwriting agreement.
In the case of a Shelf Registration Statement, the Company may
require each Holder of Registrable Certificates to furnish to the Company such
information regarding the Holder and the proposed distribution by such Holder of
such Registrable Certificates as the Company may from time to time reasonably
request in writing.
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In the case of a Shelf Registration Statement, each Holder agrees
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 3(e)(v) hereof, such Holder will forthwith
discontinue disposition of Registrable Certificates pursuant to a Shelf
Registration Statement until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by Section 3(i) hereof, and, if
so directed by the Company, such Holder will deliver to the Company (at its
expense) all copies in its possession, other than permanent file copies then in
such Holder's possession, of the Prospectus covering such Registrable
Certificates current at the time of receipt of such notice. If the disposition
of Registrable Certificates pursuant to a Shelf Registration Statement shall be
suspended for more than an aggregate of 60 days, whether or not consecutive,
during any 12-month period, the interest rate per annum borne by the
Certificates will be increased by 0.50% from the 61st day of the applicable
12-month period until such time as disposition of Registrable Certificates is no
longer suspended. If the Company shall give any such notice to suspend the
disposition of Registrable Certificates pursuant to a Registration Statement,
the Company shall extend the period during which the Registration Statement
shall be maintained effective pursuant to this Registration Rights Agreement by
the number of days during the period from and including the date of the giving
of such notice to and including the date when the Holders shall have received
copies of the supplemented or amended Prospectus necessary to resume such
dispositions.
The Holders of Registrable Certificates covered by a Shelf
Registration Statement who desire to do so may sell such Registrable
Certificates in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers (the
"Underwriters") that will administer the offering will be selected by the
Majority Holders of the Registrable Certificates included in such offering.
4. Participation of Broker-Dealers in Exchange Offer. (a) The Staff
of the SEC has taken the position that any broker-dealer that receives Exchange
Certificates for its own account in the Exchange Offer in exchange for
Certificates that were acquired by such broker-dealer as a result of market
making or other trading activities (a "Participating Broker-Dealer") may be
deemed to be an "underwriter" within the meaning of the 1933 Act and must
deliver a prospectus meeting the requirements of the 1933 Act in connection with
any resale of such Exchange Certificates.
The Company understands that it is the Staff's position that if the
Prospectus contained in the Exchange Offer Registration Statement includes a
plan of distribution containing a statement to the above effect and the means by
which Participating Broker-Dealers may resell the Exchange Certificates, without
naming the Participating Broker-Dealers or specifying the amount of Exchange
Certificates owned by them, such Prospectus may be delivered by Participating
Broker-Dealers to satisfy their prospectus delivery obligation under the 1933
Act in connection with resales of Exchange Certificates for their own accounts,
so long as the Prospectus otherwise meets the requirements of the 1933 Act.
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(b) In light of Section 4(a) above, notwithstanding the other
provisions of this Registration Rights Agreement, the Company agrees that the
provisions of this Registration Rights Agreement as they relate to a Shelf
Registration shall also apply to an Exchange Offer Registration to the extent,
and with such reasonable modifications thereto as may be reasonably requested by
the Placement Agents or by one or more Participating Broker-Dealers, in each
case as provided in clause (ii) below, in order to expedite or facilitate the
disposition of any Exchange Certificates by Participating Broker-Dealers
consistent with the positions of the Staff recited in Section 4(a) above;
provided that:
(i) the Company shall not be required to amend or supplement the
Prospectus contained in the Exchange Offer Registration Statement, as
would otherwise be contemplated by Section 3(i), for a period exceeding 90
days after the last Exchange Date (as such period may be extended pursuant
to the penultimate paragraph of Section 3 of this Agreement) and
Participating Broker-Dealers shall not be authorized by the Company to
deliver and shall not deliver such Prospectus after such period in
connection with the resales contemplated by this Section 4; and
(ii) the application of the Shelf Registration procedures set forth
in Section 3 of this Registration Rights Agreement to an Exchange Offer
Registration, to the extent not required by the positions of the Staff of
the SEC or the 1933 Act and the rules and regulations thereunder, will be
in conformity with the reasonable request to the Company by the Placement
Agents or with the reasonable request in writing to the Company by one or
more broker-dealers who certify to the Placement Agents and the Company in
writing that they anticipate that they will be Participating
Broker-Dealers; provided that in connection with such application of the
Shelf Registration procedures set forth in Section 3 to an Exchange Offer
Registration, the Company shall be obligated (x) to deal only with one
entity representing the Participating Broker-Dealers, which shall be
Morgan Stanley & Co. Incorporated unless it elects not to act as such
representative, (y) to pay the fees and expenses of only one counsel
representing the Participating Broker-Dealers, which shall be counsel to
the Placement Agents unless such counsel elects not to so act, and (z) to
cause to be delivered only one, if any, "cold comfort" letter with respect
to the Prospectus in the form existing on the last Exchange Date and with
respect to each subsequent amendment or supplement, if any, effected
during the period specified in clause (i) above.
(c) The Placement Agents shall have no liability to the Company or
any Holder with respect to any request that it may make pursuant to Section 4(b)
above.
5. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Placement Agent, each Holder and each person,
if any, who controls any Placement Agent or any Holder within the meaning of
either Section 15 of the 1933 Act or Section 20 of the 1934 Act, or is under
common control with, or is controlled by, any Placement Agent or any Holder,
from and against all losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred by any Placement
Agent, any Holder
A-17
<PAGE>
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 any Registration
Statement (or any amendment thereto) pursuant to which Exchange Certificates or
Registrable Certificates were registered under the 1933 Act, including all
documents incorporated therein by reference, 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 any
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact necessary to make the statements
therein in light of the circumstances under which they were made not misleading,
except insofar as such losses, claims, damages or liabilities are caused by any
such untrue statement or omission or alleged untrue statement or omission based
upon information relating to any Placement Agent or any Holder furnished to the
Company in writing by such Placement Agent or any selling Holder expressly for
use therein; provided, however, that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of any
Placement Agent from whom the person asserting any such losses, claims, damages
or liabilities purchased Certificates, or any person controlling such Placement
Agent, if a copy of the final Prospectus (as then amended or supplemented if the
Company shall have furnished any amendment or supplements thereto) was not sent
or given by or on behalf of such Placement Agent to such person, if required by
law so to have been delivered, at or prior to the written confirmation of the
sale of the Certificates to such person, and if the final Prospectus (as so
amended or supplemented) would have cured the defect giving rise to such losses,
claims, damages or liabilities, unless such failure is the result of
noncomplicance by the Company with Section 3 hereof. In connection with any
Underwritten Offering permitted by Section 3, the Company will also indemnify
the Underwriters, if any, selling brokers, dealers and similar securities
industry professionals participating in the distribution, their officers and
directors and each Person who controls such Persons (within the meaning of the
1933 Act and the 1934 Act) to the same extent as provided above with respect to
the indemnification of the Holders, if requested in connection with any
Registration Statement.
(b) Each Holder agrees, severally and not jointly, to indemnify and
hold harmless the Company, each Placement Agent and the other selling Holders,
and each of their respective directors, officers who sign the Registration
Statement and each Person, if any, who controls the Company, each Placement
Agent and any other selling Holder within the meaning of either Section 15 of
the 1933 Act or Section 20 of the 1934 Act to the same extent as the foregoing
indemnity from the Company to each Placement Agent and the Holders, but only
with reference to information relating to such Holder furnished to the Company
in writing by such Holder expressly for use in any Registration Statement (or
any amendment thereto) or any Prospectus (or any amendment or supplement
thereto).
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or paragraph (b) above,
such person (the "indemnified party") shall promptly notify
A-18
<PAGE>
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 (a)
the fees and expenses of more than one separate firm (in addition to any local
counsel) for the Placement Agents and all persons, if any, who control any
Placement Agent within the meaning of either Section 15 of the 1933 Act or
Section 20 of the 1934 Act, (b) the fees and expenses of more than one separate
firm (in addition to any local counsel) for the Company, its directors, its
officers who sign the Registration Statement and each person, if any, who
controls the Company within the meaning of either such Section and (c) the fees
and expenses of more than one separate firm (in addition to any local counsel)
for all Holders and all persons, if any, who control any Holders within the
meaning of either such Section, and that all such fees and expenses shall be
reimbursed as they are incurred. In such case involving any Placement Agent and
persons who control such Placement Agent, such firm shall be designated in
writing by Morgan Stanley & Co. Incorporated. In such case involving the Holders
and such persons who control Holders, such firm shall be designated in writing
by the Majority Holders. In all other cases, such firm shall be designated by
the Company. 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. 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 such
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.
(d) If the indemnification provided for in paragraph (a) or
paragraph (b) of this Section 4 is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect the relative fault
of the indemnifying party or parties on the one hand and of the indemnified
party or parties on the other hand 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 fault of the
Company and the Holders shall be determined
A-19
<PAGE>
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 the Company or by the Holders
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Holders'
respective obligations to contribute pursuant to this Section 5(d) are several
in proportion to the respective number of Registrable Certificates of such
Holder that were registered pursuant to a Registration Statement.
(e) The Company and each Holder agree that it would not be just or
equitable if contribution pursuant to this Section 5 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in paragraph (d) above. The amount paid
or payable by an indemnified party as a result of the losses, claims, damages
and liabilities referred to in paragraph (d) 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 5, no Holder shall be required to indemnify or contribute any amount in
excess of the amount by which the total price at which Registrable Certificates
were sold by such Holder exceeds the amount of any damages that such Holder 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 1933 Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 5 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.
The indemnity and contribution provisions contained in this Section
5 shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Placement Agent, any Holder or any person controlling any Placement Agent or
any Holder, or by or on behalf of the Company, its officers or directors or any
person controlling the Company, (iii) acceptance of any of the Exchange
Certificates and (iv) any sale of Registrable Certificates pursuant to a Shelf
Registration Statement.
6. Miscellaneous. (a) No Inconsistent Agreements. The Company has
not entered into, and on or after the date of this Registration Rights Agreement
will not enter into, any agreement which is inconsistent with the rights granted
to the Holders of Registrable Certificates in this Registration Rights Agreement
or otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent with
the rights granted to the holders of the Company's other issued and outstanding
securities under any such agreements.
(b) Amendments and Waivers. The provisions of this Registration
Rights Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given
A-20
<PAGE>
unless the Company has obtained the written consent of Holders of at least a
majority in aggregate principal amount of the outstanding Registrable
Certificates affected by such amendment, modification, supplement, waiver or
consent; provided, however, that no amendment, modification, supplement, waiver
or consent to any departure from the provisions of Section 5 hereof shall be
effective as against any Holder of Registrable Certificates unless consented to
in writing by such Holder.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder to
the Company by means of a notice given in accordance with the provisions of this
Section 6(c), which address initially is, with respect to the Placement Agents,
the address set forth in the Purchase Agreement; and (ii) if to the Company,
initially at the Company's address set forth in the Purchase Agreement and
thereafter at such other address, notice of which is given in accordance with
the provisions of this Section 6(c).
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
business days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied; and
on the next business day if timely delivered to an air courier guaranteeing
overnight delivery.
Copies of all such notices, demands, or other communications shall
be concurrently delivered by the person giving the same to each Trustee, at the
address specified in the Applicable Trust Agreement.
(d) Successors and Assigns. This Registration Rights Agreement shall
inure to the benefit of and be binding upon the successors, assigns and
transferees of each of the parties, including, without limitation and without
the need for an express assignment, subsequent Holders; provided that nothing
herein shall be deemed to permit any assignment, transfer or other disposition
of Registrable Certificates in violation of the terms of the Purchase Agreement
or the Trust Agreements. If any transferee of any Holder shall acquire
Registrable Certificates, in any manner, whether by operation of law or
otherwise, such Registrable Certificates shall be held subject to all of the
terms of this Registration Rights Agreement, and by taking and holding such
Registrable Certificates, such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Registration Rights Agreement and such Person shall be entitled to receive the
benefits hereof. The Placement Agents (in their capacity as Placement Agents)
shall have no liability or obligation to the Company with respect to any failure
by any other Holder to comply with, or any breach by any other Holder of, any of
the obligations of such other Holder under this Registration Rights Agreement.
A-21
<PAGE>
(e) Purchases and Sales of Certificates. The Company shall not, and
shall use its best efforts to cause its affiliates (as defined in Rule 405 under
the 1933 Act), not to purchase and then resell or otherwise transfer any
Certificates.
(f) Trustees. The Trustees shall take such action as may be
reasonably requested by the Company pursuant to Sections 2(a), 3(h), and 3(l)
hereof.
(g) Third Party Beneficiary. The Holders shall be third party
beneficiaries to the agreements made hereunder and shall have the right to
enforce such agreements directly to the extent they deem such enforcement
necessary or advisable to protect their rights hereunder.
(h) Counterparts. This Registration Rights Agreement may be executed
in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
(i) Headings. The headings in this Registration Rights Agreement are
for convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(j) Governing Law. This Registration Rights Agreement shall be
governed by and construed in accordance with the internal laws of the State of
New York
(k) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
A-22
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Registration
Rights Agreement as of the date first written above.
MIDWAY AIRLINES CORPORATION
By /s/ Jonathan S. Waller
----------------------------------
Name: Jonathan S. Waller
Title: Senior Vice President
General Counsel
THE FIRST NATIONAL BANK OF MARYLAND, not
in its individual capacity, but solely
as Trustee under each of the Trust
Agreements
By /s/Robert D. Brown
----------------------------------
Name: Robert D. Brown
Title: Assistrant Vice Pesident
Confirmed and accepted as of
the date first above written:
MORGAN STANLEY & CO. INCORPORATED
CREDIT SUISSE FIRST BOSTON
By Morgan Stanley & Co. Incorporated
By /s/ Tom Cahill
------------------------
Name: Tom Cahill
Title: Principal
A-23
<PAGE>
EXHIBIT B
Form of Opinion of
Fulbright & Jaworski L.L.P.
(i) No authorization, approval or other action by, and no notice to,
consent of, order of, or filing with, any United States Federal or New
York, governmental authority or regulatory body is required for the
consummation of the transactions contemplated by the Purchase Agreement,
except such as may be required under the blue sky laws of any jurisdiction
in connection with the purchase and distribution of the Certificates by
the Placement Agents and except for filings or recordings with the Federal
Aviation Administration and under the Uniform Commercial Code as in effect
in various jurisdictions, which filings or recordings shall have been
made, or duly presented for filing, on or prior to the respective Delivery
Date (as defined in the Note Purchase Agreement); the issuance and sale of
the Certificates to the Placement Agents pursuant to the Purchase
Agreement, the issuance of the Escrow Receipts attached to the
Certificates, the valid authorization, execution and delivery of the Pass
Through Trust Agreements and Note Purchase Agreement (the "Company Pass
Through Trust Documents") and the performance by the Company of its
respective obligations under the Company Pass Through Trust Documents do
not require the Company to obtain or effect any consent, approval,
authorization, registration or qualification of or with any governmental
agency or body of the United States or of the State of New York, except
such as may be required under the blue sky laws of any jurisdiction in
connection with the purchase and distribution of the Certificates by the
Placement Agents;
(ii) The statements in the Final Memorandum under the caption "ERISA
Considerations" fairly summarize the matters therein described;
(iii) Assuming (i) the accuracy of the representations and
warranties of the Company and you set forth in the Purchase Agreement,
(ii) the due performance by the Company and you of the covenants and
agreements set forth in the Purchase Agreement, (iii) your compliance with
the offering and transfer procedures and restrictions described in the
Final Memorandum and (iv) the accuracy of the representations and
warranties made in accordance with the Purchase Agreement and the Final
Memorandum by purchasers to whom you initially resell the Certificates
(with attached Escrow Receipts), the offer, sale and delivery of the
Certificates (with attached Escrow Receipts) to you in the manner
contemplated by the Purchase Agreement and the Final Memorandum and the
initial resale of the Certificates (with attached Escrow Receipts) by you
in the manner contemplated in the Final Memorandum and the Purchase
Agreement, do not require registration under the Securities Act of 1933,
as amended, and the Pass Through Trust Agreements do not require
qualification under the Trust Indenture Act of 1939, as amended, it being
understood that no opinion is expressed as to any subsequent resale of any
Certificates;
<PAGE>
(iv) Neither the Company nor any of the Original Trusts is an
"investment company" within the meaning of the Investment Company Act of
1940, as amended (the "Investment Company Act"); as of the Successor Pass
Through Trust Effective Date, assuming that all facts and circumstances
relevant to such matter are the same as is the case on the date hereof,
none of the Successor Trusts will be an "investment company" within the
meaning of the Investment Company Act; and none of the Original Trusts or
Successor Trusts, after giving effect to the offering and sale of the
Certificates and the application of the proceeds thereof as described in
the Final Memorandum, will be an "investment company" as defined in the
Investment Company Act;
(v) The Purchase Agreement, the Registration Rights Agreement and
the Company Pass Through Trust Agreements constitute legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with each of their terms (subject to applicable bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other
similar laws affecting creditors' rights generally from time to time in
effect and to general principles of equity, including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing,
regardless of whether such enforceability is considered in a proceeding in
equity or at law);
(vi) When each Successor Pass Through Trust Agreement becomes
effective in accordance with the terms of Section [___] of the related
successor Pass Through Trust Agreement (the "Successor Pass Through Trust
Effective Date"), the applicable conditions precedent set forth in Section
[___] of the corresponding Original Pass Through Trust Agreement and in
Section [___] of such Successor Pass Through Trust Agreement have been
satisfied and the related Assignment and Assumption Agreement has been
executed and delivered by each of the parties thereto, assuming that all
facts and circumstances relevant to such matter are the same as is the
case of the date hereof, each of the Certificates lawfully and validly
Outstanding (as such term is defined in the Original Pass Through Trust
Agreements) under the Original Pass Through Trust Agreement at such time
will be entitled to the benefits of such Successor Pass Through Trust
Agreement.
(vii) Assuming due authorization, execution and delivery of the Pass
Through Trust Agreements by the Trustee, each of the Successor Pass
Through Trust Agreements is a valid and biding obligation of the
applicable Successor Trustee enforceable against the applicable Successor
Trustee in accordance with its terms, in each case, enforceable in
accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
enforcement of creditors' rights generally and by general principles of
equity; when executed and delivered in accordance with the terms of the
Original Pass Through Trust Agreement and the Successor Pass Through Trust
Agreements and in the form of the
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<PAGE>
applicable Form Assignment and Assumption Agreement, properly completed,
assuming that all facts and circumstances relevant to such matter are the
same as is the case on the date hereof, each of the assignment and
assumption agreements contemplated under the Original Pass Through Trust
Agreements to be executed and delivered by the Trustees and the Successor
Trustees (collectively, the "Assignment and Assumption Agreements") will
be a valid and binding obligation of each of the parties thereto
enforceable against each of such parties in accordance with its terms;
each of the Escrow Agreements, the Deposit Agreements and the Note
Purchase Agreement is a valid and binding obligation of each Escrow Agent
that is a party thereto enforceable against each such Escrow Agent in
accordance with its terms; the Escrow Receipts are validly issued and
outstanding and are entitled to the benefits of the applicable Escrow
Agreement; each of the Escrow Agreements and the Note Purchase Agreement
is valid and binding obligation of the Paying Agent that is a party
thereto enforceable against such Paying Agent in accordance with its
terms;
(viii)The statements set forth under the headings "Summary",
"Description of the Certificates", "Description of the Deposit
Agreements", "Description of the Escrow Agreements", "Description of the
Liquidity Facilities", "Description of the Intercreditor
Agreement","Description of the Equipment Notes" and "Exchange Offer;
Registration Rights" in the Final Memorandum, insofar as such statements
purport to summarize certain provisions of the Certificates, the Pass
Through Trust Agreements, the Deposit Agreements, the Escrow Agreements,
the Escrow Receipts, the Liquidity Facilities, the Intercreditor
Agreement, the Equipment Notes and the forms of "Leased Aircraft
Indenture", "Leased Aircraft Participation Agreement", "Lease", "Owned
Aircraft Indenture", "Owned Aircraft Participation Agreement" and "Special
Indenture" attached to the Note Purchase Agreement (collectively, the
"Form Aircraft Financing Documents"), and the Registration Rights
Agreement, fairly summarize such provisions referred to therein; Section
1110 of the Bankruptcy Code conforms in all material respects to the
description thereof contained in "Description of the Equipment Notes -
Remedies" in the Final Memorandum; and the statements in the Final
Memorandum under the caption "Certain U.S. Federal Income Tax
Consequences" insofar as they purport to describe the material tax
consequences of an investment in the Certificates (with attached Escrow
Receipts) fairly summarize the matters therein described;
(ix) While there is no authority addressing the characterization of
entities that are similar to the Trusts in all material respects, each of
the Original Trusts should be classified as a grantor trust for U.S.
federal income tax purposes. If, as may be the case, the Original Trusts
are not classified as grantor trusts, they will be classified as
partnerships for U.S. federal income tax purposes and will not be
classified as publicly traded partnerships taxable as corporations,
provided that at least 90% of each such Original Trust's gross income for
each taxable year of its existence is "qualifying income" within the
meaning of the Section 7704(b) of the Internal Revenue Code of
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<PAGE>
1986, as amended; each of the Successor Trusts will be classified as a
grantor trust for U.S. federal income tax purposes;
(x) Each of the Escrow Agreements creates a valid escrow under New
York law and a valid equitable interest in the escrowed property in favor
of the corresponding Trustee; neither a New York court nor a United States
Federal Court applying New York law or the U.S. Bankruptcy Code, if
properly presented with the issue and after having properly considered
such issue, would permit any holder of an Escrow Receipt to terminate the
related Escrow Agreement, except in accordance with its terms;
(xi) So long as an Escrow Agreement has not been terminated,
creditors of any person that is a holder of an Escrow Receipt thereunder
or holders of a lien against the assets of any such person, such as
trustees, receivers or liquidators (whether or not any insolvency
proceeding has been commenced) (collectively, the "Creditors"), may
acquire valid claims and liens, as to the Deposits established thereunder
and as to the related Deposit Agreement and Escrow Agreement, only against
the rights of the holder of such Escrow Receipt under such Escrow
Agreement, and do not have, and may not through the enforcement of such
Creditors' rights acquire, any greater right than the holder of such
Escrow Receipt with respect to such Deposits, Deposit Agreement or Escrow
Agreement;
(xii) No creditor of the Company or any of its subsidiaries, and no
holder of a lien against the assets of any such person, such a trustees,
receivers or liquidators (whether or not any insolvency proceeding has
been commenced), may acquire valid claims or liens as to the Deposits and
the related Deposit Agreements and Escrow Agreements;
and to such further effect with respect to other legal matters relating to the
Purchase Agreement, the Financing Agreements, the Pass Through Trust Agreements
and other Operative Documents and the sale of the Certificates thereunder as
counsel for the Placement Agents may reasonably request.
Such opinion shall also state that, in connection with the preparation of
the Final Memorandum, such counsel has participated in conferences with certain
officers of, and with the accountants and counsel for, the Company concerning
the preparation of the Final Memorandum. Such opinion may state that although
such counsel has made certain inquiries and investigations in connection with
the preparation of the Final Memorandum, the limitations inherent in the role of
outside counsel are such that such counsel cannot does not assume responsibility
for the accuracy or completeness of the statements made in the Final Memorandum,
except insofar as the statements relate to such counsel and except to the extent
set forth in paragraph (ii) of such counsel's opinion dated the date hereof.
Subject to the foregoing, such opinion shall state that such counsel advises the
Placement Agents that their
B-4
<PAGE>
work in connection with this matter did not disclose any information that gave
such counsel reason to the believe that the Final Memorandum (except the
financial statements and other information of a statistical, accounting or
financial nature included therein, as to which such counsel does not express any
view) as of its date or the date hereof, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
In such opinion, such counsel may assume that each of the parties to each
of the applicable documents, other than the Company, has full power, authority
and legal right to enter into such documents and that each such document has
been duly authorized, executed and delivered by each of such parties. In
addition, such counsel may rely upon the opinion of counsel for the Company and
counsel for the Trustee and may state that their opinion is limited to matters
governed by the laws of the State of New York and the federal law of the United
States.
B-5
<PAGE>
EXHIBIT C
Form of Opinion of the General Counsel
of the Company
(i) The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the state of its incorporation with
corporate power and authority under such laws to own, lease and operate
its properties and conduct its business as described in the Final
Memorandum and to perform its obligations under the Purchase Agreement,
the Pass Through Trust Agreements, the Note Purchase Agreement and the
Registration Rights Agreement;
(ii) The Company is duly qualified to transact business as a foreign
corporation and is in good standing in each other jurisdiction in which it
owns or leases property of a nature, or transacts business of a type, that
would make such qualification necessary, except to the extent that the
failure to so qualify or be in good standing would not have a Material
Adverse Effect;
(iii) The Company is a "citizen of the United States" (as defined in
Section 40102(a)(15) of Title 49 of the United States Code, as amended)
and is an air carrier operating under a 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. There is in force with respect to the
Company an air carrier operating certificate issued pursuant to Part 121
of the regulations under the Federal Aviation Act; [all of the outstanding
shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and non-assessable and are owned by the
Company, free and clear of any pledge, lien, security interest, charge,
claim, equity or encumbrance of any kind];
(iv) No consent, approval, authorization or order of, or
qualification with, any governmental body or agency is required for the
valid authorization, issuance and delivery of the Certificates or the
Escrow Receipts, the valid authorization, execution, delivery and
performance by the Company of the Purchase Agreement, the Pass Through
Trust Agreements, the Note Purchase Agreement and the Registration Rights
Agreement (the "Subject Documents") or the consummation by the Company of
the transactions contemplated by such Subject Documents, except such as
may be required by the securities or blue sky laws of the various states
in connection with the offer and sale of the Certificates;
(v) The execution and delivery by the Company of the Subject
Documents, the issuance and sale of the Certificates (with attached Escrow
Receipts), the consummation by the Company of the transactions
contemplated in Subject Documents and compliance by the Company with the
terms thereof will not contravene (i) any
C-1
<PAGE>
provision of applicable law, (ii) the certificate of incorporation or
by-laws of the Company, (iii) to such counsel's knowledge, any agreement
or other instrument binding upon the Company that is material to the
Company or (iv) to such counsel's knowledge, any judgment, order or decree
of any governmental body, agency or court having jurisdiction over the
Company; assuming that all facts and circumstances relevant to such matter
are the same on the Successor Pass Through Trust Effective Date as is the
case on the date hereof, neither the execution and delivery of the
Assignment and Assumption Agreements on such Successor Pass Through Trust
Effective Date in accordance with the terms of the Original Pass Through
Trust Agreements and the Successor Pass Through Trust Agreements and in
the form of the applicable Form Assignment and Assumption Agreement, nor
the consummation by the parties thereto of the transactions contemplated
to be consummated thereunder on such Successor Pass Through Trust
Effective Date, will violate any law or governmental rule or regulation
applicable to the transactions contemplated by the Assignment and
Assumption Agreements;
(vi) The Subject Documents have each been duly authorized, executed
and delivered by the Company;
(vii) The sale of the Certificates (with the attached Escrow
Receipts) by the Company pursuant to the Purchase Agreement has been duly
authorized; and
(viii)There are no legal or governmental proceedings pending or
threatened to which the Company is a party or to which any of the
properties of the Company is subject other than proceedings accurately
described in all material respects in the Final Memorandum and proceedings
that would not have a Material Adverse Effect, or a Material Adverse
Effect on the power or ability of the Company to perform its obligations
under any Subject Document to which it is a party, or to consummate the
transactions contemplated by the Final Memorandum.
In addition, counsel shall state that such counsel or lawyers on his staff
have participated in the preparation of the Final Memorandum and nothing has
come to such counsel's attention that leads him to believe that the Final
Memorandum as of the date of the Purchase Agreement or at the Closing Date
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact necessary in order to make the statements therein in
the light of the circumstances under which they were made not misleading, except
that such counsel need express no opinion with respect to the financial
statements, schedules and other financial data included in the Final Memorandum.
C-2
<PAGE>
EXHIBIT D
Form of Opinion of
Ober, Kaler, Grimes & Shriver
(i) The First National Bank of Maryland ("First National") is a
national banking association duly organized and validly existing in good
standing under the laws of the United States and, in its individual
capacity, or as Pass Through Trustee, Indenture Trustee [,Paying Agent] or
Subordination Agent, has the full corporate power and authority to
execute, deliver and perform its obligations under the Pass Through Trust
Agreements, the Intercreditor Agreement, the Note Purchase Agreement, the
Liquidity Facilities, and the Escrow Agreements (collectively, the
"Transaction Documents") [and First National is a "citizen of the United
States" as defined in 49 U.S.C. ss. 40102];
(ii) Each of the Transaction Documents has been duly authorized,
executed and delivered by First National, in its individual capacity, or
as Pass Through Trustee, Indenture Trustee [,Paying Agent] or
Subordination Agent, as the case may be, and constitutes the legal, valid
and binding obligation of First National, in its individual capacity, or
as Pass Through Trustee, Indenture Trustee [,Paying Agent], or
Subordination Agent, as the case may be, enforceable against First
National, in its individual capacity, or as Pass Through Trustee,
Indenture Trustee [,Paying Agent], or Subordination Agent, as the case may
be, in accordance with their respective terms; each of the Original Pass
Through Trust Agreements is a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms;
(iii) The Certificates to be issued and dated the Closing Date have
been duly authenticated and delivered by First National pursuant to the
terms of the Original Pass Through Trust Agreements;
(iv) The Certificates are the legal, valid and binding obligations
of the Original Trusts, enforceable against the Original Trusts in
accordance with their terms and the terms of the Original Pass Through
Trust Agreements and are entitled to the benefits of the related Pass
Through Trust Agreements; the Exchange Certificates when issued in
accordance with the terms of the Original Pass Through Trust Agreements
and the Registration Rights Agreement, will be entitled to the benefits
and security afforded by the Original Pass Through Trust Agreements in
accordance with the terms of the Original Pass Through Trust Agreements;
(v) The execution, delivery and performance by First National, in
its individual capacity, or as Pass Through Trustee or as Indenture
Trustee [,Paying
<PAGE>
Agent] or Subordination Agent, as the case may be, of the Transaction
Documents or the Certificates will not contravene (i) any provision of
applicable law of the United States or the State of Maryland governing the
banking or trust powers of First National, (ii) the certificate of
incorporation or by-laws of First National, (iii) to such counsel's
knowledge, any agreement or other instrument binding upon First National
or any of its subsidiaries that is material to First National and its
subsidiaries, taken as a whole, or (iv) to such counsel's knowledge, any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over First National or any subsidiary;
(vi) No authorization, consent or approval of, notice to or order
of, or filing with, any governmental authority or agency of the United
States or the State of Maryland governing the banking or trust powers of
First National is required for the execution, delivery or performance by
First National, in its individual capacity, or as Pass Through Trustee,
Indenture Trustee [,Paying Agent] or Subordination Agent, as the case may
be, of the Transaction Documents or the Certificates;
(vii) Assuming that the Trusts will not be taxable as corporations,
but, rather, will be classified as grantor trusts under subpart E, Part I
of Subchapter J of (or as a partnership under) the United States Internal
Revenue Code of 1986, as amended, (i) the Trusts will not be subject to
any tax (including, without limitation, net or gross income, tangible or
intangible property, net worth, capital, franchise or doing business tax),
fee or other governmental charge under the laws of the State of Maryland
or any political subdivision thereof and (ii) Certificateholders that are
not residents of or otherwise subject to tax in Maryland will not be
subject to any tax (including, without limitation, net or gross income,
tangible or intangible property, net worth, capital, franchise or doing
business tax), fee or other governmental charge under the laws of the
State of Maryland or any political subdivision thereof as a result of
purchasing, holding (including receiving payments with respect to) or
selling an Certificate;
(viii)To such counsel's knowledge, there are no proceedings pending
or threatened against or affecting First National in any court or before
any governmental authority, agency, arbitration board or tribunal which,
if adversely determined, individually or in the aggregate, would
materially and adversely affect any Trust or question the right, power and
authority of First National, in its individual capacity, or as Pass
Through Trustee, Indenture Trustee, [Paying Agent] or Subordination Agent,
as the case may be, to enter into or perform its obligation under the
Transaction Documents; and
(ix) Each of the Equipment Notes to be delivered to and registered
in the name of the Subordination Agent pursuant to the Participation
Agreements shall be held by the Subordination Agent as the trustee of the
Trustee under each Trust on behalf of the Certificateholders of such
Trust.
D-2
Note to Exhibit 10.2
The following Participation Agreement is substantially identical in
all material respects to three additional Participation Agreements except as
follows:
- - --------------------------------------------------------------------------------
Owner Participant Date Aircraft (Tail No.)
- - --------------------------------------------------------------------------------
NCC Charlie Company* September 10, 1998* N575ML*
- - --------------------------------------------------------------------------------
NCC Charlie Company September 10, 1998 N576ML
- - --------------------------------------------------------------------------------
General Electric Capital Corporation November 10, 1998 N577ML
- - --------------------------------------------------------------------------------
- - ----------
* Filed document
<PAGE>
================================================================================
PARTICIPATION AGREEMENT [N576ML]
Dated as of September 10, 1998
among
MIDWAY AIRLINES CORPORATION,
Lessee
NCC CHARLIE COMPANY
as Owner Participant,
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
not in its individual capacity (except as otherwise
expressly set forth herein) but solely as,
Owner Trustee
THE FIRST NATIONAL BANK OF MARYLAND,
Indenture Trustee
THE FIRST NATIONAL BANK OF MARYLAND,
Pass-Through Trustee
and
THE FIRST NATIONAL BANK OF MARYLAND
Subordination Agent
================================================================================
COVERING ONE CANADAIR REGIONAL JET SERIES 200ER
AIRCRAFT BEARING U.S. REGISTRATION NO. N576ML
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I. INTERPRETATION................................................-2-
Section 1.01 Definitions.....................................-2-
Section 1.02 References......................................-2-
Section 1.03 Headings........................................-2-
Section 1.04 Appendices Schedules and Exhibits...............-3-
ARTICLE II. SALE, LEASING AND SECURED LOAN TRANSACTIONS...................-3-
Section 2.01 Participation...................................-3-
(a) Sale and Purchase...............................-3-
(b) Leasing.........................................-3-
(c) Owner Participant's Equity Investment...........-3-
(d) Secured Loan....................................-3-
(e) Delivery Date...................................-3-
Section 2.02 Closing Procedure...............................-4-
(a) Time and Place..................................-4-
(b) Actions of the Owner Trustee....................-4-
(c) Actions of the Lessee...........................-5-
ARTICLE III. CONDITIONS PRECEDENT..........................................-6-
Section 3.01 Conditions Precedent to Obligations
of Participant..................................-6-
(a) Notice..........................................-6-
(b) Delivery of Documents...........................-6-
(c) Airworthiness...................................-9-
(d) Other Commitments...............................-9-
(e) Violation of Law................................-9-
(f) [Reserved]......................................-10-
(g) No Event of Default.............................-10-
(h) No Event of Loss................................-10-
(i) Title...........................................-10-
(j) Certification...................................-10-
(k) Section 1110....................................-10-
(l) Filings.........................................-10-
(m) Financing Statements............................-10-
(n) Precautionary Financing Statements..............-10-
(o) No Proceedings..................................-11-
(p) Governmental Action.............................-11-
(q) Note Purchase Agreement.........................-11-
(r) Perfected Security Interest.....................-11-
(s) Representations and Warranties..................-11-
-i-
<PAGE>
Section 3.02 Conditions Precedent to Obligations
of Lessee ......................................-11-
(a) Documents.......................................-11-
(b) Other Conditions Precedent......................-12-
(c) [Reserved]......................................-12-
Section 3.03 Post-Registration Opinion.......................-12-
ARTICLE IV. LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS.............-12-
Section 4.01 Lessee's Representations and Warranties.........-12-
Section 4.02 Certain Covenants of Lessee.....................-15-
(a) Filings and Recordings..........................-15-
(b) Registration....................................-16-
(c) Information.....................................-18-
(d) Corporate Existence.............................-18-
(e) Merger and Consolidation........................-18-
(f) Change of Location..............................-19-
(g) Financial Statements............................-20-
(h) Notice of Sublease..............................-20-
(i) Filing of Documents.............................-21-
(j) Annual Foreign Opinion..........................-21-
(k) Lessee's Agreement Regarding Debt...............-21-
Section 4.03 Survival of Representations and
Warranties......................................-21-
ARTICLE V. OTHER PARTIES' REPRESENTATIONS, WARRANTIES
AND COVENANTS..................................................-22-
Section 5.01 Representations, Warranties and
Covenants of Owner Participant..................-22-
(a) Representations and Warranties..................-22-
(b) Lessor's Liens..................................-23-
(c) Assignment of Interests of Owner
Participant.....................................-24-
(d) Actions with Respect to Lessor's Estate,
Etc.............................................-25-
(e) Citizenship.....................................-25-
Section 5.02 Citizenship.....................................-26-
(a) Generally.......................................-26-
(b) Owner Trustee...................................-26-
Section 5.03 Representations, Warranties and Covenants
of Trust Company and the Owner Trustee..........-27-
(a) Representations and Warranties..................-27-
(b) Lessor's Liens..................................-29-
(c) Indemnity for Lessor's Liens....................-29-
(d) Securities Act..................................-29-
(e) Actions With Respect to Lessor's Estate,
Etc.............................................-29-
(f) Other Business..................................-29-
(g) Performance of Agreements.......................-29-
-ii-
<PAGE>
Section 5.04 Representations, Warranties and Covenants of
the Indenture Trustee............................-30-
(a) Representations and Warranties...................-30-
(b) Indenture Trustee's Liens........................-31-
(c) Indemnity for Indenture Trustee's Liens..........-31-
Section 5.05 Indenture Trustee's Notice of Default............-31-
Section 5.06 Releases from Indenture..........................-31-
Section 5.07 The Lessee's Right of Quiet Enjoyment............-31-
Section 5.08 Pass-Through Trustee's Representations and
Warranties.......................................-31-
Section 5.09 Survival of Representations, Warranties and
Covenants........................................-33-
Section 5.10 Lessee's Assumption of the Equipment Notes.......-33-
Section 5.11 Compliance with Trust Agreement, Etc.............-35-
Section 5.12 Subordination Agent's Representations, Warranties
and Covenants....................................-35-
(a) Representations and Warranties...................-35-
(b) Covenants........................................-37-
Section 5.13 Amendments to the Indenture......................-37-
ARTICLE VI. TAXES.........................................................-37-
Section 6.01 Lessee's Obligation to Pay Taxes.................-37-
(a) Generally........................................-37-
(b) Exceptions.......................................-39-
(c) Withholding......................................-41-
Section 6.02 After-Tax Basis..................................-42-
Section 6.03 Time of Payment..................................-43-
Section 6.04 Contests.........................................-43-
(a) Notice of Claim..................................-43-
(b) Request for Contest..............................-43-
(c) Declining to Contest; Settlement.................-46-
(d) Continuing Claims................................-46-
(e) Claims Barred....................................-47-
Section 6.05 Refunds..........................................-47-
Section 6.06 Reports..........................................-47-
Section 6.07 Survival of Obligations..........................-48-
Section 6.08 Payment of Taxes.................................-48-
Section 6.09 Reimbursements by Indemnitees Generally..........-48-
Section 6.10 Forms............................................-48-
Section 6.11 Verification.....................................-49-
Section 6.12 Non-Parties......................................-49-
Section 6.13 Foreign Tax On Loan Payments.....................-49-
ARTICLE VII. GENERAL INDEMNITY ............................................-49-
Section 7.01 Generally........................................-49-
(a) Indemnity........................................-49-
-iii-
<PAGE>
(b) Exceptions.....................................-51-
Section 7.02 Notice and Payment.............................-52-
Section 7.03 Defense of Claims..............................-53-
Section 7.04 Insured Claims.................................-53-
Section 7.05 Subrogation....................................-54-
Section 7.06 Information....................................-54-
Section 7.07 Survival of Obligations........................-54-
Section 7.08 Effect of Other Indemnities....................-54-
Section 7.09 Waiver of Certain Claims.......................-54-
Section 7.10 Certain Limitations............................-55-
Section 7.11 Certain Transfers..............................-55-
ARTICLE VIII. TRANSACTION COSTS............................................-56-
Section 8.01 Transaction Costs and Other Costs..............-56-
(a) Transaction Costs..............................-56-
(b) Continuing Expenses............................-56-
(c) Amendments and Supplements.....................-56-
ARTICLE IX. SUCCESSOR OWNER TRUSTEE .....................................-57-
Section 9.01 Appointment of Successor Owner Trustee.........-57-
(a) Resignation and Removal........................-57-
(b) Conditions to Appointment......................-57-
ARTICLE X. LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND
HOLDERS......................................................-58-
Section 10.01 Liabilities of the Owner Participant...........-58-
Section 10.02 Interest of Holders of Equipment Notes.........-58-
ARTICLE XI. OTHER DOCUMENTS..............................................-58-
Section 11.01 Consent of Lessee to Other Documents...........-58-
Section 11.02 Pass-Through Trustee's and Subordination
Agent's Acknowledgment.........................-59-
-iv-
<PAGE>
ARTICLE XII. NOTICES.......................................................-59-
Section 12.01 Notices.........................................-59-
ARTICLE XIII. REFINANCING...................................................-60-
Section 13.01 Refinancing.....................................-60-
ARTICLE XIV. PUBLICITY.....................................................-63-
Section 14.01 Publicity.......................................-63-
ARTICLE XV. MISCELLANEOUS ................................................-63-
Section 15.01 Counterparts....................................-63-
Section 15.02 No Oral Modifications...........................-63-
Section 15.03 Captions........................................-63-
Section 15.04 Successors and Assigns..........................-64-
Section 15.05 Concerning the Owner Trustee, Indenture
Trustee and the Pass-Through Trustee............-64-
Section 15.06 Severability....................................-64-
Section 15.07 Certain Limitations on Reorganization...........-64-
Section 15.08 GOVERNING LAW...................................-65-
Section 15.09 Section 1110 Compliance.........................-66-
Section 15.10 Reliance of Liquidity Providers.................-66-
-v-
<PAGE>
Schedule I Commitments
Appendix A Definitions
Exhibit A-1(a) Form of Opinion of General Counsel of Lessee
Exhibit A-1(b) Form of Opinion of Special North Carolina counsel
Exhibit A-2 Form of Opinion of Fulbright & Jaworski L.L.P.
Exhibit A-3 Form of Opinion of Ober, Kaler, Grimes & Shriver, A Professional
Corporation, as special counsel to Indenture Trustee,
Subordination Agent and Pass-Through Trustee
Exhibit A-4 Form of Opinion of Morris, James, Hitchens & Williams, as
special counsel to the Owner Trustee
Exhibit A-5 Form of Opinion of Crowe & Dunlevy P.C.
Exhibit A-6 Form of Opinion of Dewey Ballantine LLP, special counsel for the
Owner Participant and the Owner Participant Guarantor
Exhibit A-7 Form of Opinion of Counsel to the Owner Participant and the
Owner Participant Guarantor
Exhibit B-1 Form of Assignment and Assumption Agreement
Exhibit B-2 Form of Owner Participant Guaranty
Exhibit B-3 Form of Opinion of counsel to the Owner Participant and the
Owner Participant Guarantor in respect of the Assignment and
Assumption Agreement
-vi-
<PAGE>
PARTICIPATION AGREEMENT [N576ML] dated as of September 10, 1998
(this "Agreement") among MIDWAY AIRLINES CORPORATION, a Delaware corporation
(herein, together with its successors and permitted assigns, the "Lessee"),
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association,
not in its individual capacity, except as otherwise expressly stated herein, but
solely as owner trustee under the Trust Agreement referred to below (in such
capacity as trustee, together with its successors and permitted assigns, the
"Owner Trustee"), NCC CHARLIE COMPANY, a Delaware corporation (together with its
successors and permitted assigns, the "Owner Participant"), THE FIRST NATIONAL
BANK OF MARYLAND, a national banking association, as indenture trustee under the
Indenture referred to below (together with its successors and permitted assigns,
the "Indenture Trustee"), THE FIRST NATIONAL BANK OF MARYLAND, a national
banking association, as pass-through trustee of four separate Pass-Through
Trusts (together with its successors and permitted assigns, the "Pass-Through
Trustee"), and THE FIRST NATIONAL BANK OF MARYLAND, a national banking
association, as subordination agent (together with its successors and permitted
assigns, the "Subordination Agent").
W I T N E S S E T H:
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article 1 hereof.
WHEREAS, pursuant to the Purchase Agreement the Manufacturer agreed
to manufacture and sell to the Lessee and the Lessee agreed to purchase from the
Manufacturer the Aircraft; and
WHEREAS, concurrently with the execution and delivery of this
Agreement, the Owner Participant and First Union Trust Company, National
Association, are entering into the Trust Agreement whereby, among other things,
First Union Trust Company, National Association, is appointed as Owner Trustee
and has undertaken to acquire and hold the Trust Estate in trust for the benefit
of the Owner Participant; and
WHEREAS, subject to the terms and conditions of this Agreement, the
Owner Trustee is willing to purchase the Aircraft from the Seller for immediate
lease to the Lessee pursuant to the Lease; and
WHEREAS, subject to the terms and conditions of this Agreement and
the Trust Agreement, the Owner Participant is willing to make the equity
investment provided for herein to fund such purchase by the Owner Trustee; and
WHEREAS, the Owner Trustee and the Indenture Trustee are
concurrently entering into the Indenture for the benefit of the holders of the
Equipment Notes, pursuant to which Indenture the Owner Trustee shall, subject to
the terms and conditions set forth therein, issue to the Pass-Through Trustee
under each
-1-
<PAGE>
of the Pass-Through Trust Agreements, as a Loan Participant, Equipment Notes
substantially in the form set forth in the Indenture as evidence of the loan to
be made by each such Loan Participant to the Owner Trustee to finance a portion
of Lessor's Cost for the Aircraft, all as more particularly described herein and
in the Indenture; and
WHEREAS, subject to the terms and conditions of this Agreement, the
Lessee has agreed to assign to the Owner Trustee, upon the terms and conditions
contained in the Purchase Agreement Assignment and the Engine Warranty
Assignment, respectively, certain of the Lessee's rights and interests in and to
the Purchase Agreement and the Warranties (as defined in the Engine Warranty
Assignment), respectively; and
WHEREAS, to induce the Owner Participant to make the equity
investment provided for herein to fund the purchase of the Aircraft by the Owner
Trustee from the Seller, the Manufacturer has agreed to enter into the Residual
Agreement [N576ML], dated as of September 10, 1998 (the "Residual Agreement")
with the Owner Participant and to undertake the obligations provided therein;
and
WHEREAS, to induce the Owner Trustee to purchase the Aircraft and to
enter into the Lease, Investissement-Quebec, as agent of the Government of the
Province of Quebec (the "Deficiency Obligor") has agreed to enter into the
Deficiency Agreement [N576ML], dated as of September 10, 1998 (the "Deficiency
Agreement") with the Owner Trustee and the Owner Participant and to undertake
the obligations provided therein;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration and receipt and adequacy of
which is hereby acknowledged, and intending to be legally bound, the parties do
hereby agree as follows:
ARTICLE I.
INTERPRETATION
Section 1.1 Definitions. Capitalized terms used herein and defined
in Appendix A shall, except as such definitions may be specifically modified in
the body of this Agreement for the purposes of a particular section, paragraph
or clause, have the meanings given such terms in Appendix A.
Section 1.2 References. References in this Agreement to sections,
paragraphs, clauses, appendices, schedules and exhibits are to sections,
paragraphs, clauses, appendices, schedules and exhibits in and to this Agreement
unless otherwise specified.
-2-
<PAGE>
Section 1.3 Headings. The headings of the various sections,
paragraphs and clauses of this Agreement and the table of contents are for
convenience of reference only and shall not modify, define, expand or limit any
of the terms or provisions hereof.
Section 1.4 Appendices Schedules and Exhibits. The appendices,
schedules and exhibits are part of this Agreement.
ARTICLE II.
SALE, LEASING AND SECURED LOAN TRANSACTIONS
Section 2.1 Participation. Subject to all of the terms and
conditions of this Agreement, the parties agree to participate in the sale,
leasing and secured loan transactions with respect to the Aircraft provided for
in this Section 2.
(a) Sale and Purchase. The Owner Trustee agrees to purchase the
Aircraft from the Seller on the Delivery Date for a purchase price equal to
Lessor's Cost.
(b) Leasing. The Owner Trustee agrees to lease to the Lessee, and
the Lessee agrees to lease from the Owner Trustee, the Aircraft pursuant to the
Lease, such leasing to take place concurrently with the purchase of the Aircraft
by the Owner Trustee on the Delivery Date.
(c) Owner Participant's Equity Investment. The Owner Participant
agrees to provide immediately available funds in the amount determined by
multiplying Lessor's Cost by the percentage set forth opposite its name on
Schedule I (the Owner Participant's "Commitment") by paying such amount to the
Owner Trustee prior to the time of closing on the Delivery Date at the account
specified by the Lessee on or prior to the Delivery Date, such amount to be held
and applied toward the Owner Trustee's payment of Lessor's Cost for the Aircraft
on the Delivery Date (and if not so applied, to be promptly returned to the
Owner Participant). Such funds, once so applied, shall constitute an equity
investment by the Owner Participant in the Trust Estate.
(d) Secured Loan. Each Loan Participant agrees to provide
immediately available funds in the amount determined by multiplying Lessor's
Cost by the percentage set forth opposite its name on Schedule I (each such
commitment being referred to as a Loan Participant's "Commitment") to or on
behalf of the Owner Trustee by paying or causing to be paid such amount to the
Owner Trustee, at the account specified by the Lessee on or prior to the
Delivery Date, such amount to be held and applied toward the Owner Trustee's
payment of Lessor's Cost for the Aircraft on the Delivery Date (and if not so
applied, to be promptly returned to the Loan Participants). Such funds, once so
applied, shall constitute a loan to the Owner Trustee to be evidenced by the
Equipment Notes and secured as provided in the Indenture.
-3-
<PAGE>
(e) Delivery Date. The "Delivery Date" shall be the date fixed by
the Lessee in accordance with this Section 2.01(e) for the closing of the sale,
leasing and loan transactions with respect to the Aircraft contemplated hereby,
except that following such closing the "Delivery Date" shall mean the date on
which such transactions actually closed. The Lessee shall give at least two
Business Days' notice to each other party hereto of the Delivery Date, which
notice shall also specify the amount of the Owner Participant's Commitment and
each Loan Participant's Commitment. The Lessee may postpone a scheduled Delivery
Date from time to time, for any reason by notice given to the other parties
hereto not later than 2:00 p.m. on the date last scheduled as the Delivery Date,
such notice to specify a new Delivery Date. In the event that a Participant
shall have provided the amount of its Commitment to the Owner Trustee prior to
such a postponement, the Owner Trustee shall return such amount to such
Participant by 2:00 p.m. on the scheduled Delivery Date unless such Participant
shall have agreed otherwise in writing. Absent such an agreement, in the event
that the Owner Participant's Commitment is not returned to the Owner Participant
by 2:00 p.m. on a scheduled Delivery Date on which the closing does not occur,
the Lessee shall pay interest to the Owner Participant at a rate equal to the
rate per annum announced from time to time by Citibank, N.A. as its prime rate
plus two percent (2%) per annum for each day that such commitment is not
returned to the Owner Participant by 2:00 p.m.. The making available by the
Owner Participant of its Commitment at the closing shall be deemed a waiver of
notice of the Delivery Date by the Owner Participant and the Owner Trustee, and
the making available by the Loan Participants of their Commitments at the
closing shall be deemed a waiver of notice of the Delivery Date by such Loan
Participants respectively and the Indenture Trustee.
Section 2.2 Closing Procedure.
(a) Time and Place. The closing shall take place at 11:00 a.m. New
York City local time on the Delivery Date at the offices of Fulbright & Jaworski
L.L.P., 666 Fifth Avenue, New York, New York or at such other time and place as
the parties may agree. The closing shall be preceded by a pre-closing at the
same place, the time for which shall be fixed by the Lessee, at which the forms
of the Operative Agreements to be executed, the certificates and other documents
to be delivered and the forms of the legal opinions to be delivered at the
closing by each party or its counsel pursuant to this Agreement shall be
available for inspection by the parties and their respective counsel.
(b) Actions of the Owner Trustee. Upon receipt in full by the Owner
Trustee of the Commitment of each Participant together with instructions (which
may be oral) from each Participant or its special counsel that the applicable
conditions precedent set forth in Section 3.01 have been satisfied or waived by
such Participant, the Owner Trustee on the Delivery Date shall purchase the
Aircraft from the Seller, lease the Aircraft to the Lessee, issue the Equipment
Notes to the Pass-Through Trustee and make a security assignment of all of its
right, title and interest in and to the Trust Indenture Estate to the Indenture
Trustee. To accomplish such transactions, the Owner Trustee shall, concurrently
with the actions of the Lessee pursuant to
-4-
<PAGE>
Section 2.02(c), take the following actions: (i) pay or cause to be paid an
amount equal to Lessor's Cost to the Lessee for the purchase of the Aircraft by
transferring such amount in immediately available funds to the account specified
by the Lessee on or prior to the Delivery Date; (ii) authorize its
representative or representatives, who shall be a person or persons designated
by the Lessee and acceptable to the Owner Trustee, to accept delivery of the
Aircraft pursuant to this Agreement; (iii) accept the Bills of Sale for the
Aircraft; (iv) execute, and cause to be authenticated and delivered to each Loan
Participant with respect to each Pass-Through Trust Agreement, the Equipment
Notes specified, by reference to principal amounts, maturity dates and interest
rates, in the Indenture; (v) execute and deliver the Lease, the Lease
Supplement, the Indenture and the Indenture Supplement; (vi) deliver the
Aircraft to the Lessee pursuant to the Lease; and (vii) execute and deliver all
other documents or certificates and take such other actions as may be required
of the Owner Trustee on or before the Delivery Date pursuant to any Operative
Agreement. In addition, the Owner Trustee shall take such actions as may be
requested by the Lessee to effect the due registration of the Aircraft with the
FAA in the name of the Owner Trustee and to file and perfect the security
interest of the Indenture Trustee in all or any part of the Indenture Estate.
(c) Actions of the Lessee. Upon satisfaction or waiver by the Lessee
of the conditions precedent set forth in Section 3.02, the Lessee shall on the
Delivery Date sell the Aircraft (or cause the Aircraft to be sold) to the Owner
Trustee, lease the Aircraft from the Owner Trustee pursuant to the Lease, assign
to the Owner Trustee pursuant to the Purchase Agreement Assignment certain of
the Lessee's rights and interests in and to the Purchase Agreement and assign to
the Owner Trustee pursuant to the Engine Warranty Assignment the Lessee's rights
and interests in and to the Warranties (as defined in the Engine Warranty
Assignment). To accomplish such transactions the Lessee shall, concurrently with
the actions of the Owner Trustee pursuant to Section 2.02(b), take the following
actions:
(i) execute and deliver the Lease and the Lease Supplement;
(ii) authorize its representative or representatives (who
shall be the same person or persons designated by the Lessee for purposes
of clause (ii) of Section 2.02(b)), to accept delivery of the Aircraft
from the Owner Trustee pursuant to the Lease; and
(iii) execute and deliver all other documents or certificates
and take such other actions as may be required of the Lessee on or before
the Delivery Date pursuant to any Operative Agreement.
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ARTICLE III.
CONDITIONS PRECEDENT
Section 3.1 Conditions Precedent to Obligations of Participants. The
obligation of each Participant to make the Dollar amount of its respective
Commitment available for payment as directed by the Owner Trustee on the
Delivery Date is subject to satisfaction or waiver by each such Participant, on
or prior to the Delivery Date, of the conditions precedent set forth below in
this Section 3.01; provided, that it shall not be a condition precedent to the
obligation of any Participant that any document be produced or action taken that
is to be produced or taken by such Participant or by a Person within such
Participant's control; provided, further, that Sections 3.01(b)(iii), (xii),
(xix)(H) and (xx) shall not be conditions precedent to the obligation of Loan
Participant and Sections 3.01(q) and 3.01(r) shall not be conditions precedent
to the obligation of Owner Participant:
(a) Notice. Such Participant shall have received the notice of the
Delivery Date as provided in Section 2.01(e), or shall have waived such notice.
(b) Delivery of Documents. Such Participant shall, except as noted
below, have received executed counterparts of the following agreements,
instruments, certificates or documents, and such counterparts (a) shall have
been duly authorized, executed and delivered by the respective party or parties
thereto, (b) shall be reasonably satisfactory in form and substance to such
Participant and (c) shall be in full force and effect:
(i) the Lease; provided that, only the Indenture Trustee shall
receive the sole executed chattel paper original thereof;
(ii) Lease Supplement No. 1; provided that, only the Indenture
Trustee shall receive the sole executed chattel paper original thereof;
(iii) the Tax Indemnity Agreement; provided that, only Owner
Participant and Lessee shall receive copies of the Tax Indemnity
Agreement;
(iv) the Trust Agreement;
(v) the Indenture;
(vi) Indenture Supplement No. 1;
(vii) the Purchase Agreement and the Manufacturer's invoice
with respect to the Aircraft;
(viii) the Purchase Agreement Assignment and the Engine
Warranty Assignment;
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(ix) the PAA Consent and the Engine Manufacturer's Consent;
(x) the Equipment Notes dated the Delivery Date; provided
that, only the Subordination Agent shall receive the authenticated
Equipment Notes;
(xi) the Bills of Sale;
(xii) the broker's report and insurance certificates required
by Section 9 of the Lease;
(xiii) an appraisal or appraisals from GRA Aviation
Specialists, Inc., which appraisal or appraisals shall be satisfactory in
form and substance to Owner Participant; provided, that only Owner
Participant shall receive copies of such appraisal or appraisals;
(xiv) a copy of the Certificate of Incorporation and By-Laws
of Lessee and resolutions of the board of directors of Lessee, in each
case certified as of the Delivery Date, by the Secretary or an Assistant
Secretary of Lessee, duly authorizing the execution, delivery and
performance by Lessee of the Operative Agreements required to be executed
and delivered by Lessee on or prior to the Delivery Date in accordance
with the provisions hereof and thereof; (B) an incumbency certificate of
Lessee, Owner Participant, FNBM and Trust Company as to the person or
persons authorized to execute and deliver the relevant Operative
Agreements on behalf of such party; and (C) a copy of the Certificate of
Incorporation or Articles of Incorporation or Articles of Association and
By-Laws and general authorizing resolutions of the boards of directors (or
executive committees) or other satisfactory evidence of authorization of
Owner Participant, FNBM and Trust Company, certified as of the Delivery
Date by the Secretary or an Assistant Secretary of Owner Participant, FNBM
and Trust Company, respectively, which authorize the execution, delivery
and performance by Owner Participant, FNBM and Trust Company,
respectively, of each of the Operative Agreements to which it is a party,
together with such other documents and evidence with respect to it as any
Participant may reasonably request in order to establish the consummation
of the transactions contemplated by this Agreement and the taking of all
corporate proceedings in connection therewith;
(xv) an Officer's Certificate of Lessee, dated as of the
Delivery Date, stating that its representations and warranties set forth
in this Agreement are true and correct as of the Delivery Date (or, to the
extent that any such representation and warranty expressly relates to an
earlier date, true and correct as of such earlier date);
(xvi) an Officer's Certificate of Trust Company, dated as of
the Delivery Date, stating that its representations and warranties, in its
individual capacity and as Owner Trustee, set forth in this Agreement are
true and correct as of the Delivery Date (or, to the extent that any such
representation and
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warranty expressly relates to an earlier date, true and correct as of such
earlier date);
(xvii) an Officer's Certificate of Owner Participant, dated as
of the Delivery Date, stating that its representations and warranties set
forth in this Agreement are true and correct as of the Delivery Date (or,
to the extent that any such representation and warranty expressly relates
to an earlier date, true and correct as of such earlier date);
(xviii) an Officer's Certificate of FNBM, dated as of the
Delivery Date, stating that its representations and warranties, in its
individual capacity or as Indenture Trustee, a Pass-Through Trustee or
Subordination Agent, as the case may be, set forth in this Agreement are
true and correct as of the Delivery Date (or, to the extent that any such
representation and warranty expressly relates to an earlier date, true and
correct as of such earlier date);
(xix) the following opinions of counsel, in each case dated
the Delivery Date:
(A) (I) Jonathan Waller, Senior Vice President and General Counsel
of the Lessee substantially in the form of Exhibit A-1(a) hereto and (II)
Kennedy Covington, Lobdell & Hickman, special North Carolina counsel to the
Lessee, substantially in the form of Exhibit A-1(b) hereto, in each case
addressed to the Owner Participant, the Owner Trustee, the Pass-Through Trustee,
the Subordination Agent, each Liquidity Provider and the Indenture Trustee.
(B) Fulbright & Jaworski, L.L.P. special counsel for the Lessee
substantially in the form of Exhibit A-2 hereto addressed to the Owner
Participant, the Indenture Trustee, the Subordination Agent, the Owner Trustee,
the Pass-Through Trustee, each Liquidity Provider and the Lessee;
(C) Morris, James, Hitchens & Williams, special counsel for the
Owner Trustee substantially in the form of Exhibit A-3 hereto addressed to the
Owner Participant, the Indenture Trustee, the Owner Trustee, the Subordination
Agent, the Pass-Through Trustee, each Liquidity Provider and the Lessee;
(D) Ober, Kaler, Grimes & Shriver, A Professional Corporation,
special counsel for the Indenture Trustee, Pass-Through Trustee and
Subordination Agent in the form of Exhibit A-4 hereto and addressed to the
Indenture Trustee, the Owner Participant, the Subordination Agent, the Owner
Trustee, the Pass-Through Trustee, each Liquidity Provider and the Lessee;
(E) Crowe & Dunlevy P.C., special aviation counsel, substantially in
the form of Exhibit A-5 hereto and addressed to the Owner Participant, the
Indenture Trustee, the Subordination Agent, the Owner Trustee, the Pass-Through
Trustee, each Liquidity Provider and the Lessee;
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(F) special counsel for the Manufacturer, in a form reasonably
acceptable to the Owner Participant and addressed to the Owner Participant, the
Indenture Trustee, the Owner Trustee, the Pass-Through Trustee, each Liquidity
Provider and the Lessee;
(G) counsel for the Engine Manufacturer, in a form reasonably
acceptable to the Owner Participant and addressed to the Owner Participant, the
Indenture Trustee, the Owner Trustee, the Pass-Through Trustee, each Liquidity
Provider and the Lessee;
(H) in the case of the Owner Participant only, Dewey Ballantine LLP,
tax counsel to the Owner Participant, addressed to the Owner Participant, with
respect to tax matters;
(I) Dewey Ballantine LLP, special counsel for the Owner Participant
and the Owner Participant Guarantor, and the Counsel to the Owner Participant
and the Owner Participant Guarantor, substantially in the forms of Exhibits A-6
and A-7, addressed to the Indenture Trustee, the Owner Trustee, the Pass-Through
Trustee, each Liquidity Provider and the Lessee;
(J) counsel for the Deficiency Obligor, in a form reasonably
acceptable to the Owner Participant and addressed to the Owner Participant;
(K) counsel for the Seller, in a form reasonably acceptable to the
Owner Participant and addressed to the Owner Participant;
(xx) an Officer's Certificate of Lessee, dated as of the
Delivery Date, stating that the conditions to the purchase of the
Equipment Notes by the Pass-Through Trustee under the Pass-Through
Agreements have been duly satisfied or waived in accordance with its
terms; provided that only Owner Participant shall receive a copy of such
Officer's Certificate;
(xxi) the Deficiency Agreement shall be in full force and
effect; and
(xxii) the Residual Agreement shall be in full force and
effect.
(c) Airworthiness. Each Participant shall receive a copy of a
current, valid Standard Certificate of Airworthiness for the Aircraft duly
issued by the FAA.
(d) Other Commitments. Each other Participant shall have made
available the Dollar amount of its Commitment as directed by Owner Trustee in
accordance with Section 2.01(c) or 2.01(d), as the case may be.
(e) Violation of Law. No change shall have occurred after the date
of this Agreement in any Applicable Law that makes it a violation of Law for (a)
Lessee, any Participant, Subordination Agent, Pass-Through Trustee, Owner
Trustee or the
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Indenture Trustee to execute, deliver and perform the Operative Agreements to
which any of them is a party or (b) any Participant to make the Dollar amount of
its Commitment available or, in the case of any Loan Participant, to acquire an
Equipment Note or to realize the benefits of the security afforded by the
Indenture.
(f) [Reserved].
(g) No Event of Default. On the Delivery Date, no event shall have
occurred and be continuing, or would result from the sale, mortgage or lease of
the Aircraft, which constitutes a Default, Event of Default, Indenture Default
or Indenture Event of Default.
(h) No Event of Loss. No Event of Loss with respect to the Airframe
or any Engine shall have occurred and no circumstance, condition, act or even
that, with the giving of notice or lapse of time or both, would give rise to or
constitute an Event of Loss with respect to the Airframe or any Engine shall
have occurred.
(i) Title. Owner Trustee shall have good title (subject to filing
and recordation of the FAA Bill of Sale with the FAA) to the Aircraft, free and
clear of Liens, except Permitted Liens.
(j) Certification. The Aircraft shall have been duly certificated by
the FAA as to type and airworthiness as required by the terms of the Lease.
(k) Section 1110. Owner Trustee, as lessor under the Lease (and
Indenture Trustee, as assignee of Owner Trustee under the Indenture), shall be
entitled to the benefits of Section 1110 (as currently in effect) with respect
to the right to take possession of the Airframe and Engines as provided in the
Lease in the event of a case under Chapter 11 of the Bankruptcy Code in which
Lessee is a debtor.
(l) Filings. On the Delivery Date (i) application for registration
of the Aircraft in the name of the Owner Trustee shall have been duly made with
the FAA in compliance with the provisions of the Transportation Code; and (ii)
the Indenture, Indenture Supplement No. 1, the Lease, Lease Supplement No. 1 and
the FAA Bill of Sale shall have been duly filed for recordation (or shall be in
the process of being so duly filed for recordation) with the FAA in accordance
with the Transportation Code.
(m) Financing Statements. A Uniform Commercial Code financing
statement or statements covering the security interest contemplated by the
Indenture shall have been executed and delivered by the Owner Trustee as debtor
and by the Indenture Trustee as secured party, and such financing statement or
statements shall have been duly filed in all places necessary or desirable
within the State of Delaware.
(n) Precautionary Financing Statements. A Uniform Commercial Code
"precautionary" financing statement or statements describing the Lease as a
lease but covering any security interest in favor of the Owner Trustee (and the
Indenture Trustee
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as assignee of the Owner Trustee) which may be created thereby, shall have been
executed and delivered by the Lessee and the Owner Trustee (naming the Owner
Trustee as Lessor and secured party and Indenture Trustee as assignee), and
shall have been duly filed in all places necessary or desirable within the State
of North Carolina.
(o) No Proceedings. No action or proceeding shall have been
instituted, nor shall any action be threatened in writing, before any
governmental authority, nor shall any order, judgment or decree have been issued
or proposed to be issued by any Governmental authority, to set aside, restrain,
enjoin or prevent the completion and consummation of this Agreement or any other
Operative Agreement or the transactions contemplated hereby or thereby.
(p) Governmental Action. All appropriate action required to have
been taken prior to the Delivery Date by the FAA, or any governmental or
political agency, subdivision or instrumentality of the United States, in
connection with the transactions contemplated by this Agreement shall have been
taken, and all orders, permits, waivers, authorizations, exemptions and
approvals of such entities required to be in effect on the Delivery Date in
connection with the transactions contemplated by this Agreement shall have been
issued.
(q) Note Purchase Agreement. The conditions precedent to the
obligations of the Loan Participants and the other requirements relating to the
Aircraft and the Equipment Notes set forth in the Note Purchase Agreement shall
have been satisfied.
(r) Perfected Security Interest. On the Delivery Date, after giving
effect to the filing of the documents referenced in Section 3.01(l)(ii) and the
financing statements referenced in Sections 3.01(m) and (n), the Indenture
Trustee shall have received a duly perfected first priority security interest in
all of Owner Trustee's right, title and interest in the Aircraft and the Lease,
subject only to Permitted Liens.
(s) Representations and Warranties. The representations and
warranties of each other party to this Agreement made, in each case, in this
Agreement and in any other Operative Agreement to which it is party, shall be
true and accurate in all material respects as of the Delivery Date (unless any
such representation and warranty shall have been made with reference to a
specified date, in which case such representation and warranty shall be true and
accurate as of such specified date) and each other party to this Agreement shall
have performed and observed, in all material respects, all of its covenants,
obligations and agreements in this Agreement and in any other Operative
Agreement to which it is a party to be observed or performed by it as of the
Delivery Date.
Section 3.2 Conditions Precedent to Obligations of Lessee. The
obligation of Lessee to lease the Aircraft on the Delivery Date is subject to
the satisfaction or waiver by Lessee, on or prior to the Delivery Date, of the
conditions precedent set forth below in this Section 3.02.
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(a) Documents. Executed originals of the agreements, instruments,
certificates, documents and opinions described in Section 3.01(b) shall have
been received by Lessee, except as specifically provided therein, and shall be
satisfactory to Lessee, unless the failure to receive any such agreement,
instrument, certificate or document is the result of any action or inaction by
Lessee.
(b) Other Conditions Precedent. Each of the conditions set forth in
Sections 3.01(c), (d) (as to all Participants), (e), (g) (as to Indenture
Defaults and Indenture Events of Default not arising from Defaults or Events of
Default, as the case may be), (h), (i), (j), (k), (l), (m), (n) and (o) shall
have been satisfied or waived by Lessee, unless the failure of any such
condition to be satisfied is the result of any action or inaction by Lessee.
(c) [Reserved].
Section 3.3 Post-Registration Opinion. Promptly upon the
registration of the Aircraft and the recordation of the Documents referenced in
Section 3.01(l)(ii), Lessee will direct Crowe & Dunlevy P.C., special counsel in
Oklahoma City, Oklahoma, to deliver to Lessee, each Participant, Owner Trustee
and the Indenture Trustee a favorable opinion or opinions addressed to each of
them with respect to such registration and recordation.
ARTICLE IV.
LESSEE'S REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 4.1 Lessee's Representations and Warranties. The Lessee
represents and warrants that, as of the Delivery Date (unless any such
representation and warranty is specifically made as of an earlier date, in which
case the Lessee represents and warrants as of such earlier date):
(a) the Lessee is a corporation duly organized and validly existing
and is in good standing under the laws of Delaware, has its principal place of
business and chief executive office (as such terms are used in Article 9 of the
Uniform Commercial Code) in Durham, North Carolina, and is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the failure to be so qualified or in good standing would have a materially
adverse effect on its business or would impair its ability to perform its
obligations under the Lessee Documents;
(b) the Lessee has full power, authority and legal right to conduct
its business and operations as currently conducted and to own or hold under
lease its properties and to enter into and perform its obligations under the
Lessee Documents;
(c) the Lessee is an "air carrier" within the meaning of the
Transportation Code and a holder of a certificate under Section 41102(a) of the
Transportation Code and a "citizen of the United States" within the meaning of
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Section 40102(a)(15) of the Transportation Code holding an "air carrier
operating certificate" issued under Chapter 447 of the Transportation Code for
aircraft capable of carrying ten or more individuals or 6,000 pounds or more of
cargo, and each such certificate is in full force and effect;
(d) the Lessee possesses all necessary certificates, franchises,
licenses, permits, rights and concessions and consents (collectively "permits")
which are necessary to the operation of the routes flown by it and the conduct
of its business and operations as currently conducted and each such permit is in
full force and effect, except for any such permits the failure to have or
maintain which would not have a material adverse effect on the Lessee or its
ability to perform its obligations under the Lessee Documents;
(e) the execution, delivery and performance of the Lessee Documents
by the Lessee have been duly authorized by all necessary corporate action on the
part of the Lessee and do not require any stockholder approval, or approval or
consent of any trustee or holder of any indebtedness or obligations of the
Lessee, and each such Lessee Documents has been duly executed and delivered and
constitutes the legal, valid and binding obligations of the Lessee enforceable
against it in accordance with the terms thereof except as such enforceability
may be limited by bankruptcy, insolvency, or other similar laws or by general
equitable principles;
(f) no authorization, consent or approval of or other action by, and
no notice to or filing with, any United States federal or state governmental
authority or regulatory body is required for the execution, delivery or
performance by the Lessee of the Lessee Documents except for such registrations,
applications and recordings referred to in the opinion of Crowe and Dunlevy P.C.
delivered pursuant to Sections 3.01(b)(xviii)(E) and the filings referred to in
Section 3.01(l)(ii);
(g) neither the execution, delivery or performance by the Lessee of
the Lessee Documents nor compliance with the terms and provisions hereof or
thereof, conflicts or will conflict with or results or will result in a breach
or violation of any of the terms, conditions or provisions of, or will require
any consent (other than the PAA Consent and the Engine Manufacturer's Consent)
or approval under, any law, governmental rule or regulation or the charter
documents, as amended, or bylaws, as amended, of the Lessee or any order, writ,
injunction or decree of any court or governmental authority against the Lessee
or by which it or any of its properties is bound or any indenture, mortgage or
contract or other agreement or instrument to which the Lessee is a party or by
which it or any of its properties is bound, or constitutes or will constitute a
default thereunder or results or will result in the imposition of any Lien upon
the Aircraft or any of its properties (other than Permitted Liens), except for
any such conflict, breach or default which would not have a material adverse
effect on the Lessee or its ability to perform its obligations under the Lessee
Documents;
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(h) except as disclosed in the Offering Memo, there are no pending
or, to the knowledge of the Lessee, threatened actions, suits, investigations or
proceedings against or affecting the Lessee or any of its properties before or
by any court, governmental agency, arbitration board, tribunal or other
administrative agency which, (A) may reasonably be expected to have a materially
adverse effect on the Lessee's consolidated financial condition, business, or
operations, or (B) would materially adversely affect the ability of the Lessee
to consummate the transactions contemplated by the Operative Agreements or
perform its obligations under the Lessee Documents;
(i) [Reserved].
(j) except for (A) the registration in the Owner Trustee's name of
the Aircraft pursuant to the Transportation Code, (B) the filing with and, where
appropriate, recordation by the FAA pursuant to the Transportation Code of the
Indenture (including Indenture Supplement No. 1), and the Lease (including Lease
Supplement No. 1), (C) the filing of the financing statements referred to in
Sections 3.01(m) and 3.01(n) and (D) the taking of possession by the Indenture
Trustee of the original counterpart of the Lease (including Lease Supplement No.
1), no further action, including any filing or recording of any document, is
necessary or advisable in order (i) to establish the Owner Trustee's title to
and interest in the Aircraft and the Lessor's Estate as against the Lessee and
any third parties, or (ii) to perfect the first security interest in and Lien on
the Trust Indenture Estate in favor of the Indenture Trustee;
(k) the Owner Trustee has received good and marketable title to the
Aircraft, free and clear of all Liens, except Permitted Liens;
(l) assuming the truth of the representations contained in Section
3.12 of the Pass-Through Trust Agreements and compliance with Section 10.05 of
the Indenture, the execution and delivery of this Agreement and the other
Operative Agreements and the consummation of the transactions contemplated
hereby and thereby will not involve any prohibited transaction within the
meaning of Section 406(a) of ERISA or Section 4975(c)(1)(A) through (D) of the
Code;
(m) all premiums which have become due with respect to the insurance
required to be provided by the Lessee on or prior to the Delivery Date under
Section 9 of the Lease have been paid by the Lessee;
(n) no Default or Event of Default exists and no Event of Loss, or
event which with the passage of time would constitute an Event of Loss, exists;
(o) the Aircraft is in such condition so as to enable the
airworthiness certificate of such Aircraft to be in good standing under the
Transportation Code; the Aircraft has been duly certificated by the FAA as to
type and airworthiness; there is in effect with respect to the Aircraft a
current and valid airworthiness certificate issued by the FAA pursuant to the
Transportation Code;
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(p) the Lessee shall not be in default (after any applicable grace
periods) in the performance of any material term or condition of the Purchase
Agreement;
(q) neither the Lessee nor any subsidiary of the Lessee is an
"investment company" or a company "controlled by an investment company" within
the meaning of the Investment Company Act of 1940, as amended;
(r) there are no broker's or underwriter's fees payable on behalf of
the Lessee in connection with the transactions contemplated in the Operative
Agreements, other than those of the Placement Agents and the Lessee Advisor
referred to in Article 8 hereof;
(s) the Lessee represents and warrants that it has authorized no one
to act on its behalf in connection with the offer or sale of any interest in the
Equipment Notes or the Pass-Through Certificates other than the Placement
Agents;
(t) the audited consolidated balance sheet of Lessee with respect to
Lessee's most recent fiscal year included in Lessee's most recent Annual Report
on Form 10-K, as amended, filed by Lessee with the SEC, and the related
consolidated statements of operations and cash flows for the period then ended
have been prepared in accordance with generally accepted accounting principles
in the United States and fairly present in all material respects the financial
condition of Lessee and its consolidated subsidiaries as of such date and the
results of its operations and cash flows for such period, and since the date of
such balance sheet, there has been no material adverse change in such financial
condition or operations of Lessee, except for matters disclosed in (a) the
financial statements referred to above, (b) any subsequent Quarterly Report on
Form 10-Q or Current Report on Form 8-K filed by Lessee with the SEC on or prior
to the date hereof, or (c) otherwise disclosed in writing to the Owner
Participant;
(u) to the best of Lessee's knowledge, Lessee is not in default
under, or in violation of, any Applicable Law, the violation of which would give
rise to a Material Adverse Change to Lessee.
(v) neither Lessee nor any person authorized to act on its behalf
has directly or indirectly offered any beneficial interest or security relating
to the ownership of the Aircraft or the Lease or any interest in the Trust
Estate and Trust Agreement, or any of the Equipment Notes or any other interest
in or security under the Indenture, for sale to, or solicited any offer to
acquire any such interest or security from, or has sold any such interest or
security to, any person in violation of the Securities Act or any applicable
state securities laws;
(w) Owner Trustee, as lessor under the Lease (and Indenture Trustee,
as assignee under the Indenture), is entitled to the benefits of Section 1110
(as currently in effect) with respect to the Aircraft; and
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(x) 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.
Section 4.2 Certain Covenants of Lessee. The Lessee covenants and
agrees as follows:
(a) Filings and Recordings. The Lessee will cause to be done,
executed, acknowledged and delivered at the Lessee's cost and expense all such
further acts, conveyances and assurances as the Owner Trustee, the Indenture
Trustee, the Pass-Through Trustee or the Owner Participant shall reasonably
require for accomplishing the purposes of the Operative Agreements. Without
limiting the generality of this Section 4.02(a), the Lessee will promptly take,
or cause to be taken, at the Lessee's cost and expense, such action with respect
to the recording, filing, re-recording and re-filing of the Indenture (including
each supplement thereto), the Lease (including each supplement thereto), and any
financing statements or other instruments as may be reasonably requested by the
Indenture Trustee and appropriate, to maintain the perfection of the first
security interest and the Lien created by the Indenture, and the Owner Trustee's
title to and interest in the Aircraft and the Lessor's Estate, as against the
Lessee and any third parties, or if the Lessee cannot itself take, or cause to
be taken, such action, will furnish to the Indenture Trustee and the Owner
Trustee timely notice of the necessity of such action, together with such
instruments, in execution form, and such other information as may be required to
enable either of them to take such action at the Lessee's cost and expense in a
timely manner.
(b) Registration. From and after the Delivery Date, the Lessee shall
cause the Aircraft to be duly registered, and at all times to remain duly
registered, in the name of the Owner Trustee (provided, that the Owner Trustee
and the Owner Participant shall be and remain Citizens of the United States),
under the Transportation Code, and shall furnish to the Owner Trustee such
information as may be required to enable the Owner Trustee to make application
for such registration; provided, however, that the Lessee may, at any time cause
the Aircraft to be appropriately re-registered under the laws of a country with
which at the time of such registration the United States maintains normal
diplomatic relations and is listed on Exhibit E to the Lease; provided that:
(i) at the time of re-registration, no Specified Default
exists or would occur as a result of such re-registration;
(ii) the Lessee shall pay all fees and expenses (including the
reasonable fees and expenses of local counsel in such country) relating to
such re-registration;
(iii) the Lessee shall, at its cost, cause the interest of the
Owner Trustee as owner of the Aircraft and the Indenture Trustee as
mortgagee thereof to be duly registered or recorded under the laws of such
country and at all times
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thereafter to remain so duly registered or recorded unless and until the
registration of the Aircraft is changed as provided herein, and shall, at
its cost, cause to be done at all times all other acts including the
filing, recording and delivery of any document or instrument and the
payment of any sum necessary or, by reference to prudent industry practice
in such country, advisable in order to create, preserve and protect such
interest in the Aircraft (including the first priority duly perfected Lien
under the Indenture) as against the Lessee or any third parties in such
jurisdiction, and the laws of such country would give effect to the Owner
Trustee's title to and ownership interest in the Aircraft and the
Indenture Trustee's Lien thereon;
(iv) the obligations of the Lessee (and of the Permitted
Sublessee under a Sublease) and the rights and remedies of the Lessor and
the Owner Participant under the Operative Agreements shall remain or be,
as the case may be, legal, valid, binding and enforceable in such country;
(v) the Lessee shall ensure that all insurance required by
Section 9 of the Lease shall be in full force and effect prior to, at the
time of, and after such change in registration and the Owner Participant,
the Owner Trustee, and the Indenture Trustee shall receive a certificate
of Lessee's insurance broker to such effect;
(vi) the country of such re-registration imposes aircraft
maintenance standards approved by, or at least as stringent as those
approved by, the FAA or the central civil aviation authority of the United
Kingdom, France, Germany, Japan, the Netherlands or Canada;
(vii) it shall not be necessary by reason of such
re-registration or for purposes of enforcing remedies contained in the
Lease or the Indenture or the related Sublease for the Owner Trustee, the
Indenture Trustee or the Owner Participant to register or qualify to do
business in such country;
(viii) no Liens (except Permitted Liens) shall arise by reason
of such re-registration, and the Indenture shall continue as a first
priority Lien on the collateral thereunder;
(ix) none of the Owner Trustee, the Indenture Trustee and the
Owner Participant shall be subjected to any risk of adverse tax
consequences as a result of such re-registration for which the Lessee does
not then indemnify or cause to be indemnified such Person in a manner
satisfactory in form and substance to such Person;
(x) any export licenses and certificate of deregistration
required in connection with any repossession or return of the Aircraft
will be readily obtainable in the normal course without material delay or
material burden on
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the Owner Trustee or the Indenture Trustee, it being agreed that the
Lessee shall be responsible for the cost thereof;
(xi) there is no tort liability of the owner or lessor of an
aircraft not in possession thereof under the laws of such jurisdiction
more onerous than under the laws of the United States or any state thereof
(it being agreed that, in the event such 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);
(xii) unless Lessee shall have agreed to provide insurance
reasonably satisfactory to the Owner Participant covering the risk of
requisition of use of or title to the Aircraft by the government of such
country (so long as the Aircraft is registered under the laws of such
country), the laws of such country require fair compensation by the
government of such country payable in currency freely convertible into
Dollars and freely removable from such country (without license or permit,
unless Lessee prior to such proposed reregistration has obtained such
license or permit or such license or permit will be readily obtainable in
the normal course without material delay or material burden on the Owner
Participant) for the taking or requisition by such government of such use
or title;
(xiii) the courts of such proposed country of registry will
respect the choice of New York law to govern the Lease;
(xiv) such re-registration may not be affected until after the
Recovery Period unless the Lessee prepays on a lump sum basis any
liability due under the Tax Indemnity Agreement as a result of such
re-registration;
(xv) the Owner Participant, the Owner Trustee, and the
Indenture Trustee shall have received opinions in scope, form and
substance reasonably satisfactory to them, of counsel, expert in the laws
of such country, to the effect set forth in clauses (iii), (iv) (with
respect to the obligations of the Lessee under the Lease), (vii), (ix),
(x), (xi), (xii) and (xiii);
(xvi) such proposed change in registration is made in
connection with a Sublease to a Permitted Air Carrier and such Permitted
Sublessee is domiciled in such country; and
(xvii) Lessee shall deliver such request to Lessor and Owner
Participant in writing at least 20 days in advance of the date of any such
proposed change in registration; and
(xviii) the Deficiency Agreement and the Residual Agreement
shall remain in full force and effect.
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Lessee agrees to pay on an After-Tax Basis all reasonable out-of-pocket costs
and expenses (including, without limitation, reasonable counsel fees and
disbursements) of the Owner Participant, the Owner Trustee, and the Indenture
Trustee in connection with any re-registration pursuant to this Section.
(c) Information. The Lessee shall promptly furnish to the Owner
Trustee and the Owner Participant such information as may be required to enable
the Owner Trustee and the Owner Participant timely to file any reports required
to be filed by the Owner Trustee as the Lessor and the Owner Participant under
the Lease with any governmental authority as a result of the Owner Trustee's
ownership interest in the Aircraft.
(d) Corporate Existence. The Lessee shall at all times maintain its
corporate existence, except as permitted by Section 4.02(e) hereof, and all of
its rights, privileges and franchises necessary in the normal conduct of its
business, except for any corporate right, privilege or franchise that it
determines is no longer necessary or desirable in the conduct of its business.
(e) Merger and Consolidation. The Lessee shall not, during the Term,
enter into any merger with or into or consolidation with, or sell, convey,
transfer, lease or otherwise dispose of in one or a series of transactions all
or substantially all of its assets as an entirety to any Person, unless the
surviving corporation or Person which acquires by purchase, conveyance, transfer
or lease all or substantially all of the assets of the Lessee as an entirety (i)
is a domestic corporation organized and existing under the laws of the United
States or any State of the United States, (ii) is a Citizen of the United
States, (iii) is a Section 1110 Person, so long as such status is a condition to
the availability of Section 1110, (iv) if not the Lessee, executes a duly
authorized, legal, valid, binding, and enforceable agreement, reasonably
satisfactory in form and substance to Owner Trustee and Owner Participant,
containing an effective assumption of all of the Lessee's, as applicable,
obligations hereunder and under the other Operative Agreements, and each other
document contemplated hereby or thereby and delivers such instrument to the
Indenture Trustee, the Owner Participant and the Owner Trustee, (v) provides an
opinion from counsel (which counsel may be in the Lessee's General Counsel)
delivered to the Owner Trustee, the Indenture Trustee and the Owner Participant,
which opinion shall be reasonably satisfactory to the Owner Participant and the
Indenture Trustee, and an officer's certificate (which may rely, as to legal
matters, on such legal opinion), each stating that such merger, consolidation,
conveyance, transfer, lease or other disposition and the instrument noted in
clause (iv) above comply with this Section 4.02(e), that such instrument is a
legal, valid and binding obligation of, and is enforceable against, such
survivor or Person, and that all conditions precedent herein provided for
relating to such transaction have been complied with, and (vi) such survivor or
Person makes such filings and recordings with the FAA as may be required
pursuant to part A of subtitle VII or Title 49, United States Code to evidence
such merger or consolidation; provided that, no such merger, consolidation or
conveyance, transfer or lease shall be permitted if, immediately after
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giving effect to such consolidation, merger, purchase, conveyance, transfer,
lease or other disposition, an Event of Default shall have occurred and be
continuing.
Upon any consolidation or merger, or any conveyance, transfer or
lease of all or substantially all of the assets of the Lessee and the
satisfaction of the conditions specified in this Section 4.02(e), the successor
corporation formed by such consolidation or into which the Lessee is merged or
the Person 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 Lessee
under this Agreement and the Lease and each other Operative Agreement and any
other document contemplated hereby and thereby to which the Lessee is a party
with the same effect as if such successor corporation had been named as the
Lessee herein and therein. No such conveyance, transfer or lease of all or
substantially all of the assets of the Lessee as an entirety shall have the
effect of releasing the Lessee or any successor corporation which shall
theretofore have become the Lessee hereunder in the manner prescribed in this
Section 4.02(e) from its liability hereunder or under the other Operative
Agreements. Nothing contained herein shall permit any lease, sublease, or other
arrangement for the use, operation or possession of the Aircraft except in
compliance with the applicable provisions of the Lease.
(f) Change of Location. The Lessee agrees to give prompt written
notice (but in any event within 30 days prior to the expiration of the period of
time specified under Applicable Law to prevent lapse of perfection) to the Owner
Participant, the Owner Trustee and the Indenture Trustee of any change in the
address of its chief executive office (as such term is used in Section 9-103(3)
of the North Carolina Uniform Commercial Code) or of any change in its corporate
name; provided that, notice is hereby given that the Lessee plans to so change
such address on or about March 1, 1999 to: 2801 Slater Road, Morrisville, North
Carolina 27560.
(g) Financial Statements. The Lessee agrees to furnish to the Owner
Participant during the Term:
(i) within 60 days after the end of each of the first three
fiscal quarters in each fiscal year of the Lessee, unaudited consolidated
balance sheets of the Lessee and its subsidiaries (if any) as of the end
of such quarter and related consolidated statements of income,
shareholder's equity and cash flows of the Lessee and its subsidiaries (if
any) for the period commencing at the end of the previous fiscal year and
ending with the end of such quarter, provided that so long as the Lessee
is subject to the reporting provisions of the Securities Exchange Act of
1934, a copy of the Lessee's quarterly report on Form 10-Q will satisfy
this requirement;
(ii) within 120 days after the end of each fiscal year of the
Lessee, a copy of the annual report for such year for the Lessee or the
affiliated group of which the Lessee is a member (on a consolidated basis,
if applicable) and a balance sheet of the Lessee and its subsidiaries (if
any) as of the end of such
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fiscal year and related statements of income, shareholder's equity and
cash flows of the Lessee for such fiscal year, in comparative form with
the preceding fiscal year, in each case certified by independent certified
public accountants of national standing as having been prepared in
accordance with generally accepted accounting principles in the United
States, provided that so long as the Lessee is subject to the reporting
provisions of the Securities Exchange Act of 1934, a copy of the Lessee's
annual report on Form 10-K will satisfy this requirement;
(iii) within 120 days after the end of each fiscal year of the
Lessee, an Officer's Certificate of the Lessee, to the effect that the
signer is familiar with or has reviewed the relevant terms of the Lease
and has made, or caused to be made under his supervision, a review of the
transactions and conditions of the Lessee during the preceding fiscal year
and that such review has not disclosed the existence during such period,
nor does the signer have knowledge of the existence as of the date of such
certificate, of any condition or event which constituted or constitutes a
Default or Event of Default, or, if any such condition or event existed or
exists, specifying the nature and period of existence thereof and what
action the Lessee has taken or is taking or proposes to take with respect
thereof; and
(iv) from time to time, such other non-confidential financial
information as the Lessor the Owner Participant may reasonably request.
(h) Notice of Sublease. In the event that the Lessee subleases the
Aircraft pursuant to Section 5(b)(x) of the Lease, it shall give notice of such
sublease to each of (i) Moody's Investor Service, 99 Church Street, New York,
New York 10007, Attention: Corporate Rating Division (facsimile no.: (212)
533-1607) and (ii) Standard and Poor's Rating Agency, 26 Broadway, 14th Floor,
New York, New York 10004 (facsimile no. (212) 412-0540).
(i) Filing of Documents. Lessee, at its sole cost and expense, will
cause the documents filed with the FAA pursuant to Section 3.01(l), the
financing statements required pursuant to Section 3.01(m) and (n) and all
continuation statements (and any amendments necessitated by any combination,
consolidation or merger pursuant to Section 4.02(e), or any relocation of its
chief executive office) in respect of such financing statements to be prepared
and, subject only to the execution and delivery thereof by Owner Trustee and
Indenture Trustee, as applicable, duly and timely filed and recorded, or filed
for recordation, to the extent permitted under the Transportation Code (with
respect to such documents filed with the FAA) or the UCC or similar law of any
other applicable jurisdiction (with respect to such other documents).
(j) Annual Foreign Opinion. If the Aircraft has been registered in a
country other than the United States pursuant to Section 4.02(b), Lessee will
furnish to Owner Trustee, Indenture Trustee and each Participant annually after
such registration is effected, an opinion of special counsel reasonably
satisfactory to Owner Participant and Indenture Trustee stating that, in the
opinion of such counsel, either
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that (i) such action has been taken with respect to the recording, filing,
rerecording and refiling of the Operative Agreements and any supplements and
amendments thereof as is necessary to establish, perfect and protect Owner
Trustee's and Indenture Trustee's respective right, title and interest in and to
the Aircraft and the Operative Agreements, reciting the details of such actions,
or (ii) no such action is necessary to maintain the perfection of such right,
title and interest.
(k) Lessee's Agreement Regarding Debt. Neither the Lessee nor any
person authorized to act on its behalf will acquire, or guaranty the payment of
any amounts due in respect of, any Equipment Note or any Pass-Through
Certificate; provided that the Lessee may, if such purchase would reduce or
eliminate any claim by the Owner Participant under Section 6.01(a)(x) or
7.01(a)(vii) purchase Pass-Through Certificates in an aggregate principal amount
not exceeding an amount equal to 20% of the aggregate principal amount of
Equipment Notes then outstanding.
Section 4.3 Survival of Representations and Warranties. The
representations and warranties of the Lessee provided in Section 4.01 and in any
other Operative Agreement shall survive the delivery of the Aircraft and the
expiration or other termination of this Agreement and the other Operative
Agreements.
ARTICLE V.
OTHER PARTIES' REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 5.1 Representations, Warranties and Covenants of Owner
Participant.
(a) Representations and Warranties. The Owner Participant represents
and warrants that, as of the Delivery Date (unless any such representation and
warranty is specifically made as of an earlier date, in which case the Owner
Participant represents and warrants as of such earlier date):
(i) it is a corporation duly incorporated and validly existing
in good standing under the laws of the State of Delaware and it has full
corporate power, authority and legal right to carry on its present
business and operations, to own or lease its properties and to enter into
and to carry out the transactions contemplated by this Agreement and the
other Operative Agreements to which it is party;
(ii) the execution, delivery and performance by it of this
Agreement and the other Operative Agreements to which it is party have
been duly authorized by all necessary ccorporate action on its part and,
do not require any governmental approvals that would be required to be
obtained by the Owner Participant;
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(iii) neither the execution, delivery or performance by the
Owner Participant of the Operative Agreements to which it is party, nor
compliance with the terms and provisions hereof or thereof, conflicts or
will conflict with or results or will result in a breach or violation of
any of the terms, conditions or provisions of, or will require any consent
or approval under any law, governmental rule or regulation applicable to
the Owner Participant or the charter documents, as amended, or bylaws, as
amended, of the Owner Participant or any order, writ, injunction or decree
of any court or governmental authority against the Owner Participant or by
which it or any of its properties is bound or any indenture, mortgage or
contract or other agreement or instrument to which the Owner Participant
is a party or by which it or any of its properties is bound, or
constitutes or will constitute a default thereunder or results or will
result in the imposition of any Lien upon any of its properties, except
for any such conflict, breach or default which would not have a material
adverse effect on the Owner Participant or its ability to perform its
obligations under the Operative Agreements;
(iv) the Operative Agreements to which it is party have been
duly executed and delivered by the Owner Participant and constitute the
legal, valid and binding obligations of the Owner Participant enforceable
against it in accordance with their terms except as such enforceability
may be limited by bankruptcy, insolvency, or other similar laws or general
equitable principles;
(v) there are no pending or, to the knowledge of the Owner
Participant, threatened actions, suits, investigations or proceedings
against the Owner Participant before any court, administrative agency or
tribunal which are expected to materially adversely affect the ability of
the Owner Participant to perform its obligations under this Agreement and
the other Operative Agreements to which it is or is to be a party and the
Owner Participant knows of no pending or threatened actions or proceedings
before any court, administrative agency or tribunal involving it in
connection with the transactions contemplated by the Operative Agreements;
(vi) neither the execution and delivery by it of this
Agreement or the other Operative Agreements to which it is a party nor the
performance of obligations hereunder or thereunder requires the consent or
approval of or the giving of notice to, the registration with, or the
taking of any other action in respect of, any governmental authority or
agency that would be required to be obtained or taken by the Owner
Participant except for filings contemplated by this Agreement;
(vii) the funds to be used by the Owner Participant to acquire
its interests under this Agreement do not constitute assets (within the
meaning of ERISA and any applicable rules and regulations) of an ERISA
Plan; and
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(viii) the Owner Participant Guarantor is a corporation with a
combined capital and surplus or net worth of at least $50,000,000.
Notwithstanding the foregoing or anything else contained in this
Agreement, the Owner Participant makes no representation or warranty in this
Agreement with respect to laws, rules or regulations relating to aviation or to
the nature or use of the equipment owned by the Owner Trustee, including,
without limitation, the airworthiness, value, condition, workmanship, design,
patent or trademark infringement, operation, merchantability or fitness for use
of the Aircraft, other than such laws, rules or regulations relating to the
citizenship requirements of the Owner Participant under applicable aviation law.
(b) Lessor's Liens. The Owner Participant represents, warrants and
covenants that on the Delivery Date there are no Lessor's Liens attributable to
it (or an Affiliate thereof). The Owner Participant agrees with and for the
benefit of the Lessee, the Owner Trustee, the Indenture Trustee and the
Pass-Through Trustee that the Owner Participant will, at its own cost and
expense, take such action as may be necessary to duly discharge and satisfy in
full, promptly after the same first becomes known to the Owner Participant, any
Lessor's Lien attributable to the Owner Participant (or an Affiliate thereof),
provided, however, that the Owner Participant shall not be required to discharge
or satisfy such Lessor's Lien which is being contested by the Owner Participant
in good faith and by appropriate proceedings so long as such proceedings do not
involve any material risk of the sale, forfeiture or loss of the Aircraft or the
Lessor's Estate or the Trust Indenture Estate or any interest in any thereof or
otherwise materially adversely affect the validity or priority of the Lien of
the Indenture.
(c) Assignment of Interests of Owner Participant. At any time after
the Delivery Date and subject to satisfaction of the conditions set forth in
this Section 5.01(c), the Owner Participant may assign, convey or otherwise
transfer to a single institutional investor or an Affiliate of an institutional
investor all (but not less than all) of the Beneficial Interest, provided that
(i) the Owner Participant gives the Lessee and the Indenture Trustee at least 10
days' notice of such assignment, conveyance or other transfer, (ii) the Owner
Participant and any Owner Participant Guarantor shall remain liable for all
obligations of the Owner Participant under the Trust Agreement and the Operative
Agreements to which the Owner Participant is a party to the extent (but only to
the extent) relating to the period on or before the date of such transfer, (iii)
the transferee agrees by a written instrument substantially in the form attached
hereto as Exhibit B-1 (or otherwise in form and substance reasonably
satisfactory to Lessee and Indenture Trustee) to assume liability for, and
undertake performance of, all obligations of the Owner Participant under the
Trust Agreement and the other Operative Agreements to which such Owner
Participant is a party relating to the period after the date of transfer, (iv)
the transferee shall make a representation to the effect that the funds to be
used by the transferee to acquire the Beneficial Interest do not constitute the
assets of an ERISA Plan, (v) at or prior to the time of such transfer, the
transferee shall furnish an opinion of counsel substantially in the form
attached hereto
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as Exhibit B-3 (or otherwise in form and substance reasonably satisfactory to
Lessee and Indenture Trustee) (which counsel may be in-house counsel) to the
effect that such transferee and any guarantor of the payment and performance
obligations of such transferee, as the case may be, shall have requisite power
and authority and legal right to enter into and carry out the transactions
contemplated hereby; and that such agreement and any guaranty of the
transferee's obligations has been duly authorized, executed and delivered by the
transferee or the guarantor of the payment and performance obligations of such
transferee, as the case may be, and is a valid and binding agreement of the
transferee or the guarantor of the payment and performance obligations of such
transferee enforceable in accordance with its terms, subject to customary
exceptions for such opinions and that the transfer does not violate the
Applicable Law of the jurisdiction in which such counsel is located, and (vi)
the Lessee shall have received an opinion from counsel selected by Owner
Participant and reasonably acceptable to Lessee that no withholding tax will be
imposed by the U.S. on Basic Rent or by any foreign jurisdiction on the interest
on the Equipment Notes or the Pass-Through Certificates, in each case assuming
that the Lessee and the Holders of the Equipment Notes and the Pass-Through
Certificates are U.S. Persons. Any such transferee shall (a) be (i) a bank,
savings institution, finance company, leasing company or trust company, national
banking association acting for its own account or in a fiduciary capacity as
trustee or agent under any pension, retirement, profit sharing or similar trust
or fund, insurance company, fraternal benefit society or a corporation acting
for its own account having a combined capital and surplus (or, if applicable,
consolidated net worth or its equivalent) of not less than $50,000,000, (ii) a
subsidiary of any Person described in clause (i) where such Person provides (A)
support for the obligations assumed by such transferee subsidiary reasonably
satisfactory to the Lessee, the Owner Trustee and the Indenture Trustee or (B) a
guaranty of such transferee subsidiary's obligations substantially in the form
attached hereto as Exhibit B-2 (or otherwise in form and substance reasonably
satisfactory to Lessee, Owner Trustee and Indenture Trustee), or (iii) an
Affiliate of the transferring Owner Participant, so long as such Affiliate has a
combined capital and surplus (or, if applicable, consolidated net worth or its
equivalent) of not less than $50,000,000 (unless the Owner Participant remains
liable for the obligations of such Affiliate under the Operative Agreements, in
which case there shall be such net worth requirement), (b) be legally capable of
binding itself to the obligations of the Owner Participant and shall expressly
agree to assume all obligations of the Owner Participant under the Trust
Agreement and this Agreement and (c) provide representations, warranties, and
covenants substantially similar to those contained in clauses (a), (c) and (f)
of this Section 5.01; provided that, without the prior written consent of the
Lessee, such transferee shall not be an airline or other aircraft operator or
competitor of the Lessee in the business of air transportation or an Affiliate
of any thereof unless such Affiliate is (i) General Electric Company,
International Lease Finance Corporation, GPA, GATX Corporation or Bouillon
Aviation, (ii) any wholly-owned subsidiary of an entity listed in the foregoing
clause (i) that is (X) a special purpose corporation limited to holding Owner
Participant's interest in the transactions or (Y) primarily engaged in the
business of owning and leasing assets to third-party lessees and which is not
engaged in the business of an airline, other commercial aircraft operation or
freight forwarder or (iii) an entity from which Lessee has leased an
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aircraft directly and not as a result of the transfer to such entity of any
aircraft subject to an existing lease with Lessee; provided that Lessee's
consent shall not be required if an Event of Default shall have occurred and be
continuing at the time of such transfer; and provided further that neither such
transferee nor any Affiliate thereof shall (x) be a party to any material
litigation or arbitration (whether as plaintiff or defendant) with the Lessee or
any Affiliate of the Lessee or (y) be attempting a hostile takeover of the
Lessee or any Affiliate of the Lessee. A transferee hereunder shall be a Citizen
of the United States or has established a voting trust, voting powers or other
arrangement reasonably satisfactory to the Indenture Trustee, the Owner Trustee,
and the Lessee to permit the Owner Trustee to be the registered owner of the
Aircraft under the Transportation Code, without in any way restricting the
Lessee's use and operation of the Aircraft. The Owner Trustee shall not be on
notice of or otherwise bound by any such assignment, conveyance or transfer
unless and until it shall have received an executed counterpart of the
instrument of such assignment, conveyance or transfer. Upon any such disposition
by the Owner Participant to a transferee as above provided, the transferee shall
be deemed the "Owner Participant" for all purposes of the Operative Agreements,
and shall be deemed to have acquired the same interest in the Lessor's Estate as
theretofore held by its transferor; and each reference therein to the "Owner
Participant" shall thereafter be deemed a reference to such transferee. All
reasonable fees and expenses incurred by Lessee, Owner Participant, Indenture
Trustee, any Holder or Owner Trustee in connection with any transfer by the
Owner Participant permitted by this Section 5.01(c) will be reimbursed by the
Owner Participant, unless an Event of Default has occurred and is continuing, in
which case any fees and expenses incurred by Lessee shall not be so reimbursed;
provided, however, that in each case bills shall be submitted to the Owner
Participant prior to payment.
(d) Actions with Respect to Lessor's Estate, Etc. The Owner
Participant agrees that it will not take any action to subject the Lessor's
Estate or the trust established by the Trust Agreement, as debtor, to the
reorganization or liquidation provisions of the Bankruptcy Code or any other
applicable bankruptcy or insolvency statute.
(e) Citizenship. The Owner Participant agrees, solely for the
benefit of the Lessee, the Pass-Through Trustee, the Indenture Trustee and the
Owner Trustee, that if at any time on or after the Delivery Date when the
Aircraft is registered or the Lessee proposes to register the Aircraft in the
United States (i) either the Owner Participant shall cease to be, or an event
which has been publicly disclosed has occurred of which the Owner Participant
has knowledge and which will cause the Owner Participant to cease to be, a
Citizen of the United States, and (ii) the Aircraft shall or would therefore
become ineligible for registration in the name of the Owner Trustee under the
Transportation Code and regulations then applicable thereunder (such eligibility
to be determined without regard to any provision of law that permits the U.S.
registration of the Aircraft by restricting where it is based or used), then the
Owner Participant shall give notice thereof to the Lessee, the Owner Trustee,
the Pass-Through Trustee and the Indenture Trustee and shall (at its own expense
and without any reimbursement or indemnification from the Lessee) immediately
(and in any event
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within a period of 20 days) promptly (x) effect a voting trust or other similar
arrangement, (y) transfer in accordance with the terms of this Agreement and the
Trust Agreement all its rights, title and interest in and to such Trust
Agreement, the Lessor's Estate and this Agreement, or (z) take any other
alternative action that would prevent any deregistration, or maintain or permit
the United States registration, of the Aircraft (determined without regard to
any provision of law that permits the U.S. registration of the Aircraft by
restricting where it is based or used). Each party hereto agrees, upon the
request and at the sole expense of the Owner Participant, to cooperate with the
Owner Participant in complying with its obligations under the provisions of the
first sentence of this Section 5.01(e), but without any obligation on the part
of such other party to take any action believed by it in good faith to be
unreasonably burdensome to such party or materially adverse to its business
interests.
Section 5.2 Citizenship.
(a) Generally. The Owner Trustee, in its individual capacity,
represents and warrants that it is and on the Delivery Date will be a Citizen of
the United States. If the Owner Trustee in its individual capacity does not
comply with the requirements of this Section 5.02, the Owner Trustee and the
Indenture Trustee hereby agree that no Default shall be deemed to exist due to
non-compliance by the Lessee with the registration requirements in the Lease or
in Section 4.02(b) hereof occasioned solely by such noncompliance of the Owner
Trustee.
(b) Owner Trustee. The Owner Trustee, in its individual capacity,
covenants that if at any time on or after the Delivery Date any of its
Responsible Officers shall have actual knowledge that it has ceased to be a
Citizen of the United States, it will resign immediately as the Owner Trustee if
such citizenship is necessary for registration of the Aircraft in the Owner
Trustee's name under the Transportation Code as in effect at such time (such
necessity to be determined without regard to any provision of law that permits
the U.S. registration of the Aircraft by restricting where it is based or used)
or, if it is not necessary for such registration, if the Owner Trustee is
informed in writing by the Lessee, the Indenture Trustee or any Owner
Participant that such lack of United States citizenship would have any adverse
effect on the Lessee, the Indenture Trustee, the Holders or any Owner
Participant. The Owner Trustee, in its individual capacity, further covenants
that if at any time it appears reasonably probable that it will cease to be a
Citizen of the United States based on information that is (i) known to a
Responsible Officer of the Owner Trustee or (ii) generally known to the public,
it will promptly so notify, to the extent permitted by law, all parties to this
Agreement.
Section 5.3 Representations, Warranties and Covenants of Trust
Company and the Owner Trustee.
(a) Representations and Warranties. In addition to and without
limiting its other representations and warranties provided for in this Article
5, Trust Company represents and warrants, in its individual capacity with
respect to items (i),
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(ii), (iii)(A), (iv), (v), (vi), (vii), (viii), (ix) and (x) below, and as the
Owner Trustee with respect to items (iii)(B) and (iv), on the Delivery Date
that:
(i) it is a national banking association duly organized and
validly existing in good standing under the laws of the United States with
its principal place of business and chief executive office (as such terms
are used in Article 9 of the Uniform Commercial Code) in Delaware, and has
full corporate power and authority, in its individual capacity or
(assuming the Trust Agreement has been duly authorized, executed and
delivered by the Owner Participant) as the Owner Trustee, as the case may
be, to carry on its business as now conducted, and to execute, deliver and
perform this Agreement and the Operative Agreements to which it is or is
to be a party;
(ii) the execution, delivery and performance by Trust Company,
either in its individual capacity or as the Owner Trustee, as the case may
be, of this Agreement and the Operative Agreements to which it is or is to
be party have been duly authorized by all necessary corporate action on
its part, and do not contravene its articles of association or by-laws;
each of this Agreement and the other Operative Agreements to which it is
or is to be a party has been duly authorized, and has been duly executed
and delivered by Trust Company, either in its individual capacity or as
the Owner Trustee, as the case may be, and neither the execution and
delivery thereof nor Trust Company performance of or compliance with any
of the terms and provisions thereof will violate any federal or Delaware
law or regulation governing Trust Company's banking or trust powers,
(iii) (A) assuming due authorization, execution and delivery
by each other party thereto, each of the Operative Agreements to which it
is or is to be party when duly executed and delivered will, to the extent
each such document is entered into by Trust Company in its individual
capacity, constitute the legal, valid and binding obligation of Trust
Company in its individual capacity enforceable against it in such capacity
in accordance with its respective terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights (regardless of whether enforceability is
considered in a proceeding in equity or at law), and the performance by
Trust Company in its individual capacity of any of its obligations
thereunder does not contravene any lease, regulation or contractual
restriction binding on Trust Company in its individual capacity;
(B) assuming due authorization, execution and delivery by each
other party thereto, each of the Operative Agreements to which it is or is
to be party when duly executed and delivered will, to the extent each such
document is entered into by the Owner Trustee in its trust capacity,
constitute the legal, valid and binding obligation of the Owner Trustee
enforceable against it in such capacity in accordance with its respective
terms, except as such enforceability
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may be limited by bankruptcy, insolvency, reorganization or other similar
laws or general equitable principles, and the performance by the Owner
Trustee of any of its obligations thereunder does not contravene any
lease, regulation or contractual restriction binding on the Owner Trustee;
(iv) there are no pending or, to its knowledge, threatened
actions or proceedings against Trust Company before any court or
administrative agency which would materially adversely affect the ability
of Trust Company, either in its individual capacity or as the Owner
Trustee, as the case may be, to perform its obligations under the
Operative Agreements to which it is or is to be party;
(v) its chief executive office (as such term is defined in
Article 9 of the UCC) is One Rodney Square, 920 King Street, Suite 102,
Wilmington, Delaware 19801, and it shall give the Lessee, the Indenture
Trustee and the Owner Participant at least 30 days' prior written notice
in the event of any change in its chief executive office or name;
(vi) neither the execution and delivery by it, either in its
individual capacity or as the Owner Trustee, as the case may be, of any of
the Operative Agreements to which it is or is to be a party, requires on
the part of Trust Company in its individual capacity or any of its
Affiliates the consent or approval of or the giving of notice to, the
registration with, or the taking of any other action in respect of, any
federal or governmental authority or agency governing its banking or trust
powers;
(vii) the Owner Trustee holds whatever title to the Aircraft
as was conveyed to it by the Seller and the Aircraft is free of Lessor's
Liens attributable to Trust Company in its individual capacity;
(viii) Trust Company is a Citizen of the United States;
(ix) Trust Company has made a filing with the New York State
Banking Department under Section 131(3) of the New York State Banking Law
with respect to the trust formed by the Trust Agreement; and
(x) there are no Expenses or Taxes that may be imposed on or
asserted against the Trust, the Trust Estate or any part thereof or any
interest therein, the Trust Indenture Estate, Lessee, Owner Participant,
any Pass-Through Trustee, Subordination Agent, Owner Trustee or Indenture
Trustee (except, as to Owner Trustee, Taxes imposed on the fees payable to
Owner Trustee) under the laws of the State of Delaware in connection with
the execution, delivery or performance of any Operative Agreement by Owner
Trustee or in connection with the issuance of the Equipment Notes, which
Expenses or Taxes would not have been imposed if Owner Trustee had not (x)
had its principal place of business in, (y) performed (in its individual
capacity or as Owner Trustee) any or all of its duties under the Operative
Agreements in or (z) engaged in any
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activities unrelated to the transactions contemplated by the Operative
Agreements in, the State of Delaware.
(b) Lessor's Liens. Trust Company, in its individual capacity,
further represents, warrants and covenants that there are no Lessor's Liens
attributable to it in its individual capacity on the Delivery Date. The Owner
Trustee, in its trust capacity, and at the cost and expense of the Lessee,
covenants that it will in its trust capacity promptly, and in any event within
30 days after the same shall first become known to it, take such action as may
be necessary to discharge duly any Lessor's Liens attributable to it in its
trust capacity. Trust Company, in its individual capacity, covenants and agrees
that it will at its own expense take such action as may be necessary to duly
discharge and satisfy in full, promptly, and in any event within 30 days after
the same shall first become known to it, any Lessor's Liens attributable to it
in its individual capacity which may arise at any time after the date of this
Agreement.
(c) Indemnity for Lessor's Liens. Trust Company, in its individual
capacity, agrees to indemnify and hold harmless the Lessee, the Indenture
Trustee, the Owner Participant and the Pass-Through Trustee and the Owner
Trustee from and against any loss, cost, expense or damage which may be suffered
by the Lessee, the Indenture Trustee, the Owner Participant, the Pass-Through
Trustee or the Owner Trustee as a result of the failure of Trust Company to
discharge and satisfy any Lessor's Liens attributable to it in its individual
capacity, as described in Section 5.03(b) hereof.
(d) Securities Act. None of Trust Company, the Owner Trustee or any
Person authorized by either of them to act on its behalf has directly or
indirectly offered or sold or will directly or indirectly offer or sell any
interest in the Lessor's Estate, or in any similar security relating to the
Lessor's Estate, or in any security the offering of which for purposes of the
Securities Act of 1933, as amended, would be deemed to be part of the same
offering as the offering of the aforementioned securities to, or solicited any
offer to acquire any of the same from, any Person.
(e) Actions With Respect to Lessor's Estate, Etc. Neither Trust
Company, in its individual capacity, nor the Owner Trustee will take any action
to subject the Lessor's Estate or the trust established by the Trust Agreement,
as debtor, to the reorganization or liquidation provisions of the Bankruptcy
Code or any other applicable bankruptcy or insolvency statute.
(f) Other Business. Owner Trustee will not enter into any business
or other activity except as contemplated by the Operative Agreements.
(g) Performance of Agreements. Owner Trustee shall perform its
obligations under the Operative Agreements to which it is a party in accordance
with the terms thereof.
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Section 5.4 Representations, Warranties and Covenants of the
Indenture Trustee.
(a) Representations and Warranties. The Indenture Trustee in its
individual capacity represents on the Delivery Date as follows:
(i) it is a national banking association duly organized and
validly existing in good standing under the laws of the United States of
America and has the corporate power and authority to enter into and
perform its obligations under the Indenture, this Agreement and the other
Operative Agreements to which it is a party and to authenticate the
Equipment Notes to be delivered on the Delivery Date;
(ii) the Indenture and this Agreement and the other Operative
Agreements to which it is or is to be a party, and the authentication of
the Equipment Notes, have been duly authorized by all necessary corporate
action on its part, and neither the execution and delivery thereof nor its
performance of any of the terms and provisions thereof will violate any
federal or Maryland law or regulation relating to its banking or trust
powers or contravene or result in any breach of, or constitute any default
under, its articles of association or by-laws;
(iii) each of the Indenture and this Agreement, and the other
Operative Agreements to which it is a party, has been duly executed and
delivered by it and, assuming that each such agreement is the legal, valid
and binding obligation of each other party thereto, is (or will be, as the
case may be), the legal, valid and binding obligation of the Indenture
Trustee, enforceable against the Indenture Trustee in accordance with its
terms except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws or equitable principles
of general application to or affecting the enforcement of creditors'
rights (regardless of whether enforceability is considered in a proceeding
in equity or at law);
(iv) neither the execution and delivery by it of the Indenture
and this Agreement and the other Operative Agreements to which it is or is
to be a party, nor the performance by it 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 in respect of, any Federal or Maryland governmental authority or
agency governing its banking and trust powers;
(v) it has made a filing with the New York State Banking
Department under Section 131(3) of the New York Banking Law in respect of
the performance of its duties relating to the Trust Indenture Estate; and
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(vi) there are no pending or, to the knowledge of the
Indenture Trustee, threatened actions or proceedings against the Indenture
Trustee before any court, administrative agency or tribunal which, if
determined adversely to the Indenture Trustee, would materially adversely
affect the ability of the Indenture Trustee to perform its obligations
under any of the Operative Agreements to which it is a party.
(b) Indenture Trustee's Liens. The Indenture Trustee, in its
individual capacity, represents, warrants and covenants that there are no
Indenture Trustee's Liens on the Delivery Date. The Indenture Trustee, in its
individual capacity, covenants and agrees that it will not directly or
indirectly create, incur, assume or suffer to exist any Indenture Trustee's Lien
and that it will at its own expense take such action as may be necessary to duly
discharge and satisfy in full, promptly, and in any event within 30 days, after
the same shall first become known to it, any Indenture Trustee's Liens.
(c) Indemnity for Indenture Trustee's Liens. The Indenture Trustee,
in its individual capacity, agrees to indemnify and hold harmless the Lessee,
the Owner Participant, the Owner Trustee and the Pass-Through Trustee from and
against any actual out-of-pocket loss, cost, expense or damage (including but
not limited to any reduction in the amount payable out of the Trust Estate or
the Trust Indenture Estate and any interference with the possession, operation
or other use of all or any part of the Aircraft) which may be suffered by the
Lessee, the Indenture Trustee, the Owner Participant, the Owner Trustee or the
Pass-Through Trustee as a result of the failure of the Indenture Trustee to
discharge and satisfy any Indenture Trustee's Liens attributable to it in its
individual capacity, as described in Section 5.04(b) hereof.
Section 5.5 Indenture Trustee's Notice of Default. The Indenture
Trustee agrees to give the Lessee and the Owner Participant notice of any
Default or Event of Default promptly upon a Responsible Officer of the Indenture
Trustee having actual knowledge thereof.
Section 5.6 Releases from Indenture. The Indenture Trustee covenants
and agrees, for the benefit of the Lessee and the Owner Participant, to execute
and deliver the instruments of release from the Lien of the Indenture which it
is required to execute and deliver in accordance with the provisions of Article
XIV of the Indenture, and the Owner Participant agrees, for the benefit of the
Lessee, to cause the Owner Trustee to request the Indenture Trustee to execute
and deliver such instruments of release upon written notice from the Lessee to
make such request.
Section 5.7 The Lessee's Right of Quiet Enjoyment. Notwithstanding
any other provision of any of the Operative Agreements, each other party to this
Agreement agrees, severally and as to its own actions only, that it will not, so
long as no Event of Default shall have occurred and be continuing, take or cause
to be taken any action contrary to the Lessee's rights under the Lease,
including, without limitation, its rights to possession, use and quiet enjoyment
of the Aircraft during the
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Term, provided that nothing contained herein shall affect any of the rights of
the Owner Participant, the Owner Trustee or the Indenture Trustee expressly
granted to such Person under any Operative Agreement.
Section 5.8 Pass-Through Trustee's Representations and Warranties.
The Pass-Through Trustee, in its individual capacity (except with respect to
clause (iii) below), represents and warrants as of the Delivery Date that:
(i) it is a national banking association duly organized and
validly existing in good standing under the laws of the United States of
America and has full corporate power and authority to enter into and
perform its obligations under the Pass-Through Trust Agreements, the
Intercreditor Agreement and this Agreement and to execute and authenticate
the Pass-Through Certificates to be delivered on the Pass-Through Closing
Date;
(ii) the execution, delivery and performance of this
Agreement, and the Pass-Through Trust Agreement and the performance of its
obligations hereunder and thereunder have been fully authorized by all
necessary corporate action on its part, and neither the execution and
delivery thereof nor its performance of any of the terms and provisions
thereof will violate any federal or Maryland law or regulation relating to
its banking or trust powers or contravene or result in any breach of, or
constitute any default under its articles of association, or bylaws or the
provisions of any indenture, mortgage, contract or other agreement to
which it is a party or by which it or its properties may be bound or
affected;
(iii) each of this Agreement and the Pass-Through Trust
Agreement has been duly executed and delivered by it (in its individual
and trust capacities) and, assuming that each such agreement is the legal,
valid and binding obligation of each other party thereto, is or will be,
as the case may be, the legal, valid and binding obligation of the
Pass-Through Trustee (in its individual and trust capacities), enforceable
in accordance with its respective terms except as limited by bankruptcy,
insolvency, moratorium, reorganization or other similar laws or equitable
principles of general application to or affecting the enforcement of
creditors' rights generally (regardless of whether such enforceability is
considered in a proceeding in equity or at law); and
(iv) there are no Taxes payable by the Pass-Through Trustee
imposed by the State of Maryland 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 (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 the Pass-Through Trust Agreements), and there are no Taxes
payable by the Pass-Through Trustee imposed by the State of Maryland or
any political subdivision thereof in connection with the acquisition,
possession or ownership by the Pass-Through
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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 the Pass-Through Trust Agreements and,
assuming that the trusts created by the Pass-Through Trust Agreements will
not be taxable as corporations, but, rather, will be classified as grantor
trusts under subpart E, Part I of Subchapter J of the Code or as a
partnership under Subchapter K of the Code, and assuming that the assets
of the trusts will be treated as held for investment purposes as provided
in each Pass-Through Trust Agreement, such trusts will not be subject to
any taxes (including, without limitation, net or gross income, tangible or
intangible property, net worth, capital, franchise or doing business tax),
fee or other governmental charge under the laws of the State of Maryland
or any political subdivision thereof.
Section 5.9 Survival of Representations, Warranties and Covenants.
Representations, warranties and covenants of the Owner Participant, the Owner
Trustee (in its individual or trust capacity), the Pass-Through Trustee (in its
individual or trust capacity), the Indenture Trustee (in its individual or trust
capacity) and the Subordination Agent (in its individual or trust capacity)
provided for in this Article 5, and their respective obligations under any and
all of them, shall survive the delivery of the Aircraft and the expiration or
other termination of this Agreement and the other Operative Agreements.
Section 5.10 Lessee's Assumption of the Equipment Notes.
(a) Subject to compliance by the Lessee with all of its obligations
under the Operative Agreements, each of the Owner Participant, the Owner
Trustee, the Indenture Trustee, the Pass-Through Trustee and the Lessee
covenants and agrees that if the Lessee elects to purchase the Aircraft pursuant
to the terms of the Operative Agreements, if no Event of Default shall exist,
then, upon compliance with the applicable provisions of the Operative
Agreements, the Owner Trustee will transfer to the Lessee, without recourse or
warranty (except as to the absence of Lessor's Liens attributable to the Owner
Trustee) but subject to the Lien of the Indenture, all of the Owner Trustee's
right, title and interest in and to the Aircraft, and if the Lessee, in
connection with such purchase, elects to assume the obligations of the Owner
Trustee to the Indenture Trustee and the Holders under the Indenture, the
Equipment Notes, and hereunder, the Lessee shall so notify the Indenture Trustee
(such notice to be given at least 30 and not more than 60 days prior to the
effective date of such assumption), and each of the parties shall execute and
deliver appropriate documentation permitting the Lessee to assume such
obligations on the basis of full recourse to the Lessee, maintaining for the
benefit of the Holders the security interest in the Aircraft created by the
Indenture, and upon compliance with the provisions of this Section 5.10
releasing the Owner Participant and the Owner Trustee from all obligations in
respect of the Equipment Notes, the Indenture, this Agreement, and the other
Operative Agreements, except any obligations relating to the period prior to
such assumption and
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take all such other actions, at the Lessee's expense, as are reasonably
necessary to permit such assumption by the Lessee.
(b) In connection with such assumption:
(i) the Lessee shall execute and deliver an instrument (A)
pursuant to which the Lessee irrevocably and unconditionally assumes and
undertakes, with full recourse to the Lessee, to pay, satisfy, and
discharge when and as due (at the stated maturity thereof, by acceleration
or otherwise) the principal of, Make-Whole Premium, if any, interest, and
all other sums owing on all Outstanding Equipment Notes (or on the
Lessee's substituted obligations) in accordance with their terms, and
punctually to perform and observe all of the covenants and obligations
hereunder and under the Indenture and the Equipment Notes (as the same may
be amended in connection with such assumption) to be performed or observed
by the Owner Trustee, and (B) which contains amendments to the Indenture,
in form and substance as reasonably satisfactory to the Indenture Trustee,
that incorporate therein such provisions from the Lease (or, if the Lease
has not been entered into, the form of Lease attached hereto as Exhibit
A-2 to the Note Purchase Agreement) and this Agreement as may be
appropriate, including, without limitation, events of default
substantially identical in scope and effect to those set forth in the
Lease (or such form, as the case may be) and covenants substantially
identical to the covenants of the Lessee hereunder and under the Lease (or
such form, as the case may be);
(ii) the instrument referred to in paragraph (i) of this
Section 5.10(b), any Uniform Commercial Code financing statements relating
thereto, and any other documents which shall be necessary (or reasonably
requested by the Indenture Trustee) to establish the Lessee's title to and
interest in the Aircraft or to reflect the substitution of the Lessee for
the Owner Trustee under the Operative Agreements or to continue the
perfection of the security interests in the Aircraft and the other rights,
property, and interests included in the Trust Indenture Estate for the
benefit of the Holders shall be filed in such form, manner, and places as
are necessary or, in the reasonable opinion of the Indenture Trustee,
advisable for such purpose;
(iii) the Indenture Trustee shall have received an insurance
report dated the effective date of such assumption of an independent
insurance broker and certificates of insurance, each in form and substance
satisfactory to the Indenture Trustee, as to the due compliance as of the
effective date of such assumption with the terms of Section 9 of the Lease
(as it relates to the Indenture Trustee) relating to the insurance with
respect to the Aircraft (provided that the required amount of all-risk
hull insurance, subject to the self insurance rights of the Lessee, shall
be in an amount at least equal to the aggregate outstanding amount of the
Equipment Notes plus six months interest);
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(iv) the Indenture Trustee shall have received a certificate
from the Lessee that no Specified Default exists as of the effective date
of such assumption; and
(v) the Indenture Trustee shall have received (A) from counsel
for the Lessee (who may be the Lessee's General Counsel) a legal opinion,
in form and substance as reasonably satisfactory to the Indenture Trustee:
(w) with respect to the compliance of the assumption contemplated hereby
with the terms hereof, (x) with respect to the due authorization,
execution, delivery, validity, and enforceability of the instrument
referred to in paragraph (i) of this Section 5.10(b), (y) with respect to
the continued perfection of the security interest in the Aircraft for the
benefit of the Holders, and (z) with respect to the continued availability
of the benefits of Section 1110 to the Indenture Trustee for the benefit
of the Holders with respect to the Aircraft after giving effect to such
assumption (but only to the extent such benefits would have been available
to the Holders prior to such assumption assuming compliance with the
Operative Agreements by the parties thereto), (B) from counsel to the
Indenture Trustee and Lessee's special aviation counsel, a legal opinion
comparable to the respective opinions delivered on the Delivery Date, as
the case may be, with such changes therein as may be appropriate in light
of such assumption, and (C) in the case of each opinion described in
clause (A) or (B) above, covering such additional matters as the Indenture
Trustee shall reasonably request.
(c) The Lessee shall pay all reasonable expenses (including
reasonable fees and expenses of counsel) of the Indenture Trustee, the Owner
Trustee, the Pass-Through Trustee, each Liquidity Provider and the Owner
Participant in connection with such assumption.
Section 5.11 Compliance with Trust Agreement, Etc. Each of the Owner
Participant, Trust Company, and the Owner Trustee agrees with the Lessee, the
Indenture Trustee, the Liquidity Providers and the Pass-Through Trustee that so
long as the Lien of the Indenture shall be in effect it will (i) comply with all
of the terms of the Trust Agreement applicable to it in its respective capacity,
the noncompliance with which would materially adversely affect any such party
and (ii) not take any action, or cause any action to be taken, to amend, modify
or supplement any other provision of the Trust Agreement in a manner that would
materially adversely affect any such party without the prior written consent of
such party. The Owner Trustee confirms for the benefit of the Lessee, the
Indenture Trustee, the Liquidity Providers and the Pass-Through Trustee that it
will comply with the provisions of Article 2 of the Trust Agreement.
Notwithstanding anything else to the contrary in the Trust Agreement, so long as
the Lease remains in effect, the Owner Participant agrees not to terminate or
revoke the trust created by the Trust Agreement without the consent of the
Lessee. If and so long as the Indenture shall not have been discharged the
consent of the Indenture Trustee shall also be required prior to any termination
or revocation of such trust and in addition, the Owner Trustee will, at the
Lessee's expense, promptly and duly execute and deliver to the Indenture Trustee
such documents and assurances
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including, without limitation, conveyances, financing statements and
continuation statements with respect to financing statements and take such
further action as the Indenture Trustee may from time to time reasonably request
in order to protect the rights and remedies created or intended to be created in
favor of the Indenture Trustee under the Indenture and to create for the benefit
of the Holders a valid first priority Lien with respect to, and a first and
prior perfected security interest in, the Trust Indenture Estate.
Section 5.12 Subordination Agent's Representations, Warranties and
Covenants.
(a) Representations and Warranties. The Subordination Agent
represents and warrants as of the Delivery Date, that:
(i) it is a national banking association duly organized and
validly existing in good standing under the laws of the United States of
America and has the corporate power and authority to enter into and
perform its obligations under this Agreement, the Liquidity Facilities and
the Intercreditor Agreement;
(ii) the execution, delivery and performance of this
Agreement, each of the Liquidity Facilities and the Intercreditor
Agreement and the performance of its obligations hereunder and thereunder
have been fully authorized by all necessary, corporate action on its part,
and, neither the execution and delivery thereof nor its performance of any
of the terms and provisions thereof will violate any federal or Maryland
law or regulation relating to its banking or trust powers or contravene or
result in any breach of, or constitute any default under its articles of
association, or bylaws or the provisions of any indenture, mortgage,
contract or other agreement to which it is a party or by which it or its
properties may be bound or affected;
(iii) each of this Agreement, the Liquidity Facilities and the
Intercreditor Agreement has been duly executed and delivered by it and,
assuming that each such agreement is the legal, valid and binding
obligation of each other party thereto, is or will be, as the case may be,
the legal, valid and binding obligation of the Subordination Agent,
enforceable in accordance with its respective terms except as limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
or equitable principles of general application to or affecting the
enforcement of creditors' rights generally (regardless of whether such
enforceability is considered in a proceeding in equity or at law);
(iv) there are no Taxes payable by the Subordination Agent
imposed by the State of Maryland 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
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services rendered in connection with the transactions contemplated by the
Intercreditor Agreement or any of the Liquidity Facilities), and there are
no Taxes payable by the Subordination Agent imposed by the State of
Maryland or any political subdivision thereof in connection with the
acquisition, possession or ownership by the Subordination Agent of any of
the Equipment Notes 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);
(v) to the best of the Subordination Agent's knowledge, 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;
(vi) 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 Notes 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
(vii) the Subordination Agent is not directly or indirectly
controlling, controlled by or under common control with the Owner
Participant, the Owner Trustee, any Placement Agent or the Lessee.
(b) Covenants.
(i) The Subordination Agent agrees not to amend any Liquidity
Facility or the Intercreditor Agreement without the consent of the Lessee.
(ii) At any time when directed by the Lessee, the
Subordination Agent shall replace any Liquidity Provider pursuant to
Section 3.6(e) of the Intercreditor Agreement. Except as otherwise
expressly provided in the Intercreditor Agreement, the Subordination Agent
shall not in any other instance replace any Liquidity Provider in respect
of any Liquidity Facility.
(iii) In connection with the deposit in the applicable Cash
Account of amounts drawn pursuant to any Downgrade Drawing or
Non-Extension Drawing (as defined in the Liquidity Facility) under a
Liquidity Facility, the Subordination Agent agrees, so long as no Event of
Default shall have occurred and be continuing, to pay to the Lessee
promptly following each Regular Distribution Date any Investment Earnings
on the amount so deposited
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which remain after application of such Investment Earnings pursuant to
Section 2.06 of such Liquidity Facility to the interest payable on such
Downgrade Drawing under Section 3.07 of such Liquidity Facility.
Capitalized terms used in this Section 7.01(b) shall have the meanings
specified in the Intercreditor Agreement.
Section 5.13 Amendments to the Indenture.
Each of the Owner Trustee and the Indenture Trustee agrees that it
will not during the Term enter into any amendment or supplement to the Indenture
without the prior consent of the Lessee, if such amendment or supplement would
have the effect of limiting any right or of increasing any obligation or
liability of the Lessee under the terms of the Lease or any other Operative
Agreement.
ARTICLE VI.
TAXES
Section 6.1 Lessee's Obligation to Pay Taxes.
(a) Generally. The Lessee agrees promptly to pay when due, and to
indemnify on an After Tax Basis and hold each Tax Indemnitee harmless from all
license, recording, documentary, registration and other fees and all taxes
(including, without limitation, income, gross receipts, sales, rental, use,
value added, property (tangible and intangible), ad valorem, excise and stamp
taxes), fees, levies, imposts, recording duties, duties, charges, assessments or
withholdings of any nature whatsoever, together with any assessments, penalties,
fines, additions to tax or interest thereon (individually, a "Tax," and
collectively called "Taxes"), however imposed or asserted (whether imposed upon
any Tax Indemnitee, the Lessee, all or any part of the Aircraft, Airframe, any
Engine or any Part or the Lessor's Estate, the Trust Indenture Estate, Rent, the
Equipment Notes, the Pass-Through Trusts, the Pass-Through Certificates, or
otherwise upon or with respect to any Operative Agreement or any transactions
contemplated thereunder or any payments thereunder or otherwise in connection
therewith), by any Federal, state or local government or taxing authority in the
United States, or by any government or taxing authority of a foreign country or
of any political subdivision or taxing authority thereof or by a territory or
possession of the United States or an international taxing authority, in any
such case as relating to or measured by:
(i) the construction, mortgaging, financing, refinancing,
purchase, charter, rental, assignment, presence, overhaul, control,
acceptance, rejection, delivery, nondelivery, transport, location,
ownership, registration, reregistration, deregistration, insuring,
assembly, possession, repossession, operation, use, non-use, condition,
maintenance, repair, improvement, conversion, sale, return, abandonment,
preparation, installation, storage, redelivery, replacement, manufacture,
leasing, subleasing, sub-subleasing, modification, alteration,
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rebuilding, importation, transfer of title, transfer of registration,
exportation or other application or disposition of, or the imposition of
any Lien (or the incurrence of any liability to refund or pay over any
amount as a result of any Lien) on, the Aircraft, the Airframe, any Engine
or any Part or any interest therein;
(ii) amounts payable under the Operative Agreements;
(iii) the Aircraft, or the income or other proceeds (w)
received with respect to the Aircraft attributable to the transactions
contemplated by the Operative Agreements, (x) held by the Owner Trustee
under the Trust Agreement or after an Event of Default under the Lease,
(y) held by the Indenture Trustee under the Indenture or (z) held by the
Pass-Through Trustee under the Pass-Through Trust Agreement;
(iv) with respect to any Operative Agreement, any interest
therein or by reason of the transactions described in or contemplated by
the Operative Agreements;
(v) the principal or interest or other amounts payable with
respect to the Equipment Notes;
(vi) the Pass-Through Certificates or the Equipment Notes or
the issuance, sale, acquisition, reoptimization, or refinancing thereof or
the beneficial interests in the Trust Estate or the Trust Indenture Estate
or the creation thereof under the Trust Agreement or the Indenture, or the
security interest created or perfected thereby or by any filing thereof;
(vii) any assumption by the Lessee pursuant to Section 5.10 of
this Agreement;
(viii) the Aircraft, the Airframe, any Engine or any Part;
(ix) the rentals (including Basic Rent and Supplemental Rent),
receipts, earnings, principal, interest, fees, proceeds and any other
income or amounts payable, whether actual or deemed, arising upon, under
or in connection with any of the Operative Agreements;
(x) in the case of the Owner Participant, any "prohibited
transaction," within the meaning of Section 406 of ERISA or Section
4975(c)(1) of the Code, arising out of or in connection with the
acquisition or holding of the Owner Participant's interest in the Trust
Estate.
(b) Exceptions. The indemnity provided for in Section 6.01(a) shall
not extend to any of the following:
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(i) With respect to a Tax Indemnitee, Taxes, whether imposed
by withholding or otherwise, based upon, measured by or with respect to
the net or gross income, items of tax preference or minimum tax or excess
profits, alternative minimum taxes, receipts, capital, franchise, net
worth (whether, denominated income, excise, capital stock, or doing
business taxes) or other similarly-based taxes (other than taxes that are
in the nature of license, sales, use, value-added, transfer, rental, ad
valorem, stamp, property, or similar taxes) ("Income Taxes") imposed by
the United States or by any state, local or foreign jurisdiction in which
such Tax Indemnitee is subject to tax without regard to the transactions
contemplated by the Operative Agreement, provided, however, that this
clause shall not exclude from the indemnity described in Section 6.01(a)
above any such Income Taxes to be imposed by any jurisdiction (other than
the United States or any state or local taxing authority in any state in
the United States) as a result of (I) the operation, registration,
location, presence, or use of the Aircraft, Airframe, any Engine or any
Part thereof, by the Lessee or any Affiliate thereof or any Sublessee
within the jurisdiction of the taxing authority imposing such Tax, (II)
the presence of activities of the Lessee or any Affiliate thereof or any
Sublessee within the jurisdiction of the taxing authority imposing such
Tax, (III) the status of the Lessee or any Affiliate thereof or any
Sublessee as a foreign entity or as an entity owned in whole or in part by
foreign persons, or (IV) the Lessee or any Affiliate thereof or any
Sublessee having made (or having been deemed to have made) payments to
such Tax Indemnitee from the jurisdiction of the taxing authority imposing
such Tax, (it being understood that any such indemnity for Income Taxes
not excluded from the indemnity described in Section 6.01(a) shall be
payable only to the extent of the net harm incurred by the Tax Indemnitee
from such Income Taxes, taking into account any incremental Tax benefit in
another tax jurisdiction resulting from payment of such Income Taxes);
(ii) Taxes imposed with respect to any period beginning after
the later of (A) the discharge in full of the Lessee's obligation, if any,
to pay Termination Value under and in accordance with the Lease, (B) the
expiration of the Term of the Lease or (C) the termination of the Lease in
accordance with the applicable provisions of the Lease thereof;
(iii) As to the Owner Trustee, Taxes imposed against the Owner
Trustee upon or with respect to any fees for services rendered in its
capacity as Owner Trustee under the Trust Agreement or, as to the
Indenture Trustee, Taxes imposed against the Indenture Trustee upon or
with respect to any fees received by it for services rendered in its
capacity as Indenture Trustee under the Indenture;
(iv) With respect to any Tax Indemnitee, Taxes resulting from
the willful misconduct or gross negligence of such Tax Indemnitee or a
Related Tax Indemnitee or the breach by any Tax Indemnitee other than with
respect to the Owner Trustee or Owner Participant, of any representation,
warranty or
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covenant contained in the Operative Agreements or any document delivered
in connection therewith (unless attributable to a breach of
representation, warranty or covenant of the Lessee);
(v) Taxes imposed on the Owner Trustee or the Owner
Participant or any successor, assign or Affiliate thereof which became
payable by reason of any voluntary transfer or disposition by such Tax
Indemnitee subsequent to the Delivery Date, including revocation of the
Trust, of any interest in some or all of the Aircraft, Airframe, Engines
or Parts thereof or its interest in the Lessor's Estate or a transfer or
disposition of shares or other interests in the Owner Trustee or the Owner
Participant (not including any transfers of any Equipment Note pursuant to
Section 13.01 (a) hereof) or a disposition in connection with a bankruptcy
or similar proceedings involving either the Lessor or the Owner
Participant or a transfer or disposition of shares or other interests in
the Owner Trustee or the Owner Participant in each case other than (A)
transfers resulting from a loss, substitution or modification of the
Aircraft, Engines or any Part, (B) transfers pursuant to the Lessor's
exercise of remedies in accordance with Section 17 of the Lease, (C)
termination of the Lease upon the Lessee's exercise of Lessee options
pursuant to Section 14 of the Lease, or (D) a transfer to Lessee pursuant
to Section 13(b) of the Lease; the parties agree to cooperate to minimize
any such Taxes covered by this provision;
(vi) Taxes subject to indemnification by the Lessee pursuant
to the Tax Indemnity Agreement;
(vii) Other than with respect to the Owner Trustee or Owner
Participant, Taxes imposed on a successor, assign or other transferee of
any interest of such Tax Indemnitee (including, without limitation, a
transferee which is a new lending office of an original Tax Indemnitee) to
the extent that such Taxes would not have been imposed on the original Tax
Indemnitee or exceed the amount of Taxes that would have been imposed and
would have been indemnifiable pursuant to Section 6.01(a) hereof had there
not been a succession, assignment or other transfer by such original Tax
Indemnitee of any such interest of such Tax Indemnitee in the Aircraft or
any Part, any interest in or under any Operative Agreement, or any
proceeds thereunder unless such sale, assignment, transfer or disposition
occurs in connection with the exercise of Lease remedies;
(viii) Other than with respect to the Owner Trustee or the
Owner Participant, Taxes imposed by any jurisdiction that would not have
been imposed on the Owner Trustee or the Owner Participant but for the
activities or the status of the Owner Trustee or the Owner Participant in
such jurisdiction unrelated to the transactions contemplated by the
Operative Agreements;
(ix) Any Taxes which have been properly included in the
Purchase Price;
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(x) Any Taxes imposed on the Owner Trustee or Owner
Participant which would not have been imposed but for a Lessor's Lien or
any Taxes imposed on the Indenture Trustee which would not have been
imposed but for an Indenture Trustee's Lien;
(xi) In the case of the Owner Participant, any Taxes relating
to, resulting from, arising out of or in connection with a "prohibited
transaction" within the meaning of Section 406 of ERISA or Section
4975(c)(1) of the Code resulting from the direct or indirect use of assets
of any ERISA Plan to acquire or hold Owner Participant's interest in the
Trust Estate or in the case of any transferee of the Owner Participant
referred to in Section 5.01(c), to purchase the Beneficial Interest
pursuant to Section 5.01(c);
(xii) Other than with respect to the Owner Trustee or the
Owner Participant, Taxes other than Income Taxes that would not have been
imposed but for the existence or status of any trust used to hold title to
the Aircraft;
(xiii) Other than with respect to the Owner Trustee or the
Owner Participant, taxes in the nature of an intangible or similar Tax
imposed on or with respect to the Equipment Notes (or the indebtedness
evidenced thereby), the Pass-Through Certificates, the Trust Estate or the
Trust Agreement;
(xiv) Taxes that are being contested in accordance with the
provisions hereof; or
(xv) United States withholding Taxes imposed on an Owner
Participant as a result of such Owner Participant not being a U.S. Person.
(c) Withholding. The Pass-Through Trustee shall withhold any Taxes
required by law to be withheld on payments to any holder of a Pass-Through
Certificate. The Indenture Trustee shall withhold any Taxes required to be
withheld on any payment to a Holder pursuant to Section 5.09 of the Indenture.
If the Indenture Trustee or the Pass-Through Trustee fails to withhold a Tax
required to be withheld with respect to any Holder of an Equipment Note or any
holder of a Pass-Through Certificate or any claim is otherwise asserted by a
taxing authority against the Owner Trustee or Owner Participant for any
withholding tax, the Lessee will indemnify the Owner Trustee and the Owner
Participant (without regard to the exclusions set forth in Section 6.01(b)
hereof) on an After-Tax Basis against any such Taxes required to be withheld and
any interest and penalties with respect thereto, along with any other costs
(including reasonable attorney's fees) incurred in connection with any such
claim. The Indenture Trustee or the Pass-Through Trustee, as the case may be, in
its individual capacity (and without recourse to the Trust Indenture Estate),
shall indemnify the Lessee (without regard to the exclusions set forth in
Section 6.01(b) hereof) on an After-Tax Basis for any payment the Lessee shall
have made pursuant to the preceding sentence.
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Section 6.2 After-Tax Basis. The amount which the Lessee shall be
required to pay with respect to any Tax indemnified against under Section 6.01
(an "Indemnifiable Tax") shall be an amount sufficient to restore the Tax
Indemnitee, on an After-Tax Basis, to the same position such party would have
been in had such Tax not been incurred, taking into account any tax benefits
recognized by such Tax Indemnitee as a result of the Indemnifiable Tax. If any
Tax Indemnitee actually realizes a tax benefit (whether by credit, deduction or
otherwise), or would have realized such a benefit as to which it has been given
notice if properly claimed, and with respect to Owner Participant, the Owner
Participant has not determined in good faith that claiming such benefit would
have a material adverse impact on the Owner Participant or an Affiliate thereof,
by reason of the payment of any Tax paid or indemnified against by the Lessee,
provided that an Event of Default has not occurred and is not continuing, such
Tax Indemnitee shall promptly pay to the Lessee, to the extent such tax benefit
was not previously taken into account in computing such payment or indemnity,
but not before the Lessee shall have made all payments then due to such Tax
Indemnitee under this Agreement, the Tax Indemnity Agreement and any other
Operative Agreement, an amount equal to the lesser of (x) the sum of such tax
benefit plus any other tax benefit realized by such Tax Indemnitee that would
not have been realized but for any payment made by such Tax Indemnitee pursuant
to this sentence and not already paid to the Lessee, or (y) the amount of the
payment made under Section 6.01 hereof and this Section 6.02 by the Lessee to
such Tax Indemnitee plus the amount of any other payments by the Lessee to such
Tax Indemnitee theretofore required to be made under this Section 6.02 and
Sections 6.01 and 6.05 hereof (and the excess, if any, of the Tax benefit over
the applicable amount described in clause (x) over the amount described in
clause (y) above shall be carried forward and applied to reduce pro tanto any
subsequent obligations of the Lessee to make payments to such Tax Indemnitee
pursuant to Section 6.01 hereof). If an amount payable by any Tax Indemnitee to
the Lessee pursuant to this Section 6.02 is not paid when due because of the
occurrence and continuation of any Event of Default, such amount shall be
payable by any Tax Indemnitee to the Lessee upon the Lessee's curing all Events
of Default. The Lessee shall reimburse on an After-Tax Basis such Tax Indemnitee
(subject to Section 6.01(b), but only insofar as subsections (iv), (vi), (vii),
(x), (xi), (xii), (xiii), (xiv) and (xv) thereof would apply) for any payment of
a tax benefit pursuant to the preceding sentence (or a tax benefit otherwise
taken into account in calculating the Lessee's indemnity obligation hereunder)
to the extent that such tax benefit is subsequently disallowed or reduced.
In determining the order in which any Tax Indemnitee utilizes
withholding or other foreign taxes as a credit against such Tax Indemnitee's
United States income taxes, such Tax Indemnitee shall be deemed to utilize (i)
first, all foreign taxes other than those described in clause (ii) below; and
(ii) then, on a pro rata basis, all foreign taxes with respect to which such Tax
Indemnitee is entitled to obtain indemnification pursuant to an indemnification
provision contained in any lease, loan agreement, or other financing document
(including this Participation Agreement) that is similar to the indemnification
provision in this Article 6.
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Section 6.3 Time of Payment. Any amount payable to a Tax Indemnitee
pursuant to this Article 6 shall be paid promptly, but in any event within 30
days after receipt of a written demand therefor from such Tax Indemnitee
accompanied by a written statement describing in reasonable detail the basis for
such indemnity and the computation of the amount so payable, provided that in
the case of amounts which are being contested by the Lessee in good faith or by
the Tax Indemnitee in either case pursuant to Section 6.04 hereof, or subject to
verification proceedings pursuant to Section 6.11 hereof, such amount shall be
payable within 30 days after the time such contest or verification proceeding,
as the case may be, is finally resolved. In no event shall any amount be payable
under Section 6.01 until two Business Day prior to the due date for Tax in
issue.
Section 6.4 Contests.
(a) Notice of Claim. If a written claim is made against any Tax
Indemnitee for Taxes with respect to which the Lessee is liable for a payment or
indemnity hereunder, such Tax Indemnitee shall promptly (but in any event within
30 days of receipt thereof) give the Lessee notice in writing of such claim and
shall furnish the Lessee with copies of any written requests for information
sent to such Tax Indemnitee from any taxing authority to the extent relating to
such Taxes with respect to which the Lessee may be required to indemnify
hereunder; provided, however, that the failure of a Tax Indemnitee to give such
notice or furnish such copy shall not terminate any of the rights of such Tax
Indemnitee under this Article 6, except (A) to the extent that the Lessee's
contest rights have been materially and adversely impaired by the failure to
provide such notice or copy or (B) to the extent that such failure results in
the imposition of, or an increase in the amount of, any penalties, interest or
additions to Tax related to the Tax which is the subject of such claim or
proceeding.
(b) Request for Contest. If a written claim shall be made for any
Tax, other than an Income Tax, for which the Lessee may be obligated to
indemnify pursuant to Section 6.01 hereunder, and under applicable law of the
taxing jurisdiction the Lessee is allowed to contest directly such Tax and the
Tax to be contested is not reflected in a report or return with other Taxes of
any Tax Indemnitee (as confirmed in writing by such Tax Indemnitee) and if the
Tax Indemnitee determines in good faith that it will not suffer any adverse
consequences as a result (as confirmed in writing by such Tax Indemnitee), then
the Lessee shall be permitted, at its expense and in its own name, or, if
consented to in writing by the Tax Indemnitee, in the name of such Tax
Indemnitee, to contest the imposition of such Tax; provided, however, that the
Lessee shall not be permitted or entitled to contest any Tax unless (A) such
contest will not result in the risk of an imposition of criminal penalties or a
more than de minimis risk of a sale, forfeiture or loss of the Aircraft, the
Airframe, the Engines or any part thereof or the creation of any Lien other than
Liens for Taxes of the Lessee (x) either not yet due or being contested in good
faith by appropriate proceedings so long as such proceedings do not involve the
risk of an imposition of criminal penalties or the more than de minimis risk of
any sale, forfeiture or loss of the Aircraft, and (y) for the payment of which
such reserves, if any, as required to be provided under generally
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accepted accounting principles have been provided and, to the extent permitted
by law, the Lessee shall be entitled to withhold payment during pendency of such
contest, (B) if an Event of Default shall have occurred and be continuing, the
Lessee shall have provided security for its obligations hereunder reasonably
satisfactory to the Owner Participant by placing in escrow funds to cover any
such obligations, (C) the Lessee shall have agreed to pay such Tax Indemnitee on
demand and on an After-Tax Basis all costs and expenses that such Tax Indemnitee
actually incurs in connection with contesting such claim (including, without
limitation, all costs, expenses, losses, reasonable legal and accounting fees,
disbursements, or penalties, interest and addition to tax), (D) if such contest
shall be conducted in a manner requiring the payment of the claim in advance,
the Lessee shall have advanced sufficient funds, on an interest free basis, to
make the payment required, and agreed to indemnify the Tax Indemnitee against
any additional net adverse tax consequences on an After-Tax Basis to such Tax
Indemnitee of such advance, (E) if such contest shall be conducted in a manner
requiring the payment of the claim, the Lessee shall have paid the amount
required, (F) Lessee shall have acknowledged its liability for such claims, (G)
such contest and related contests involving other equipment involve potential
payments and/or indemnities by the Lessee (whether or not such indemnity is
pursuant to this Agreement) of at least $25,000 in the aggregate, and (H)
independent tax counsel selected by Owner Participant and reasonably acceptable
to the Lessee has rendered an opinion within 30 days of the Owner Participant
providing notice of the claim to the Lessee that a Reasonable Basis exists for
contesting such claim.
If the Lessee shall so request within 30 days after receipt of such
notice from a Tax Indemnitee under this Section 6.04 hereof and with respect to
a Tax for which the Lessee may be obligated to indemnify pursuant to Section
6.01, such Tax Indemnitee shall in good faith at the Lessee's after-tax expense
contest the imposition of such Tax; provided, however, that such Tax Indemnitee,
after considering in good faith any advice of the Lessee and the Lessee's
counsel concerning the forum in which the adjustment is most likely to be
favorably resolved, may in its sole discretion select the manner and forum for
such contest and determine whether any such contest shall be made by (a)
resisting payment thereof if lawful and practicable or not paying the same
except under protest if protest is necessary and proper in each case so long as
non-payment will not result in a more than de minimis risk of the sale,
forfeiture or loss of, or the creation of a Lien other than a Permitted Lien on
the Aircraft, Airframe or any Engine or any risk of criminal liability; or (b)
if the payment be made, using reasonable efforts to obtain a refund thereof in
appropriate administrative and/or judicial proceedings; provided further,
however, that at such Tax Indemnitee's option, such contest shall be conducted
by the Lessee in the name of such Tax Indemnitee if such Tax Indemnitee so
requests in writing and that in no event shall such Tax Indemnitee be required
or the Lessee permitted to contest under this paragraph the imposition of any
Tax for which the Lessee may be obligated pursuant to this Section 6.01 unless:
(i) in the case of an Income Tax, the Lessee shall have
furnished at the Lessee's expense an opinion of counsel selected by the
Lessee and reasonably
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satisfactory to such Tax Indemnitee to the effect that a Reasonable Basis
exists for pursuing such contest;
(ii) the Lessee shall have agreed to pay such Tax Indemnitee
on demand and on an After-Tax Basis all reasonable costs and expenses that
such Tax Indemnitee may incur in connection with contesting such claim
(including, without limitation, all costs expenses, losses, reasonable
legal and accounting fees, disbursements, penalties, interest and
additions to tax);
(iii) such Tax Indemnitee shall have determined that the
action to be taken will not result in any more than de minimis danger of
sale, forfeiture or loss of, or the creation of any Lien other the Liens
for Taxes of the Lessee (or any Sublessee) either not yet due or being
contested in good faith by appropriate proceedings so long as such
proceedings do not involve any more than de minimis risk of the sale,
forfeiture or loss of the Aircraft, the Airframe or any Engine or any
interest therein and for the payment of which such reserves, if any, as
are required to be provided under generally accepted accounting principles
have been provided;
(iv) if an Event of Default shall have occurred and be
continuing, the Lessee shall have provided security for its obligations
hereunder reasonably satisfactory to the Owner Participant by placing in
escrow sufficient funds to cover any such obligations;
(v) Lessee shall have acknowledged its liability for such
claims;
(vi) such contest and related contests involving other
equipment involve potential payments and/or indemnities by the Lessee
(whether or not such indemnity is pursuant to this Agreement) of at least
$25,000 in the aggregate; and
(vii) if such contest shall be conducted in a manner requiring
the payment of the claim in advance, the Lessee shall have advanced
sufficient funds, on an interest free basis, to make the payment required,
and agreed to indemnify the Tax Indemnitee against any additional net
adverse tax consequences on an After-Tax Basis to such Tax Indemnitee of
such advance.
If requested by the Lessee, the Tax Indemnitee shall appeal any
adverse administrative or judicial decision, except that the Tax Indemnitee
shall not be required to pursue any appeals to the United States Supreme Court
provided that with respect to an appeal of a judicial decision it must be more
likely than not that such appeal will be successful. Notwithstanding the
foregoing, the Lessee shall not be permitted or entitled to contest any such Tax
in its own name unless the Tax is reflected in a report or a return of the
Lessee or raised in an audit or other proceeding of the Lessee, the Lessee is
allowed to contest such Tax under applicable law of the taxing jurisdiction, and
no tax return of the Tax Indemnitee is kept open as a result of such contest
beyond
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the applicable statute of limitations period. If the Lessee is permitted under
applicable law to contest a Tax asserted against the Lessee and the same or
similar Tax is also asserted against the Tax Indemnitee, subject to the
conditions herein, each of the Lessee and such Tax Indemnitee shall conduct its
contest in its own name and the Lessee and such Tax Indemnitee will cooperate in
a reasonable manner with respect to the respective contests of such Tax.
If such Tax Indemnitee shall elect to contest a claim for Taxes by
paying the Tax claimed (including such amounts payable as interest, penalties or
additions to tax) and seeking a refund, then upon timely request by such Tax
Indemnitee, the Lessee shall advance to such Tax Indemnitee on an interest-free
basis the amount of such Tax (including such amounts payable as interest,
penalties or additions to tax) and shall indemnify the Tax Indemnitee on an
After-Tax Basis against any additional net cost to such Tax Indemnitee with
respect to such advance.
(c) Declining to Contest; Settlement. (i) If, after the Lessee has
properly requested a contest in accordance with this Section 6.04 and Lessee is
then complying with the terms of this Section 6.04, any Tax Indemnitee shall at
any time decline to take any action required under Section 6.04 with respect to
such contest, then, if such failure shall cause the contest to be determined
adversely or shall preclude such contest as a matter of law, the Lessee shall
not be obligated to indemnify such Tax Indemnitee for such Tax and such Tax
Indemnitee shall reimburse the Lessee for all amounts previously advanced by the
Lessee in connection with such contest (other than costs and expenses of such
contest).
(ii) No Tax Indemnitee shall settle a contest of any
indemnified Tax without requesting the Lessee's written consent (which
consent will not be unreasonably withheld, as determined in the Lessee's
good faith judgment). If any Tax Indemnitee shall settle a contest for any
Tax without receiving the Lessee's written consent, then the Lessee shall
not be obligated to indemnify such Tax Indemnitee for such Tax and the Tax
Indemnitee shall reimburse the Lessee for all amounts previously advanced
with respect to such contest (other than costs and expenses of such
contest). Notwithstanding the preceding two sentences, no Tax Indemnitee
shall be required to take or continue any action unless the Lessee shall
have agreed to pay the Tax Indemnitee on a current and After Tax Basis all
reasonable fees and expenses (including reasonable attorney's and
accountant's fees) which such Tax Indemnitee may incur as a result of
contesting such Taxes.
(d) Continuing Claims. Notwithstanding anything contained in this
Section 6.04 to the contrary, no Tax Indemnitee shall be required to contest any
claim if the subject matter thereof shall be of a continuing nature and shall
have previously been adversely decided pursuant to the contest provisions of
this Section 6.04 unless there shall have been a change in the law (including,
without limitation, amendments to statutes or regulations, administrative
rulings and court decisions) or the Lessee shall have provided new facts after
such claim shall have been so previously decided,
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and such Tax Indemnitee shall have received an opinion of independent tax
counsel selected by it and reasonably approved by the Lessee and furnished at
the Lessee's sole expense to the effect that, as a result of such change or new
facts, it is more likely than not that the position which such Tax Indemnitee or
the Lessee, as the case may be, had asserted in such previous contest, would
prevail.
(e) Claims Barred. If (A) any Tax Indemnitee fails to give the
Lessee written notice pursuant to this Section 6.04 of any claim by any
government or taxing authority for any Tax for which the Lessee is obligated
pursuant to this Section 6.01, (B) as a direct result of such failure the
contest of such claim becomes barred by law and (C) the Lessee furnishes, at the
Lessee's expense, an opinion of counsel selected by the Lessee and reasonably
satisfactory to such Tax Indemnitee to the effect that, had the contest of such
claim not become barred by law, a Reasonable Basis, would have existed for
pursuing such contest, such Tax Indemnitee shall be deemed to have waived its
right to any payment by the Lessee that would otherwise be payable by the Lessee
pursuant to this Section 6.01 in respect of such claim.
Section 6.5 Refunds. When a Tax Indemnitee becomes entitled to
receive a refund or credit against Tax of all or any part of any Taxes which the
Lessee shall have paid for such Tax Indemnitee or for which the Lessee shall
have reimbursed or indemnified such Tax Indemnitee, such Tax Indemnitee shall
pay, provided an Event of Default has not occurred and is not continuing, to the
Lessee an amount equal to the amount of such refund or credit less (x) all
payments then due to such Tax Indemnitee under this Article 6, and (y) Taxes
imposed with respect to the accrual or receipt thereof, including interest
received attributable thereto, plus any tax benefit realized by such Tax
Indemnitee as a result of any payment by such Tax Indemnitee made pursuant to
this sentence; provided, however, that such amount shall not be payable (a)
before such time as the Lessee shall have made all payments or indemnities then
due and payable to such Tax Indemnitee under this Article 6 and (b) to the
extent that the amount of such payment would exceed (i) the amount of all prior
payments by the Lessee to such Tax Indemnitee pursuant to this Article 6 less
(ii) the amount of all prior payments by such Tax Indemnitee to the Lessee
pursuant to this Article 6 (any such excess shall be carried forward to reduce
pro tanto any subsequent obligations of the Lessee to make payments to such Tax
Indemnitee pursuant to Section 6.01 hereof). If an amount payable by any Tax
Indemnitee to the Lessee pursuant to this Section 6.02 is not paid when due
because of the occurrence and continuation of an Event of Default, such amount
shall be payable by any Tax Indemnitee to the Lessee upon the Lessee's curing
all Events of Default.
Any subsequent loss of such refund or tax benefit shall be treated
as a Tax subject to indemnification under the provisions of this Article 6 (in
the case of any such tax benefit, subject to Section 6.01(b) but only insofar as
subsections (iv), (vi), (vii), (x), (xi), (xii), (xiii), (xiv) and (xv) thereof
would apply).
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Section 6.6 Reports. In case any report or return is required to be
made with respect to any Taxes against which the Lessee is or may be obligated
to indemnify the Indemnities under this Article 6, the Lessee shall, to the
extent it has knowledge thereof, make such report or return, except for any such
report or return that the Tax Indemnitee has notified the Lessee that it intends
to file, in such manner as will show the ownership of the Aircraft in the Owner
Trustee and shall send a copy of the applicable portions of such report or
return to the Tax Indemnitee and the Owner Trustee or will notify the Tax
Indemnitee of such requirement and make such report or return in such manner as
shall be satisfactory to such Tax Indemnitee and the Owner Trustee. The Lessee
will provide such information within the possession or control of the Lessee as
the Tax Indemnitee may reasonably request in writing from the Lessee to enable
the Tax Indemnitee to fulfill its tax filing requirements with respect to the
transactions contemplated by the Operative Agreements (without duplication of
any comparable requirements of the Tax Indemnity Agreement) and any audit
information request arising from any such filing. The Tax Indemnitee will
provide such information within its possession or control as the Lessee may
reasonably require from such Tax Indemnitee to enable the Lessee to fulfill its
tax filing requirements with respect to the transactions contemplated by the
Operative Agreements and any audit information request arising from such filing;
provided that in no event shall any Tax Indemnitee be required to provide copies
of any of its tax returns.
Section 6.7 Survival of Obligations. The representations,
warranties, indemnities and agreements of the Lessee provided for in this
Article 6 and the Lessee's obligations under any and all of them, in each case,
with respect to events or periods prior to the expiration or termination of the
Lease shall survive the expiration or other termination of the Operative
Agreements.
Section 6.8 Payment of Taxes. With respect to any Tax otherwise
indemnifiable hereunder by the Lessee and applicable to the Aircraft, Airframe,
any Engine or Parts, to the extent permitted by the applicable federal, state,
local or foreign law, the Lessee shall pay such tax directly to the relevant
Taxing authority and file any returns or reports required with respect thereto
to the extent legally entitled to do so in its own name; provided, however, that
the Lessee shall not make any statements or take any action which would indicate
that the Lessee or any Person other than the Owner Trustee or Owner Participant
is the owner of the Aircraft, the Airframe, any Engine or any Part or which
would otherwise be inconsistent with the terms of the Lease or the Tax Indemnity
Agreement and the position thereunder of the Owner Trustee and the Owner
Participant.
Section 6.9 Reimbursements by Indemnitees Generally. To the extent
the Lessee is required to pay or withhold any Tax imposed on or with respect to
a Tax Indemnitee in respect of the transactions contemplated by the Operative
Agreements, which Tax is not otherwise the responsibility of the Lessee under
the Operative Agreements, or any other written agreements between the Lessee and
such Tax Indemnitee, then such Tax Indemnitee shall pay to the Lessee within 30
days of the
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Lessee's demand therefor an amount which equals the amount actually paid by the
Lessee with respect to such Taxes.
Section 6.10 Forms. Each Tax Indemnitee agrees to furnish from time
to time to Lessee or to such other person as Lessee may designate, at Lessee's
request, such duly executed and properly completed forms as may be necessary or
appropriate in order to claim any reduction of or exemption from any withholding
or other Tax imposed by any taxing authority, if (x) such reduction or exemption
is available to such Tax Indemnitee, (y) Lessee has provided such Tax Indemnitee
with any information necessary to complete such form not otherwise reasonably
available to such Tax Indemnitee, and (z) with respect to Owner Participant, the
Owner Participant has determined in good faith that furnishing such form could
not have a material adverse impact on the Owner Participant or an Affiliate
thereof.
Section 6.11 Verification. At the Lessee's request, the accuracy of
any calculation of amount(s) payable pursuant to this Article 6 shall be
verified by independent public accountants selected by the applicable Tax
Indemnitee and reasonably satisfactory to the Lessee, and such verification
shall bind the applicable Tax Indemnitee and the Lessee. In order, and to the
extent necessary, to enable such independent accountants to verify such amounts,
such Tax Indemnitee shall provide to such independent accountants (for their
confidential use and not to be disclosed to the Lessee or any other person) all
information reasonably necessary for such verification. Verification shall be at
the expense of the Lessee, unless such verification results in an adjustment in
the Lessee's favor of $10,000 or more of the amount of the payment as computed
by such Tax Indemnitee, in which case the verification shall be at the expense
of the Tax Indemnitee.
Section 6.12 Non-Parties. If a Tax Indemnitee is not a party to this
Agreement, Lessee may require the Tax Indemnitee to agree in writing, in a form
reasonably acceptable to Lessee, to the terms of this Article 6 prior to making
any payment to such Tax Indemnitee hereunder.
Section 6.13 Foreign Tax On Loan Payments. If an Owner Participant
is incorporated or organized in a country other than the United States or in a
territory, possession or commonwealth of the United States (within the meaning
of the tax law of that foreign jurisdiction) and if as a result thereof any
foreign withholding Taxes are imposed on any Pass-Through Trustee, Pass-Through
Trust, or Holder, then Owner Participant shall reimburse Lessee for any payments
Lessee is required to make to or on behalf of any Pass-Through Trust, or Holder
under this Article 6 as a result of the imposition of such Taxes. The amount
payable by Owner Participant to Lessee shall be an amount which, after taking
into account any such Taxes, any Tax imposed upon the receipt or accrual by
Lessee of such payment by Owner Participant and any tax benefits or tax savings
realized by Lessee with respect to the payment of such withholding Tax or the
payment hereunder, shall equal the amount of Lessee's payment to or on behalf of
such Pass-Through Trustee, or Holder.
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ARTICLE VII.
GENERAL INDEMNITY
Section 7.1 Generally.
(a) Indemnity. The Lessee agrees to indemnify each Indemnitee
against and agrees to protect, defend, save and keep harmless each Indemnitee
from and against and in respect of, and will pay on an After-Tax Basis, any and
all liabilities, obligations, losses, damages, settlements, penalties, claims,
actions, suits, costs, disbursements and expenses, demands or judgments
(including reasonable legal fees and expenses) of every kind and nature, whether
or not any of the transactions contemplated by this Agreement are consummated
and whether arising before, on or after the Delivery Date (individually, an
"Expense," collectively, "Expenses"), which may be imposed on, incurred or
suffered by or asserted against any Indemnitee, in any way relating to, arising
out of or in connection with, any one or more of the following:
(i) any Operative Agreement, Sublease or Pass-Through Document
or any transaction contemplated thereby;
(ii) the operation, possession, use, non-use, maintenance,
storage, overhaul, delivery, non-delivery, control, condition, alteration,
modification, addition, improvement, airworthiness, replacement,
substitution, return, abandonment, redelivery or other disposition, repair
or testing of the Aircraft, Airframe, or any Engine or any engine used in
connection with the Airframe, or any Part thereof by the Lessee, any
sublessee or any other Person whatsoever, whether or not such operation,
possession, use, non-use, maintenance, storage, overhaul, delivery,
non-delivery, control, condition, alteration, modification, addition,
improvement, airworthiness, replacement, substitution, return,
abandonment, redelivery or other disposition, repair or testing is in
compliance with the terms of the Lease, including, without limitation,
claims for death, personal injury or property damage or other loss or harm
to any Person whatsoever, including, without limitation, any passengers,
shippers or other Persons wherever located, claims or penalty relating to
any laws, rules or regulations, including, without limitation,
environmental control, noise and pollution laws, rules or regulation and
any Liens in respect of the Aircraft, any Engine or any Part;
(iii) the manufacture, design, sale, return, purchase,
acceptance, nonacceptance, rejection, delivery, non-delivery, condition,
repair, modification, servicing, rebuilding, airworthiness, registration,
reregistration, deregistration, ownership, financing, import, export,
performance, non-performance, lease, sublease, transfer, merchantability,
fitness for use, alteration, substitution or replacement of any Airframe,
Engine, or Part or other transfer of use or possession, or other
disposition of the Aircraft, the Airframe, any Engine or any Part
including, without limitation, latent and other defects, whether or not
discoverable, tort liability, whether or not arising out of the negligence
of any
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Indemnitee (whether active, passive or imputed and including strict
liability without fault), and any claims for patent, trademark or
copyright infringement;
(iv) any breach of or failure to perform or observe, or any
other non-compliance with, any condition, covenant or agreement to be
performed, or other obligations of the Lessee under any of the Operative
Agreements or any Pass-Through Trust Agreement, or the falsity or
inaccuracy of any representation or warranty of the Lessee in any of the
Operative Agreements or any Pass-Through Trust Agreement (other than
representations and warranties in the Tax Indemnity Agreement) or the
occurrence of any Default or Event of Default;
(v) the enforcement of the terms of the Operative Agreements
(including this Section 7.01(a));
(vi) the offer, issuance, sale or delivery of any Equipment
Note, any Pass-Through Certificate (or any certificates or securities
issued in connection with any refinancing thereof pursuant to Article 13
hereof) or interest in the Lessor's Estate or the Trust Agreement or any
similar interest; and
(vii) in the case of the Owner Participant, any "prohibited
transaction," within the meaning of Section 406 of ERISA or Section
4975(c)(1) of the Code, arising out of or in connection with the
acquisition or holding of the Owner Participant's interest in the Trust
Estate.
(b) Exceptions. The indemnity provided for in Section 7.01(a) shall
not extend to any Expense of any Indemnitee to the extent it:
(i) is attributable to the willful misconduct or gross
negligence of such Indemnitee (other than gross negligence or willful
misconduct imputed to such person by reason of its interest in the
Aircraft or any transaction documents);
(ii) except to the extent fairly attributable to acts or
events occurring prior thereto, is attributable to acts or events (other
than the performance by Lessee of its obligations pursuant to the terms of
the Operative Agreements) which occur after the Aircraft is no longer part
of the Lessor's Estate or, if the Aircraft remains a part of the Lessor's
Estate, after the expiration of the Term (unless the Aircraft is being
returned at such time, in which case after return of physical possession;
provided that if the Lease has been terminated pursuant to Section 17
thereof, the indemnity provided in Section 7.01(a) hereof shall survive
for so long as Lessor or the Indenture Trustee shall be exercising
remedies under such Section 17), or to acts or events which occur after
return of possession of the Aircraft by the Lessee in accordance with the
provisions of the Lease (subject to the foregoing proviso if the Lessor
has terminated the Lease pursuant to Section 17 of the Lease); provided
that nothing in this clause (ii) shall be deemed
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to exclude or limit any claim that any Indemnitee may have under
Applicable Law by reason of an Event of Default or for damages from Lessee
for breach of Lessee's covenants contained in the Lessee Documents or to
release Lessee from any of its obligations under the Lessee Documents that
expressly provide for performance after termination of the Term;
(iii) other than as expressly provided herein or in the other
Operative Agreements, is a Tax or loss of a Tax benefit, whether or not
the Lessee is required to indemnify therefor pursuant to Article 6 hereof
or pursuant to the Tax Indemnity Agreement;
(iv) is a cost or expense expressly required to be paid by
such Indemnitee or its permitted transferees (and not by the Lessee)
pursuant to this Agreement or any other Operative Agreement and for which
the Lessee is not otherwise obligated to reimburse such Indemnitee,
directly or indirectly pursuant to the terms of this Agreement or such
other Operative Agreement;
(v) is attributable to the incorrectness or breach by such
Indemnitee of its representations or warranties, under any of the
Operative Agreements except to the extent such incorrectness or breach was
caused by a breach by Lessee of any representation or warranty or by any
failure of Lessee to perform any obligation under an Operative Agreement;
(vi) is attributable to the failure by such Indemnitee to
perform any of its obligations under any of the Operative Agreements
except to the extent such failure was caused by a breach of Lessee of any
representation or warranty or by any failure of Lessee to perform any
obligation under an Operative Agreement;
(vii) is, in the case of the Owner Participant, Lessor's Liens
attributable to the Owner Participant; in the case of the Owner Trustee,
Lessor's Liens to the extent attributable to the Owner Trustee; in the
case of Trust Company, Lessor's Liens to the extent attributable to Trust
Company; and in the case of the Indenture Trustee, Indenture Trustee's
Liens;
(viii) is, in the case of the Owner Participant or the Owner
Trustee, attributable to the offer or sale by such Indemnitee of any
interest in the Aircraft, the Lessor's Estate or the Trust Agreement or
any similar interest (including an offer or sale resulting from bankruptcy
or other proceedings for the relief of debtors in which such Indemnitee is
the debtor), unless in each case such offer or sale shall occur pursuant
to the exercise of remedies under Section 17 of the Lease;
(ix) in the case of the Owner Participant, is an Expense
relating to, resulting from, arising out of or in connection with a
"prohibited transaction" within the meaning of Section 406 of ERISA or
Section 4975(c)(1) of the Code
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resulting from the direct or indirect use of assets of any ERISA Plan to
acquire or hold Owner Participant's interest in the Trust Estate or in the
case of any transferee of the Owner Participant referred to in Section
5.01(c), to purchase the Beneficial Interest pursuant to Section 5.01(c).
(x) except during the continuation of an Event of Default, is
attributable to any amendment to any of the Operative Agreements which is
not requested, or consented to, by the Lessee or is not required or made
pursuant to the terms of any of the Operative Agreements or Pass-Through
Documents;
(xi) is attributable to the exercise by any Indemnitee of any
right to inspect the Aircraft except with respect to any such inspection
conducted while an Event of Default is continuing; and
(xii) constitutes the loss of future profits of such
Indemnitee or losses attributable to such Indemnitee's overhead.
Section 7.2 Notice and Payment. Each Indemnitee shall give prompt
written notice to the Lessee of any liability as to which an officer of such
Indemnitee has actual knowledge, or reasonably should have had actual knowledge,
for which the Lessee is, or may be, liable under this Article 7; provided,
however, that failure to give such notice shall not terminate any of the rights
of an Indemnitee under this Article 7 and shall not release Lessee from any of
its obligations to indemnify such Indemnitee hereunder, except to the extent
that such failure adversely affects any applicable defense or counterclaim,
otherwise increases the amount the Lessee would have been liable for in the
absence of such failure to provide such notice or adversely affects the ability
of Lessee's insurers to defend such claim.
Section 7.3 Defense of Claims. The Lessee or its insurers shall have
the right (in each such case at the Lessee's sole expense) to investigate,
defend (and control the defense of) any such claim for which indemnification is
sought pursuant to this Article 7 and each Indemnitee shall cooperate with the
Lessee or its insurers with respect thereto, provided that, without limiting the
right of the Lessee's insurers to assume and control the defense of or to
compromise, any such claim, the Lessee shall not be entitled to assume and
control the defense of or compromise any such claim (A) during the continuance
of any Event of Default arising under Sections 16(a), (f), (g) or (h) of the
Lease, (B) if an actual or potential material conflict of interest exists making
it advisable in the good faith opinion of such Indemnitee (on the basis of
prevailing standards of professional responsibility) for such Indemnitee to be
represented by separate counsel or if such proceeding involves the potential
imposition of criminal liability on such Indemnitee or (C) if such proceeding
will involve any non-de minimis risk of the sale, forfeiture or loss of, or the
creation of any Lien (other than Permitted Liens) on the Aircraft, the Trust
Indenture Estate or the Trust Estate (unless the Lessee posts a bond or other
security reasonably acceptable in form and substance to such Indemnitee) or
involve any risk of criminal liability to such Indemnitee and, in any such case,
the relevant Indemnitee will, in good faith, undertake the defense of such
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claim at the expense of the Lessee. Subject to the immediately foregoing
sentence, where the Lessee or the insurers under a policy of insurance
maintained by the Lessee undertake the defense of an Indemnitee with respect to
such a claim, no additional legal fees or expenses of such Indemnitee in
connection with the defense of such claim shall be indemnified hereunder unless
the fees or expenses were incurred at the written request of the Lessee or such
insurers. Subject to the requirement of any policy of insurance applicable to a
claim, an Indemnitee may participate at its own expense at any judicial
proceeding controlled by the Lessee or its insurers pursuant to the preceding
provisions, to the extent that such party's participation does not, in the
reasonable opinion of the independent counsel appointed by the Lessee or its
insurers to conduct such proceedings, interfere with the defense of such claim
(it being agreed that the making of copies, giving notice of proceedings and the
like shall not be considered interference); and such participation shall not
constitute a waiver of the indemnification provided in this Section 7.03. No
Indemnitee shall enter into any settlement or other compromise with respect to
any claim described in this Section 7.03 (other than any claim involving
potential criminal liability) without the prior written consent of the Lessee,
unless such Indemnitee waives its right to be indemnified under this Article 7
with respect to such claim. The Lessee shall not enter into any settlement or
compromise with respect to which the Lessee has not agreed to indemnify such
Indemnitee to such Indemnitee's satisfaction or which admits any criminal
violation, gross negligence or willful misconduct on the part of any Indemnitee
without the prior written consent of such Indemnitee.
Section 7.4 Insured Claims. Notwithstanding any other provision of
this Article 7 to the contrary, in the case of any claim indemnified by the
Lessee hereunder which is covered by a policy of insurance maintained by the
Lessee pursuant to Section 9 of the Lease or otherwise, it shall be a condition
of such indemnity with respect to any particular Indemnitee that such Indemnitee
shall cooperate with the insurers in the exercise of their rights to
investigate, defend or compromise such claim as may be required to retain the
benefits of such insurance with respect to such claim.
Section 7.5 Subrogation. To the extent that an Expense indemnified
by the Lessee under this Article 7 is in fact paid in full by the Lessee and/or
an insurer under a policy of insurance maintained by the Lessee, the Lessee
and/or such insurer as the case may be shall be subrogated to the extent of such
payment to the rights and remedies of the Indemnitee on whose behalf such
Expense was paid with respect to the transaction or event giving rise to such
Expense. Should an Indemnitee receive any refund, in whole or in part, with
respect to any Expense paid in full by the Lessee hereunder, it shall promptly
pay over the amount refunded (but not an amount in excess of the amount Lessee
and/or such insurer has paid to such Indemnitee in respect of such Expense) to
the Lessee unless a Specified Default or an Event of Default shall have occurred
and be continuing (or would have occurred and be continuing if the Owner
Participant had given the notice specified in Section 16(a) of the Lease), in
which case, provided that Lessee shall have paid such Indemnitee all amounts
required under this Article 7 or under any other Operative Agreement, such
amounts shall be paid over to Owner Trustee (or, so long as the Indenture shall
not have been
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discharged, to the Indenture Trustee) to hold as security for Lessee's
obligations under the Lessee Documents or, if requested by Lessee, applied to
satisfy such obligations.
Section 7.6 Information. Subject to Section 7.04, Lessee will
provide the relevant Indemnitee with such information, not within the control of
such Indemnitee, as is in Lessee's control or is reasonably available to Lessee,
which such Indemnitee may reasonably request, and will otherwise cooperate with
such Indemnitee, so as to enable such Indemnitee to fulfill its obligations
under Section 7.03 and to control or participate in any proceeding to the extent
permitted by Section 7.03. The Indemnitee shall supply Lessee with such
information, not within the control of Lessee, as is in such Indemnitee's
control or is reasonably available to such Indemnitee, which Lessee may
reasonably request to control or participate in any proceeding to the extent
permitted by Section 7.03.
Section 7.7 Survival of Obligations. The indemnities and agreements
of the Lessee provided for in this Article 7 shall survive the expiration or
other termination of this Agreement.
Section 7.8 Effect of Other Indemnities. The Lessee's obligations
under this Article 7 shall be those of a primary obligor whether or not the
Person indemnified shall also be indemnified with respect to the same matter
under the terms of this Agreement, or any other document or instrument, and the
Person seeking indemnification from the Lessee pursuant to any provision of this
Agreement may proceed directly against the Lessee without first seeking to
enforce any other right of indemnification.
Section 7.9 Waiver of Certain Claims. The Lessee hereby waives and
releases any Expense now or hereafter existing against any Indemnitee arising
out of death or personal injury to personnel of the Lessee, loss or damage to
property of the Lessee, or the loss of use of any property of the Lessee, which
results from or arises out of the condition, use or operation of the Aircraft
during the Term, including, without limitation, any latent or patent defect
whether or not discoverable.
Section 7.10 Certain Limitations. The Lessee does not guarantee and
nothing in the general indemnification provisions of this Article 7 shall be
construed as a guarantee (or an indemnification) by the Lessee (i) that the
principal of, premium, if any, or interest on any "Equipment Note" (as defined
in the Pass-Through Trust Agreements) will be paid or (ii) with respect to the
residual value of the Aircraft or any part thereof.
Section 7.11 Certain Transfers. If the Owner Participant (i) makes
any claim for payment as a result of the indemnity provided by the Lessee in
Section 6.01(a)(x) or 7.01(a)(vii), and (ii) such claim is the result of the
direct or indirect acquisition or holding of a Pass-Through Certificate by an
ERISA Plan, established or maintained by Owner Participant or any entity that is
treated as a single employer with Owner Participant under Section 414(b), (c),
(m) or (o) of the Code (an "ERISA
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Affiliate") or as to which Owner Participant or any ERISA Affiliate of Owner
Participant contributed or is a member, the Lessee shall have the right, upon 30
days notice to the Owner Participant, to purchase the Beneficial Interest, on a
Termination Date specified in such notice, for a price equal to the higher of
(1) the Owner Participant's Share of Termination Value and (2) the Owner
Participant's Share of FMV. In connection with any such purchase, the Lessee
shall pay all unpaid Supplemental Rent (including payment of such indemnity
claim) due on or before such Termination Date. The Lessee shall not have the
right to purchase the Beneficial Interest in any instance pursuant to the
foregoing sentence in the event the Owner Participant waives any claim for
payment it may have in such instance pursuant to clause (i) above. For purposes
of this Section 7.11, "Owner Participant's Share of Termination Value" means the
excess of (w) the Termination Value as of such Termination Date, over (x) the
aggregate principal amount of Equipment Notes outstanding on such Termination
Date (and accrued interest thereon) and "Owner Participant's Share of FMV" means
the Fair Market Sales Value of the Aircraft as of such Termination Date,
determined in accordance with the definition thereof but assuming (y) that the
Aircraft is subject to the Lease, the Indenture, the indebtedness evidenced by
the Equipment Notes and the other Operative Agreements and (z) that the
violation giving rise to such indemnity claim has been cured. Nothing in this
Section 7.11 shall affect the obligation of the Lessee to make any payment of
Basic Rent due on or prior to the Termination Date.
ARTICLE VIII.
TRANSACTION COSTS
Section 8.1 Transaction Costs and Other Costs.
(a) Transaction Costs. If the transactions contemplated by this
Agreement to occur on the Delivery Date are consummated, the Owner Participant
shall pay (or reimburse the Lessee if the Lessee shall have previously made such
payment) all fees and expenses of the following persons relating to the offering
of the Pass-Through Certificates contemplated by the Placement Agreement and
related to the transactions contemplated hereby, following receipt by the Owner
Participant of appropriate invoices with respect thereto: (i) the out-of-pocket
expenses of the Owner Participant relating to the time sharing charges of Warren
& Selbert and the reasonable fees and expenses of counsel for Owner Participant;
(ii) the reasonable fees and expenses of the respective counsel for the Lessee,
the Owner Trustee, the Indenture Trustee, the Manufacturer, the Subordination
Agent, the Pass-Through Trustee, each Liquidity Provider and the Placement
Agents (other than those fees, expenses and disbursements payable by the
Placement Agent pursuant to the Placement Agreement); (iii) the reasonable fees
and expenses of special aviation counsel; (iv) any initial fees and expenses of
the Pass-Through Trustee and the initial fees and expenses of the Owner Trustee,
the Subordination Agent, the Indenture Trustee; (v) any compensation,
commissions and discounts payable to the Placement Agents pursuant to the
Placement Agreement; (vi) the fees and expenses incurred in connection with
printing any offering
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memorandum for the offering of the Pass-Through Certificates; (vii) the fees and
expenses of Moody's and S&P; (viii) the fees and expenses of The Seabury Group
LLC (the "Lessee Advisor"); (ix) any amounts paid in connection with any
appraisal report prepared for the Owner Participant; and (x) any other amounts
approved by the Lessee and the Owner Participant. The fees and expenses
described in clauses (ii) through (viii) of this paragraph shall be allocable to
the Owner Participant under this Agreement in such manner as is agreed to by the
Owner Participant and the Lessee.
(b) Continuing Expenses. The Lessee agrees to pay, as Supplemental
Rent, (i) the continuing fees, expenses and disbursements (including reasonable
counsel fees and expenses) of Trust Company and the Owner Trustee, with respect
to the administration of the Lease and the Lessor's Estate; (ii) the continuing
fees, expenses and disbursements (including reasonable counsel fees and
expenses) of the Indenture Trustee, with respect to the administration of the
Trust Indenture Estate; (iii) the continuing fees, expenses and disbursements
(including reasonable counsel fees and expenses) of the Pass-Through Trustee and
the Subordination Agent; and (iv) the continuing fees, expenses and
disbursements (including reasonable counsel fees and expenses) of the Liquidity
Providers as expressly provided in each Liquidity Facility.
(c) Amendments and Supplements. Without limitation of the foregoing,
the Lessee agrees to pay, as Supplemental Rent, to the Owner Trustee, the Owner
Participant, the Indenture Trustee, the Subordination Agent, the Liquidity
Providers and the Pass-Through Trustee all costs and expenses (including
reasonable legal fees and expenses) incurred by any of them in connection with
any amendment, supplement, waiver or consent (whether or not entered into) under
this Agreement or any other Operative Agreement or document or instrument
delivered pursuant to any of them, which amendment, supplement, waiver or
consent is required by any provision of any Operative Agreement (including any
adjustment pursuant to Section 3(d) of the Lease) or is requested by the Lessee
or necessitated by the action or inaction of the Lessee; provided, however, that
the Lessee shall not be responsible for fees or expenses incurred in connection
with the offer, sale or other transfer (whether pursuant to Section 5.01(c)
hereof or otherwise) by the Owner Participant, the Owner Trustee, the Indemnitee
Trustee, or any Holder of any interest in the Aircraft, the Lessor's Estate, the
Beneficial Interest or the Trust Agreement or any similar interest (and the
offer or, seller, or transferor shall be responsible for all such fees and
expenses), unless such offer, sale or transfer shall occur (A) pursuant to the
exercise of remedies under Section 17 of the Lease, or (B) in connection with
the termination of the Lease or action or direction of the Lessee pursuant to
Section 8, 13 or 14 of the Lease.
ARTICLE IX.
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SUCCESSOR OWNER TRUSTEE
Section 9.1 Appointment of Successor Owner Trustee.
(a) Resignation and Removal. The Owner Trustee or any successor
Owner Trustee may resign or may be removed (with the consent of the Lessee) by
the Owner Participant, and a successor Owner Trustee may be appointed and a
Person may become Owner Trustee under the Trust Agreement only in accordance
with the provisions of Section 9.01 of the Trust Agreement and the provisions of
paragraphs (b) and (c) of this Section 9.01.
(b) Conditions to Appointment. The appointment in any manner of a
successor Owner Trustee pursuant to Section 3.11 of the Trust Agreement shall be
subject to the following conditions:
(i) such successor Owner Trustee shall be a Citizen of the
United States;
(ii) such successor Owner Trustee shall be a bank or a trust
company having combined capital, surplus and undivided profits of at least
$100,000,000 or a bank or trust company fully guaranteed by a direct or
indirect parent thereof having a combined capital, surplus and undivided
profits of at least $100,000,000;
(iii) such appointment shall not violate any provisions of the
Transportation Code or any applicable rule or regulation of the applicable
regulatory agency or body of any other jurisdiction in which the Aircraft
may then be registered or create a relationship which would be in
violation of the Transportation Code or any applicable rule or regulation
of the applicable regulatory agency or body of any other jurisdiction in
which the Aircraft may then be registered;
(iv) such successor Owner Trustee shall enter into an
agreement or agreements, in form and substance reasonably satisfactory to
the Lessee, the Owner Participant, the Pass-Through Trustee and the
Indenture Trustee whereby such successor Owner Trustee confirms that it
shall be deemed a party to this Agreement and each other Operative
Agreement to which the Owner Trustee is a party and agrees to be bound by
all the terms of such documents applicable to the Owner Trustee and makes
the representations and warranties contained in Section 5.04 hereof
(except that it may be duly incorporated, validly existing and in good
standing under the laws of the United States of America or any State
thereof); and
(v) all filings of Uniform Commercial Code financing and
continuation statements, filings in accordance with the Transportation
Code and amendments thereto shall be made and all further actions taken in
connection with such
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appointment as may be necessary in connection with maintaining the
validity, perfection and priority of the Lien of the Indenture and the
valid and continued registration of the Aircraft in accordance with the
Transportation Code.
ARTICLE X.
LIABILITIES AND INTERESTS OF THE OWNER PARTICIPANT AND
HOLDERS
Section 10.1 Liabilities of the Owner Participant. The Owner
Participant shall not have any obligation or duty to the Lessee or to any Holder
with respect to the transactions contemplated by this Agreement, except those
obligations or duties expressly set forth in this Agreement, the Indenture or
(to the Lessee only) the Tax Indemnity Agreement or in any other Operative
Agreement to which the Owner Participant is a party and the Owner Participant
shall not be liable for the performance by any other party hereto of such other
party's obligations or duties hereunder.
Section 10.2 Interest of Holders of Equipment Notes. Each Holder of
an Equipment Note shall have no further interest in, or other right with respect
to, the Trust Indenture Estate when and if the principal and interest on all
Equipment Notes held by such Holder and all other sums payable to such Holder
under this Agreement, under the Indenture and under such Equipment Notes shall
have been paid in full.
ARTICLE XI.
OTHER DOCUMENTS
Section 11.1 Consent of Lessee to Other Documents. The Lessee hereby
consents in all respects to the execution and delivery of the Indenture, the
Trust Agreement, the Intercreditor Agreement and the Liquidity Facilities.
Section 11.2 Pass-Through Trustee's and Subordination Agent's
Acknowledgment. The Pass-Through Trustee and the Subordination Agent hereby
acknowledge and agree to be bound by all of the terms and conditions of the
Indenture, including without limitation, Section 8.02 thereof regarding the
rights of the Owner Participant to purchase the Equipment Notes under the
circumstances specified therein.
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ARTICLE XII.
NOTICES
Section 12.1 Notices. Except as otherwise specifically provided
herein, all notices, requests, approvals or consents required or permitted by
the terms hereof shall be in writing (it being understood that the specification
of a writing in certain instances and not in others does not imply an intention
that a writing is not required as to the latter). Any notice shall be effective
when received. Any notice shall either be mailed, certified or registered mail,
return receipt requested with proper first class postage prepaid, or sent in the
form of a telecopy, provided that there is receipt of such notice the next
Business Day from an overnight courier service, or by overnight delivery service
or delivered by hand. Any notice shall be directed to the Lessee, the Lessor,
the Indenture Trustee or any other party hereto to the respective addresses set
forth below or to such other address or telecopy number as any such party may
designate pursuant to this Section 12.01:
(a) if to the Lessee, to its office at 300 W. Morgan Street, Suite
1200, Durham, North Carolina, Attention: General Counsel, telephone (919)
956-4810, facsimile (919) 956-7568; or to such other address as the Lessee shall
from time to time designate in writing to the Lessor, the Indenture Trustee and
any Owner Participant;
(b) if to the Lessor or the Owner Trustee, to its office at One
Rodney Square, 920 King Street, Suite 102, Wilmington, Delaware 19801,
Attention: Corporate Trust Administration, telephone (302) 888-7539, facsimile
(302) 888-7544; or to such other address as the Lessor shall from time to time
designate in writing to the Lessee and the Indenture Trustee, with a copy to the
Owner Participant;
(c) if to the Owner Participant to its office at 245 Park Avenue,
40th Floor, New York, New York 10167, Attention: Asset Administrator, telephone
(212) 557-4799 facsimile (212) 557-4569; or to such other address as the Owner
Participant shall from time to time designate in writing to the Lessee, and the
Owner Trustee and the Indenture Trustee;
(d) if to the Indenture Trustee, the Subordination Agent or the
Pass-Through Trustee, to its office at 25 South Charles Street, Mail Code
101-591, Baltimore, Maryland 21201 Attention: Corporate Trust Department,
telephone (410) 244-4626 facsimile (410) 244-4236; or to such other address as
the Indenture Trustee or the Pass-Through Trustee, as the case may be, shall
from time to time designate in writing to the Lessor, the Lessee and the Owner
Participant; and
(e) if to the Liquidity Provider, to its office at 135 South LaSalle
Street, #760, Chicago, IL 60674-9135, Attention: Claudia Heldring, telephone
(312) 904-2900 and facsimile (312) 606-8428; or to such other address as a
Liquidity Provider shall from time to time designate in writing to the Lessor,
the Lessee and the Indenture Trustee.
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ARTICLE XIII.
REFINANCING
Section 13.1 Refinancing
(a) Subject to the terms and conditions of this Section 13.01, the
Lessee may request the Owner Participant to participate in two refinancings in
whole but not in part, of the Equipment Notes prior to the end of the Basic Term
(a "Refinancing"). Such Refinancing may be placed in either the private or
public markets and shall be denominated in Dollars and shall be on terms
reasonably satisfactory to the Owner Participant. The Owner Participant will
agree to negotiate promptly in good faith to conclude an agreement with the
Lessee as to the terms of any such Refinancing transaction (including the terms
of any debt to be issued in connection with such refinancing and the
documentation to be executed in connection therewith). Without the prior written
consent of the Owner Participant, the prospectus and other offering materials
relating to any Refinancing in the form of a public offering shall not identify
the Owner Participant and shall not include any financial statements of the
Owner Participant or any Affiliate thereof. In connection with any such
Refinancing in the form of a public offering, the Lessee shall indemnify the
Owner Participant in a manner satisfactory to it for any liabilities under
federal, state or foreign securities laws resulting from such offering. The
aggregate principal amount of the new Equipment Notes issued in connection with
any Refinancing shall be the same as the aggregate principal amount outstanding
on the Equipment Notes being refinanced.
(b) Notwithstanding anything herein to the contrary, no Refinancing
will be permitted unless the Owner Participant and the Indenture Trustee shall
have received at least 15 days' prior written notice of the scheduled closing
date of such Refinancing and the Owner Participant shall have been provided such
longer period as it shall have required for a reasonable opportunity to review
the relevant documentation and the Owner Participant shall have determined in
good faith that neither it nor the Owner Trustee shall suffer any loss or
expense or bear any increased risk as a result of such Refinancing (including,
without limitation, any risk with respect to taxes or other adverse consequences
to the Owner Participant including the application of Revenue Procedures 75-21
and 75-28 and Section 467 of the Code) for which it has not been or will not
have been indemnified in a manner satisfactory in form and substance to the
Owner Participant.
Prior to the consummation of any Refinancing pursuant to this
Section 13.01, the Owner Participant and the Lessee shall agree upon a schedule
setting forth each installment of Basic Rent and setting forth Termination
Values payable pursuant to the Lease as a result of the Refinancing in
accordance with Section 3(d) of the Lease, and thereafter the amounts set forth
in such schedule shall become the amounts payable under the Lease. Upon the
consummation of the Refinancing, the evidence of indebtedness issued pursuant to
the Refinancing shall be considered "Equipment Notes" for purposes of this
Agreement and the Lease.
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(c) Notwithstanding the foregoing, the Owner Participant shall have
no obligation to proceed with any Refinancing transaction as contemplated by
this Section 13.01 unless the Lessee provides an indemnity on an After Tax Basis
to the Owner Trustee and the Owner Participant by agreement in form and
substance satisfactory to each of them (provided that Taxes are excluded from
such indemnity), for any liability, obligation (other than, in the case of the
Owner Trustee, the non-recourse obligation to pay principal and interest in
respect of the refinanced indebtedness), cost or expense (including, without
limitation, reasonable attorneys' fees and Make-Whole Premium or other amounts
due under the Indenture).
(d) Without the prior written consent of the Owner Participant, no
such refinancing shall (1) cause the aggregate principal amount of the
indebtedness to be substituted for the Equipment Notes to exceed the aggregate
principal amount of the then outstanding Equipment Notes, (2) cause the weighted
average life of such indebtedness to be longer than the remaining weighted
average life of the then outstanding Equipment Notes, or (3) cause the date of
maturity of such indebtedness to be later than the date of maturity of the
Equipment Notes being refinanced.
(e) Subject to the foregoing provisions of this Section 13.01, each
party agrees to take or cause to be taken all requested action, including,
without limitation, the execution and delivery of any documents and instruments,
including, without limitation, amendments or supplements to the Lease, which may
be reasonably necessary or desirable to effect such Refinancing, including, in
the case of the Owner Participant, direction to the Owner Trustee by the Owner
Participant to prepay the Equipment Notes then outstanding; provided, however,
that such Refinancing shall be subject to the satisfaction of each of the
following conditions:
(i) Payment shall have been made with respect to principal,
accrued interest, Make-Whole Premium, if any, and all other sums due and
owing on the Equipment Notes payable under the Indenture;
(ii) Payment in full of all other amounts then due and owing
by the Lessee under this Agreement, the Indenture, the Lease, the Trust
Agreement, and the Equipment Notes then outstanding shall have been made
by the Lessee;
(iii) Such party shall have received such opinions of counsel
(including, without limitation, an opinion received by the Owner
Participant from independent tax counsel selected by Owner Participant and
reasonably satisfactory to the Lessee that such Refinancing shall not
result in any, or the risk of any, adverse tax consequences to such Owner
Participant, unless the Lessee shall have provided, or caused to be
provided, an indemnity in respect thereof satisfactory in form and
substance to the Owner Participant), certificates and other documents as
it may reasonably request, each in form and substance reasonably
satisfactory to such party;
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(iv) All authorizations, approvals and consents which in the
reasonable judgment of the Owner Participant are necessary for such
Refinancing shall have been obtained;
(v) No Specified Default shall exist or would occur
immediately after giving effect to such Refinancing;
(vi) In the event the Lessee shall not prohibit the purchase
of the Refinancing loan certificates by, or with the assets of, an ERISA
Plan, the Lessee will permit the placement of the Refinancing loan
certificates with an ERISA Plan only if either (A) if such placement is in
the form of pass-through certificates, the sole underwriter or the manager
or co-manager of the underwriting syndicate or the selling or placement
agent of such pass-through certificates represents to the Lessee that it
has a prohibited transaction exemption from the U.S. Department of Labor
with respect to Pass-Through certificates (such as Prohibited Transaction
Exemption 89-88 or any other comparable exemption) or (B) purchasers of
the Refinancing loan certificates (or if the Refinancing involves the
issuance and sale of pass-through certificates, purchasers of such
pass-through certificates) provide a representation (which may be in the
form of a deemed representation) regarding their source of funds used in
acquiring the Refinancing loan certificates (or such pass-through
certificates, as the case may be) and, if such purchasers represent that
they are using funds of an ERISA Plan in acquiring the Refinancing loan
certificates (or such pass-through certificates, as the case may be), such
purchasers further represent that they are relying on a prohibited
transaction exemption from the U.S. Department of Labor with respect to
their purchase and holding of the Refinancing loan certificates (or such
pass-through certificates, as the case may be). The reliance on any such
exemption will not be conditional on the Owner Participant's
representation concerning its party in interest or other status with
respect to ERISA Plans;
(vii) The Lessee shall pay all costs and expenses (including
legal fees and disbursements) incurred in connection with any proposed or
actually consummated Refinancing; and
(viii) In the case of Refinancings after the first
Refinancing, the Lessee shall pay the Owner Participant, upon the
consummation of any such Refinancing, a refinancing fee in the aggregate
amount of $75,000 (it being understood that there is no such refinancing
fee payable on the first Refinancing); provided that, in the event such
Refinancing also involves the indebtedness issued under any Related
Indenture, the payment of this fee under this Section 13.01(e)(viii) will
satisfy the Lessee's obligation under any similar provision in any other
"Participation Agreement" (as defined in any such Related Indenture).
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ARTICLE XIV.
PUBLICITY
Section 14.1 Publicity. Each party hereto agrees that it will use
its commercially reasonable efforts not to disclose, or permit any of its
employees or agents to disclose after the Delivery Date, the identity of the
Owner Participant or the terms of the Operative Agreements in connection with
the issuance or release for external publication of any article or advertising
or publicity matter relating to the terms and conditions of any of the Operative
Agreements or the transactions contemplated thereby without the prior written
consent of the Owner Participant and Lessee. Nothing in this Section 14.01 shall
prevent the Lessee from filing any information with the SEC as is required by
Applicable Law.
ARTICLE XV.
MISCELLANEOUS
Section 15.1 Counterparts. This Agreement may be executed by the
parties 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 15.2 No Oral Modifications. Neither this Agreement nor any
of its terms may be terminated, amended, supplemented, waived or modified
orally, but only by an instrument in writing signed by the party against which
the enforcement of the termination, amendment, supplement, waiver or
modification is sought. No such written termination, amendment, supplement,
waiver or modification shall be effective unless a signed copy shall have been
delivered to and executed by the Owner Trustee and the Indenture Trustee. A copy
of each such termination, amendment, supplement, waiver or modification shall
also be delivered to each other party to this Agreement.
The consent of each of the Pass-Through Trustee and the
Subordination Agent, in its capacity as a party to this Agreement and not as a
Holder, shall not be required to modify, amend or supplement this Agreement or
to give any consent, waiver, authorization or approval with respect to this
Agreement under the circumstances in which the consent of the Indenture Trustee
would not be required for such modification, amendment, supplement, consent,
waiver or approval in accordance with Section 6.01(b) of the Indenture, provided
that the Pass-Through Trustee and the Subordination Agent shall be entitled to
receive an Opinion of Counsel (as defined in the Pass-Through Trust Agreement)
necessary, in its sole discretion, to establish that the Indenture Trustee's
consent would not be required under such circumstances.
Section 15.3 Captions. The table of contents preceding this
Agreement and the headings of the various Articles and Sections of this
Agreement are for convenience of reference only and shall not modify, define,
expand or limit any of the terms or provisions of this Agreement.
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Section 15.4 Successors and Assigns. The terms of this Agreement
shall be binding upon, and shall inure to the benefit of, the Lessee and its
successors and permitted assigns, the Subordination Agent and its successors and
permitted assigns, including without limitation each Holder of an Equipment
Note, the Owner Participant and its successors and permitted assigns, the Owner
Trustee and its successors as Owner Trustee (and any additional owner trustee
appointed) under the Trust Agreement, the Indenture Trustee and its successors
as Indenture Trustee (and any additional indenture trustee appointed) under the
Indenture and the Pass-Through Trustee and its successors as Pass-Through
Trustee (and any additional Pass-Through trustee appointed).
Section 15.5 Concerning the Owner Trustee, Indenture Trustee and the
Pass-Through Trustee. Each of Trust Company and FNBM is entering into this
Agreement solely in its capacities (except to the extent otherwise expressly
indicated), in the case of Trust Company, not in its individual capacity but
solely as Owner Trustee under the Trust Agreement, in the case of FNBM, not in
its individual capacity but solely as Indenture Trustee under the Indenture and
as Pass-Through Trustee under the Pass-Through Trust Agreement and as
Subordination Agent under the Subordination Agreement, and except as otherwise
expressly provided in this Agreement or in the Lease, the Indenture, the
Pass-Through Trust Agreement or the Trust Agreement, neither Trust Company nor
FNBM shall be personally liable for or on account of its statements,
representations, warranties, covenants or obligations under this Agreement;
provided, however, that each of Trust Company and FNBM accepts the benefits
running to it under this Agreement, and each agrees that (except as otherwise
expressly provided in this Agreement or any other Operative Agreement to which
it is a party) it shall be liable in its individual capacity for (a) its own
gross negligence or willful misconduct (whether in its capacity as trustee or in
its individual capacity), (b) any breach of representations and warranties or
any breach of covenants made in its individual capacity pursuant to or in
connection with this Agreement or the other Operative Agreements to which it is
a party, (c) any breach, in the case of the Owner Trustee, of its covenants
contained in Sections 3.05 and 3.08 of the Indenture, (d) the failure to use
ordinary care in receiving, handling and disbursing funds, (e) in the case of
the Owner Trustee, Lessor's Liens attributable to it in its individual capacity,
(f) in the case of the Indenture Trustee, Indenture Trustee's Liens, and (g)
taxes, fees or other charges on, or based on, or measured by, any fees,
commissions or compensation received by it in connection with the transactions
contemplated by the Operative Agreements.
Section 15.6 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 15.7 Certain Limitations on Reorganization. The Indenture
Trustee and the Pass-Through Trustee agree that, if (i) the Owner Trustee
becomes or all or any part of the Lessor's Estate or the trust created by the
Trust Agreement
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becomes the property of, a debtor subject to the reorganization provisions of
the Bankruptcy Code or any other applicable bankruptcy or insolvency statutes,
(ii) pursuant to any such reorganization provisions, the Owner Participant is
held to have recourse liability to the debtor, the Owner Trustee or the trustee
of the debtor directly or indirectly on account of any amount payable as
Make-Whole Premium, principal or interest on the Equipment Notes, or any other
amount payable on any Equipment Note that is provided in the Operative
Agreements to be nonrecourse to the Owner Participant and (iii) the Indenture
Trustee actually receives any Recourse Amount which reflects any payment by the
Owner Participant on account of (ii) above, then the Indenture Trustee shall
promptly refund to the Owner Participant such Recourse Amount. For purposes of
this Section 15.07, "Recourse Amount" means the amount by which the portion of
such payment by the Owner Participant on account of clause (ii) above received
by the Indenture Trustee exceeds the amount which would have been received by
the Indenture Trustee if the Owner Participant had not become subject to the
recourse liability referred to in (ii) above. Nothing contained in this Section
shall prevent the Indenture Trustee from enforcing any individual obligation
(and retaining the proceeds thereof) of the Owner Participant under this
Agreement or, any other Operative Agreement to the extent herein or therein
provided, for which the Owner Participant has expressly agreed by the terms of
this Agreement to accept individual responsibility.
Section 15.8 GOVERNING LAW. (a) THIS AGREEMENT IS BEING DELIVERED IN
THE STATE OF NEW YORK, AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAWS.
(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO
IRREVOCABLY AGREES, ACCEPTS AND SUBMITS ITSELF TO THE NON-EXCLUSIVE JURISDICTION
OF THE COURTS OF THE STATE OF NEW YORK IN THE CITY AND COUNTY OF NEW YORK AND OF
THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN CONNECTION WITH ANY
LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO ANY MATTER RELATING TO OR
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT.
(c) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES THAT
THE SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE
BY MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT
THE ADDRESS SET FORTH PURSUANT TO SECTION 12.01. EACH PARTY HERETO AGREES THAT
SERVICE UPON IT, OR ANY OF ITS AGENTS, IN EACH CASE IN ACCORDANCE WITH THIS
SECTION 15.08(c), SHALL CONSTITUTE VALID AND EFFECTIVE PERSONAL SERVICE UPON
SUCH
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PARTY, AND EACH PARTY HERETO HEREBY AGREES THAT THE FAILURE OF ANY OF ITS AGENTS
TO GIVE ANY NOTICE OF SUCH SERVICE TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT
IN ANY WAY THE VALIDITY OF SUCH SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED
IN ANY ACTION OR PROCEEDING BASED THEREON.
(d) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A
DEFENSE, OR OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN
ANY OF THE ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT
THIS AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY
SUCH COURTS.
(e) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO
HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION IN ANY COURT IN ANY JURISDICTION BASED UPON OR ARISING OUT OF OR RELATING
TO THIS AGREEMENT.
Section 15.9 Section 1110 Compliance. The parties hereto agree that
the transactions contemplated by the Operative Agreements are expressly intended
to be, shall be, and should be construed so as to be entitled to the benefits
and protection of Section 1110.
Section 15.10 Reliance of Liquidity Providers. Each of the parties
hereto agrees and acknowledges that each Liquidity Provider shall be a third
party beneficiary of each of the representations and warranties made herein by
such party (and of each covenant herein made by such party to each Liquidity
Provider), and that each Liquidity Provider may rely on such representations,
warranties and covenants to the same extent as if such representations,
warranties and covenants were made to such Liquidity Provider directly. The
terms of this Agreement shall inure to the benefit of each Liquidity Provider,
their respective successors and permitted assigns.
* * *
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IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by their respective, duly authorized officers as of the
day and year first written above.
MIDWAY AIRLINES CORPORATION
By:
-------------------------------------
Name:
Title:
NCC CHARLIE COMPANY
By:
-------------------------------------
Name:
Title:
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, not in its individual
capacity, except as otherwise expressly
provided herein but solely as Owner
Trustee
By:
-------------------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF MARYLAND, as
Indenture Trustee, Pass-Through Trustee
and Subordination Agent
By:
-------------------------------------
Name:
Title:
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Schedule I
Commitments
Participants Amount of Commitment
- - ------------ --------------------
NCC CHARLIE COMPANY ____% of Lessor's Cost
1998-1A Pass-Through Trust ____% of Lessor's Cost
1998-1B Pass-Through Trust ____% of Lessor's Cost
1998-1C Pass-Through Trust ____% of Lessor's Cost
1998-1D Pass-Through Trust ____% of Lessor's Cost
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Note to Exhibit 10.3
The following Trust Agreement is substantially identical in all material
respects to three additional Trust Agreements except as follows:
- - --------------------------------------------------------------------------------
Owner Participant Date Aircraft (Tail No.)
- - --------------------------------------------------------------------------------
NCC Charlie Company* September 10, 1998* N575ML*
- - --------------------------------------------------------------------------------
NCC Charlie Company September 10, 1998 N576ML
- - --------------------------------------------------------------------------------
General Electric Capital Corporation November 10, 1998 N577ML
- - --------------------------------------------------------------------------------
- - ----------
* Filed document
<PAGE>
================================================================================
TRUST AGREEMENT [N576ML]
Dated as of September 10, 1998
between
NCC CHARLIE COMPANY,
as Owner Participant
and
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
as Owner Trustee
------------------------
One Canadair Regional Jet Series 200 ER Aircraft
N576ML
================================================================================
<PAGE>
PAGE
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TABLE OF CONTENTS
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PAGE
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ARTICLE I DEFINITIONS AND TERMS..............................................1
Section 1.01 Definitions...........................................1
ARTICLE II AUTHORITY TO EXECUTE CERTAIN OPERATIVE AGREEMENTS;
DECLARATION OF TRUST...............................................2
Section 2.01 Authority to Execute Documents........................2
Section 2.02 Declaration of Trust..................................2
ARTICLE III ACCEPTANCE AND DELIVERY OF AIRCRAFT; ISSUANCE OF
EQUIPMENT NOTES; LEASE OF AIRCRAFT; REPLACEMENT....................3
Section 3.01 Authorization.........................................3
Section 3.02 Conditions Precedent..................................4
Section 3.03 Postponement of Delivery Date.........................4
Section 3.04 Authorization in Respect of a Replacement Airframe
or Replacement Engines................................4
Section 3.05 Trust Agreement Remaining in Full Force and Effect....5
Section 3.06 Authorization in Respect of Return of an Engine.......5
ARTICLE IV RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE TRUST ESTATE....................................6
Section 4.01 Distribution of Payments..............................6
(a) Payments to the Indenture Trustee.....................6
(b) Payments to the Owner Trustee; Other Parties..........6
(c) Excepted Payments.....................................7
(d) Certain Distributions to Owner Participant............7
Section 4.02 Method of Payments....................................7
ARTICLE V DUTIES OF THE OWNER TRUSTEE........................................8
Section 5.01 Notice of Event of Default............................8
Section 5.02 Action Upon Instructions..............................8
Section 5.03 Indemnification.......................................9
Section 5.04 No Duties Except as Specified in Trust Agreement or
Instructions..........................................9
Section 5.05 No Action Except Under Specified Documents or
Instructions.........................................10
i
<PAGE>
PAGE
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ARTICLE VI THE OWNER TRUSTEE................................................10
Section 6.01 Acceptance of Trusts and Duties....................10
Section 6.02 Absence of Certain Duties..........................10
Section 6.03 No Representations or Warranties as to Certain
Matters............................................11
Section 6.04 No Segregation of Monies Required; Investment
Thereof............................................12
Section 6.05 Reliance Upon Certificates, Counsel and Agents.....12
Section 6.06 Not Acting in Individual Capacity..................13
Section 6.07 Fees; Compensation.................................13
Section 6.08 Tax Returns........................................13
Section 6.09 Fixed Investment Trust.............................13
ARTICLE VII INDEMNIFICATION OF THE OWNER TRUSTEE
BY THE OWNER PARTICIPANT.........................................13
Section 7.01 The Owner Participant to Indemnify the Owner
Trustee............................................13
ARTICLE VIII [RESERVED].......................................................15
ARTICLE IX SUCCESSOR OWNER TRUSTEES; CO-TRUSTEES............................15
Section 9.01 Resignation of the Owner Trustee; Appointment of
Successor..........................................15
(b) Execution and Delivery of Documents, etc.......15
(c) Qualification..................................16
(d) Merger, etc....................................16
Section 9.02 Co-Trustees and Separate Trustees..................16
ARTICLE X SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT
AND OTHER DOCUMENTS..............................................18
Section 10.01 Supplements and Amendments.........................18
(a) Supplements and Amend-ments....................18
(b) Delivery of Amendments and Supplements to
Certain Parties................................18
Section 10.02 Discretion as to Execution of Documents............18
Section 10.03 Absence of Requirements as to Form.................19
Section 10.04 Distribution of Documents..........................19
ARTICLE XI MISCELLANEOUS....................................................19
Section 11.01 Termination of Trust Agreement.....................19
Section 11.02 The Owner Participant Has No Legal Title in Trust
Estate.............................................20
ii
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PAGE
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Section 11.03 Assignment, Sale, etc., of Aircraft................20
Section 11.04 Trust Agreement for Benefit of Certain Parties
Only...............................................20
Section 11.05 Notices............................................20
Section 11.06 Severability.......................................20
Section 11.07 Waivers, etc.......................................20
Section 11.08 Counterparts.......................................21
Section 11.09 Binding Effect, etc................................21
Section 11.10 Headings; References...............................21
Section 11.11 GOVERNING LAW......................................21
Section 11.12 Administration of Trust............................22
iii
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TRUST AGREEMENT [N576ML]
This TRUST AGREEMENT [N576ML], dated as of September 10, 1998
between NCC CHARLIE COMPANY, a Delaware corporation (together with its
successors and permitted assigns, the "Owner Participant"), and FIRST UNION
TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, in its
individual capacity only as expressly stated herein and otherwise not in its
individual capacity but solely as trustee hereunder (herein in such capacity
with its permitted successors and assigns called the "Owner Trustee").
W I T N E S S E T H :
ARTICLE I
DEFINITIONS AND TERMS
Section 1.01 Definitions. Unless the context shall otherwise require
and except as contained in this Section 1.01, the capitalized terms used herein
shall have the respective meanings assigned thereto in the Lease (as hereinafter
defined) for all purposes hereof. All definitions contained in this Section 1.01
shall be equally applicable to both the singular and plural forms of the terms
defined. For all purposes of this Trust Agreement the following terms shall have
the following meanings:
"Excepted Payments" has the meaning given to such term in the Lease.
"First Union" means First Union Trust Company, National Association,
a national banking association.
"Lease" means Lease Agreement [N576ML] dated as of September 10,
1998, between the Lessor and the Lessee, as the same may be modified, amended or
supplemented from time to time. The term "Lease" shall also include each Lease
Supplement entered into pursuant to the terms of the Lease.
"Lessee" means Midway Airlines Corporation, a Delaware corporation,
and its successors and permitted assigns, as the lessee under the Lease.
"Owner Participant" means the Person identified as such in the
introduction hereto.
"Owner Trustee" means the Person identified as such in the
introduction hereto.
"Participation Agreement" means Participation Agreement [N576ML],
dated as of September 10, 1998, among the Lessee, the Owner Participant, the
Lessor, the Indenture Trustee,
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the Pass Through Trustee and the Subordination Agent, as the same may be
amended, modified or supplemented from time to time.
"Trust Agreement" means this Trust Agreement [N576ML] dated as of
September 10, 1998 between First Union and the Owner Participant, as the same
may be amended, modified or supplemented from time to time.
"Trust Estate" has the meaning given to such term in the
Participation Agreement.
"Trust Indenture" means Trust Indenture and Security Agreement
[N576ML], dated as of September 10, 1998, between the Owner Trustee and the
Indenture Trustee, as the same may be amended, modified, or supplemented from
time to time. The term "Trust Indenture" shall also include each Indenture
Supplement entered into pursuant to the terms of the Trust Indenture.
ARTICLE II
AUTHORITY TO EXECUTE CERTAIN OPERATIVE AGREEMENTS;
DECLARATION OF TRUST
Section 2.01 Authority to Execute Documents. The Owner Participant
hereby authorizes and directs the Owner Trustee (i) to execute and deliver the
Participation Agreement, the Lease, the Lease Supplement covering the Aircraft,
the Trust Indenture, the Indenture Supplement covering the Aircraft, the
Equipment Notes and any other agreements, instruments or documents, to which the
Owner Trustee is a party in the respective forms thereof in which delivered from
time to time by the Owner Participant to the Owner Trustee for execution and
delivery and (ii) subject to the terms hereof, to exercise its rights (upon
instructions received from the Owner Participant) and perform its duties under
the documents referred to in this Section in accordance with the terms thereof.
Section 2.02 Declaration of Trust. First Union hereby declares that
it will hold the Trust Estate upon the trusts hereinafter set forth for the use
and benefit of the Owner Participant, subject, however, to the provisions of and
the Lien created under the Trust Indenture.
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ARTICLE III
ACCEPTANCE AND DELIVERY OF AIRCRAFT; ISSUANCE OF
EQUIPMENT NOTES; LEASE OF AIRCRAFT; REPLACEMENT
Section 3.01 Authorization. (a) The Owner Participant hereby
authorizes and directs the Owner Trustee to, and the Owner Trustee agrees for
the benefit of the Owner Participant that, on the Delivery Date it will, subject
to due compliance with the terms of Section 3.02 hereof:
(i) authorize a representative or representatives of the Owner
Trustee to accept delivery of the Aircraft pursuant to the
Participation Agreement;
(ii) execute and deliver each of the Operative Agreements to
which the Owner Trustee is to be a party;
(iii) purchase the Aircraft pursuant to the Participation
Agreement;
(iv) pay an amount equal to Lessor's Cost to, or at the
direction of, the Lessee pursuant to the Participation Agreement in
consideration of the sale of the Aircraft to the Owner Trustee
thereunder;
(v) issue to the Loan Participants one or more Equipment Notes
in respect of the Aircraft in the amounts and otherwise as provided
in the Participation Agreement and the Trust Indenture;
(vi) execute and deliver the financing statements contemplated
by Sections 3.01(m) and (n) of the Participation Agreement;
(vii) make application to the FAA for registration of the
Aircraft in the name of the Owner Trustee;
(viii) take such other action as may reasonably be required of
the Owner Trustee hereunder or under the Participation Agreement,
the Trust Indenture or the Lease to effectuate the transactions
contemplated thereby; and
(ix) execute and deliver all such other instruments, documents
or certificates and take all such other actions in accordance with
the directions of the Owner Participant, as the Owner Participant
may reasonably deem necessary or advisable in connection with the
transactions contemplated hereby and by the other Operative
Agreements.
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(b) The Owner Participant hereby authorizes and directs the
Owner Trustee to, and the Owner Trustee agrees for the benefit of
the Owner Participant that it will:
(i) immediately after the delivery of the Aircraft to
the Owner Trustee, cause the Aircraft to be leased to Lessee under
the Lease; and
(ii) execute and deliver a Lease Supplement and an
Indenture Supplement, in each case covering the Aircraft.
Section 3.02 Conditions Precedent. The right and obligation of the
Owner Trustee to take the action required by Section 3.01 hereof shall be
subject to the following conditions precedent:
(a) the Owner Participant shall have made the full amount of
its Commitment with respect to the Aircraft available to the Owner
Trustee, in immediately available funds, in accordance with Section
2.01(c) of the Participation Agreement; and
(b) the terms and conditions of Section 3.01 of the
Participation Agreement shall have been waived by the Owner
Participant or complied with in a manner satisfactory to the Owner
Participant. The Owner Participant shall, by instructing Owner
Trustee to release the full amount of its Commitment then held by
Owner Trustee as provided in Section 2.01 of the Participation
Agreement, be deemed to have found satisfactory to it, or waived,
all such conditions precedent.
Section 3.03 Postponement of Delivery Date. The Owner Trustee, upon
instructions from the Owner Participant, shall take all action specified in
Section 2.01(e) of the Participation Agreement as action to be taken by the
Owner Trustee.
Section 3.04 Authorization in Respect of a Replacement Airframe or
Replacement Engines. The Owner Trustee agrees for the benefit of the Owner
Participant that, upon the receipt by a Responsible Officer of Owner Trustee of
an authorization and direction from the Owner Participant, it will, in the event
of a Replacement Airframe or Replacement Engines, if any, being substituted
pursuant to Section 8(a)(i) of the Lease, or a Replacement Engine being
substituted pursuant to Section 7(e) of the Lease, subject to due compliance
with the terms of Sections 8(d) and 7(e) of the Lease, as the case may be:
(a) to the extent not previously accomplished by a prior
authorization, authorize a representative or representatives of the
Owner Trustee to accept delivery of the Replacement Airframe or
Replacement Engines, if any, or the Replacement Engine;
4
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(b) accept from Lessee or other vendor of the Replacement
Airframe or Replacement Engines, if any, or the Replacement Engine,
a bill of sale or bills of sale (if tendered) and the invoice, if
any, with respect to the Replacement Airframe and Replacement
Engines, if any, or the Replacement Engine being furnished pursuant
to Section 8(a)(ii) or 7(e) of the Lease;
(c) in the case of a Replacement Airframe, make application to
the FAA (or the Aeronautical Authority of any jurisdiction other
than the United States of America in which the Replacement Airframe
is then registered in accordance with the terms of the Lease) for
registration in the name of the Owner Trustee of the Aircraft of
which such Replacement Airframe is a part;
(d) execute and deliver a Lease Supplement and an Indenture
Supplement covering (i) the Aircraft of which such Replacement
Airframe is part of and, (ii) such Replacement Engine, as the case
may be;
(e) transfer its interest in (without recourse except as to
obligations in respect of Lessor's Liens) and to the Airframe and
Engines (if any) or the Engine being replaced to or at the direction
of Lessee;
(f) request in writing that the Indenture Trustee execute and
deliver to Lessee appropriate instruments to release the Airframe or
Engines (or engines) being replaced from the Lien created under the
Trust Indenture and release the Assignment of Warranties (solely
with respect to such replaced Airframe or Engines, if any) from the
assignment and pledge under the Trust Indenture; and
(g) take such further action as may be contemplated by
Sections 8(d) or 7(e) of the Lease, as the case may be.
Section 3.05 Trust Agreement Remaining in Full Force and Effect. In
the event of the substitution of a Replacement Airframe for the Airframe or the
substitution of a Replacement Engine for any Engine or engine all provisions of
this Trust Agreement relating to such replaced Airframe or Engine or engine
shall be applicable to such Replacement Airframe or Replacement Engine, with the
same force and effect as if such Replacement Airframe or Replacement Engine were
the same airframe, engine or propeller as the Airframe or Engine being replaced
but for the Event of Loss with respect to such Airframe or Engine.
Section 3.06 Authorization in Respect of Return of an Engine. The
Owner Trustee agrees for the benefit of the Owner Participant that, upon the
receipt by a Responsible Officer of the Owner Trustee of an authorization and
direction from the Owner Participant, it will, in the event of an engine being
transferred to the Owner Trustee pursuant to Section 12(b) of the Lease, subject
to due compliance with the terms of such Section 12(b):
5
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(a) accept from Lessee or other vendor the bill of sale
contemplated by such Section 12(b) with respect to such engine being
transferred to the Owner Trustee;
(b) transfer its right, title and interest in (without
recourse or warranty except a warranty against Lessor's Liens) and
to an Engine to or at the direction of Lessee as contemplated by
such Section 12(b); and
(c) request in writing that the Indenture Trustee execute and
deliver to Lessee appropriate instruments to release the Engine
being transferred to Lessee pursuant to such Section 12(b) from the
Lien of the Trust Indenture and to release Assignment of Warranties
(solely with respect to such Engine) from the assignment and pledge
under the Trust Indenture.
ARTICLE IV
RECEIPT, DISTRIBUTION AND APPLICATION
OF INCOME FROM THE TRUST ESTATE
Section 4.01 Distribution of Payments. (a) Payments to the Indenture
Trustee. Until the Trust Indenture shall have been terminated pursuant to
Section 14.01 thereof or until the Aircraft shall have been released from the
Lien created under the Trust Indenture pursuant to the terms thereof, all Basic
Rent, Supplemental Rent, insurance proceeds and requisition, indemnity or other
payments of any kind included in the Trust Estate (it being understood that
Excepted Payments are not part of the Trust Estate) shall be payable directly to
the Indenture Trustee (and if any of the same are received by the Owner Trustee
shall upon receipt be paid over to the Indenture Trustee without deduction,
set-off or adjustment of any kind) for distribution in accordance with the
provisions of Article V of the Trust Indenture; provided, that any payments
received by Owner Trustee from (i) Lessee with respect to Owner Trustee's fees
and disbursements or (ii) Owner Participant pursuant to Section 7.01 shall not
be paid over to Indenture Trustee but shall be retained by Owner Trustee and
applied toward the purpose for which such payments were made.
(b) Payments to the Owner Trustee; Other Parties. Any payment
of the type required to be paid to the Indenture Trustee referred to
in paragraph (a) of this Section 4.01 received by the Owner Trustee
after the Trust Indenture shall have been terminated, any payment
received by the Owner Trustee pursuant to the provisions of Article
V of the Trust Indenture (other than Excepted Payments) and any
other amounts received as part of the Trust Estate and for the
application or distribution of which no provision is made herein,
shall be distributed forthwith upon receipt by the Owner Trustee in
the following order of priority: first, so much of such payment as
shall be required to pay or reimburse the Owner Trustee for any fees
or expenses not otherwise paid or reimbursed as to
6
<PAGE>
which the Owner Trustee is entitled to be so paid or reimbursed
pursuant to the provisions hereof or of the Trust Indenture shall be
retained by the Owner Trustee; and second, the balance, if any,
shall be paid to the Owner Participant.
(c) Excepted Payments. Any Excepted Payments received by the
Owner Trustee shall be paid by the Owner Trustee to the Person to
whom such Excepted Payments are payable under the provisions of the
Tax Indemnity Agreement, the Participation Agreement, the Lease or
any other Operative Agreement.
(d) Certain Distributions to Owner Participant. All amounts
from time to time distributable to Owner Participant pursuant to the
Trust Indenture shall, if paid to Owner Trustee, be distributed by
Owner Trustee to Owner Participant in accordance with the provisions
of Article V of the Trust Indenture.
Section 4.02 Method of Payments. The Owner Trustee shall make
distributions or cause distributions to be made to (i) the Owner Participant
pursuant to this Article IV by transferring by wire transfer in immediately
available funds the amount to be distributed to such account or accounts of the
Owner Participant as it may designate from time to time by written notice to the
Owner Trustee (and the Owner Trustee shall use reasonable efforts to cause such
funds to be transferred by wire transfer on the same day as received, but in any
case not later than the next succeeding Business Day), and (ii) the Indenture
Trustee pursuant to this Article IV by paying the amount to be distributed to
the Indenture Trustee in the manner specified in the Trust Indenture; provided,
however, that the Owner Trustee shall use its best efforts to invest overnight,
for the benefit of the Owner Participant, in investments that would be permitted
by Section 15 of the Lease (but only to the extent such investments are
available and, if such investments are not available, then in such other
investments available to the Owner Trustee which, after consultation with the
Owner Participant, the Owner Participant shall direct), all funds not
transferred by the Owner Trustee by wire transfer on the same day as they were
received. Notwithstanding the foregoing but subject always to the provisions of
and Lien created by the Trust Indenture, the Owner Trustee will, if so requested
by the Owner Participant by written notice, pay any and all amounts payable by
the Owner Trustee hereunder to the Owner Participant either (i) by crediting, or
causing the Indenture Trustee to credit, such amount or amounts to an account or
accounts maintained by the Owner Participant as it may designate from time to
time by written notice to the Owner Trustee, in immediately available funds, or
(ii) by mailing, or causing the Indenture Trustee to mail, an official bank
check or checks in such amount or amounts payable to the Owner Participant at
such address as the Owner Participant shall have designated in writing to the
Owner Trustee.
7
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ARTICLE V
DUTIES OF THE OWNER TRUSTEE
Section 5.01 Notice of Event of Default. If the Owner Trustee shall
have knowledge of a Default or an Event of Default or an Indenture Default or
Indenture Event of Default, the Owner Trustee shall give to the Owner
Participant and the Lessee prompt telephonic or telecopied notice thereof
followed by prompt confirmation thereof by certified mail, postage prepaid.
Subject to the terms of Section 5.03, the Owner Trustee shall take such action
or shall refrain from taking such action, not inconsistent with the provisions
of the Operative Agreements, with respect to such Default, Event of Default,
Indenture Default or Indenture Event of Default as the Owner Trustee shall be
directed in writing by the Owner Participant. For all purposes of this Trust
Agreement and the Lease, the Owner Trustee shall not be deemed to have knowledge
of a Default, an Event of Default, an Indenture Default or an Indenture Event of
Default unless notified in writing thereof in the manner and at the address set
forth in Section 11.05 or unless an officer in the Corporate Trust
Administration Department who has responsibility for, or familiarity with, the
transactions contemplated hereunder, under the Participation Agreement and under
the Trust Indenture or any Vice President in the Corporate Trust Administration
Department of the Owner Trustee has actual knowledge thereof.
Section 5.02 Action Upon Instructions. Subject in all respects to
the terms of Sections 5.01 and 5.03 and to the terms of the other Operative
Agreements, upon the written instructions at any time and from time to time of
the Owner Participant, the Owner Trustee will take such of the following actions
as may be specified in such instructions: (i) give such notice or direction or
exercise such right, remedy or power hereunder or under any of the Operative
Agreements to which the Owner Trustee is a party, or in respect of all or any
part of the Trust Estate, as shall be specified in such instructions; (ii) take
such action to preserve or protect the Trust Estate (including the discharge of
any Liens or encumbrances) as may be specified in such instructions; (iii)
approve as satisfactory to it all matters required by the terms of the Lease to
be satisfactory to the Owner Trustee, it being understood that without written
instructions of the Owner Participant, the Owner Trustee shall not approve any
such matter as satisfactory to it; (iv) after the expiration or earlier
termination of the Lease, convey all of the Owner Trustee's right, title and
interest in and to the Aircraft for such amount, on such terms and to such
purchaser or purchasers as shall be designated in such instructions, or retain,
lease or otherwise dispose of, or from time to time take such action with
respect to, the Aircraft on such terms as shall be set forth in such
instructions or deliver the Aircraft to the Owner Participant in accordance with
such instructions; and (v) take or refrain from taking such other action or
actions as may be specified in such instructions. In the event that the Owner
Trustee is unsure of the application of any provision of this Trust Agreement or
any other agreement relating to the transactions contemplated hereby, the Owner
Trustee may request and rely upon instructions of the Owner Participant.
8
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Section 5.03 Indemnification. The Owner Trustee shall not be
required to take or refrain from taking any action under Section 5.01 (other
than the giving of notices referred to therein) or 5.02 unless the Owner Trustee
shall have been indemnified by the Owner Participant, in manner and form
satisfactory to the Owner Trustee, against any liability, cost or expense
(including reasonable counsel fees and disbursements) which may be incurred in
connection therewith; and, if the Owner Participant shall have directed the
Owner Trustee to take or refrain from taking any such action, the Owner
Participant agrees to furnish such indemnity as shall be required and in
addition to pay the reasonable fees and charges of the Owner Trustee for the
services performed or to be performed by it pursuant to such direction. The
Owner Trustee shall not be required to take any action under Section 5.01 or
5.02 if the Owner Trustee shall reasonably determine, or shall have been advised
by counsel, that such action is contrary to the terms of any of the Operative
Agreements to which the Owner Trustee is a party, or is otherwise contrary to
Applicable Law.
Section 5.04 No Duties Except as Specified in Trust Agreement or
Instructions. The Owner Trustee shall not have any duty or obligation to manage,
control, use, sell, dispose of or otherwise deal with the Aircraft or any other
part of the Trust Estate, or otherwise to take or refrain from taking any action
under, or in connection with any of the Operative Agreements to which the Owner
Trustee is a party, except as expressly required by the terms of any of the
Operative Agreements to which the Owner Trustee is a party, or (to the extent
not inconsistent with the provisions of the Trust Indenture) as expressly
provided by the terms hereof or in written instructions from the Owner
Participant received pursuant to the terms of Section 5.01 or 5.02, and no
implied duties or obligations shall be read into this Trust Agreement or any of
the Operative Agreements to which the Owner Trustee is a party against the Owner
Trustee. The Owner Trustee nevertheless agrees that it will, in its individual
capacity and at its own cost and expense (but without any right of indemnity in
respect of any such cost or expense under Section 7.01) promptly take such
action as may be necessary duly to discharge and satisfy in full (i) all
Lessor's Liens attributable to the Owner Trustee in its individual capacity,
(ii) any Liens (other than Lessor's Liens attributable to it in its individual
capacity) created as a result of its breach of any of its obligations under this
Trust Agreement (subject to the limitations on the liability of the Owner
Trustee in its individual capacity set forth in Section 6.01) on any part of the
Trust Estate, or on any properties of the Owner Trustee assigned, pledged or
mortgaged as part of the Trust Estate, which arise from acts of the Owner
Trustee in its individual capacity, except the Lien created under the Trust
Indenture, the rights of Lessee under the Lease and the rights of the Owner
Participant hereunder, and (iii) any other Liens or encumbrances attributable to
the Owner Trustee in its individual capacity on any part of the Trust Estate
which result from claims against the Owner Trustee in its individual capacity
unrelated to the ownership of the Aircraft, the administration of the Trust
Estate or the transactions contemplated by the Operative Agreements.
9
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Section 5.05 No Action Except Under Specified Documents or
Instructions. The Owner Trustee shall have no power or authority to, and the
Owner Trustee agrees that it will not, manage, control, use, sell, dispose of or
otherwise deal with the Aircraft or any other part of the Trust Estate except
(i) as expressly required by the terms of any of the Operative Agreements to
which the Owner Trustee is a party, (ii) as expressly provided by the terms
hereof, or (iii) as expressly provided in written instructions from the Owner
Participant pursuant to Section 5.01 or 5.02, but subject always to the
provisions of the Lien created by the Trust Indenture.
ARTICLE VI
THE OWNER TRUSTEE
Section 6.01 Acceptance of Trusts and Duties. First Union accepts
the trusts hereby created and agrees to perform the same but only upon the terms
hereof applicable to it. First Union also agrees to receive and disburse all
monies received by it constituting part of the Trust Estate upon the terms
hereof. First Union shall not be answerable or accountable under any
circumstances, except for (i) its own willful misconduct or gross negligence,
(ii) its performance of the terms of the last sentence of Section 5.04, (iii)
its failure to use ordinary care in receiving or disbursing funds or to comply
with the first sentence of Section 6.08, (iv) liabilities that may result from
the inaccuracy of any representation or warranty of the Owner Trustee in its
individual capacity (or from the failure by the Owner Trustee in its individual
capacity to perform any covenant made in its individual capacity) in Section
6.03 or in any of the Operative Agreements to which the Owner Trustee is a
party, (v) taxes, fees or other charges on, based on or measured by any fees,
commissions or other compensation received by First Union as compensation for
its services rendered as the Owner Trustee, (vi) its failure (in its individual
capacity or as Owner Trustee) to use ordinary care in connection with its
obligations to invest funds pursuant to Section 15 of the Lease or Section 4.02
hereof and (vii) for any liability on the part of the Owner Trustee arising out
of its negligence or willful or negligent misconduct in connection with its
obligations under Section 5.01, 6.08 or 9.02 hereof or Section 3.05 of the Trust
Indenture; provided, however, that the failure to act or perform in the absence
of instructions after the Owner Trustee has requested instructions from the
Owner Participant pursuant to the last sentence of Section 5.02 shall not
constitute willful misconduct or gross negligence for purposes of clause (i) of
this Section 6.01.
Section 6.02 Absence of Certain Duties. Except in accordance with
written instructions furnished pursuant to Sections 5.01 and 5.02 and except as
provided in, and without limiting the generality of, Sections 3.01, 5.04 and
5.05 and the last sentence of Section 9.01(b), the Owner Trustee shall have no
duty (i) to see to any registration of the Aircraft or any recording or filing
of the Lease, this Trust Agreement, the Trust Indenture, any financing or
continuation statement or of any supplement to any thereof or to see to the
maintenance of any such registration, rerecording or refiling, except that of
Owner Trustee to comply with the FAA reporting requirements set forth in 14
C.F.R. ss.47.45 and 14 C.F.R. ss.47.51 or any successor provisions, and that the
Owner Trustee shall upon written request furnished by Lessee take such action as
may be required of the
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Owner Trustee to maintain the registration of the Aircraft in the name of the
Owner Trustee under the Act or, to the extent the Aircraft is registered in a
country other than the United States of America pursuant to Section 4.02 of the
Participation Agreement, other Applicable Law, and to the extent that
information for that purpose is supplied by Lessee pursuant to any of the
Operative Agreements, complete and timely submit any and all reports relating to
the Aircraft which may from time to time be required by the FAA or any
government or governmental authority having jurisdiction, (ii) to see to any
insurance on the Aircraft or to effect or maintain any such insurance, whether
or not Lessee shall be in default with respect thereto, (iii) to see to the
payment or discharge of any tax, assessment or other governmental charge or any
Lien or encumbrance of any kind owing with respect to, assessed or levied
against any part of the Trust Estate except as provided by Section 5.04 hereof
or Section 5.03(b) of the Participation Agreement, (iv) to confirm or verify any
financial statements of Lessee or (v) to inspect the Aircraft or the books and
records of Lessee with respect to the Aircraft. Notwithstanding the foregoing,
the Owner Trustee will furnish to Indenture Trustee and Owner Participant,
promptly upon receipt thereof, duplicates or copies of all reports, notices,
requests, demands, certificates, financial statements and other instruments
furnished to Owner Trustee under the Lease or any other Operative Agreement
except to the extent to which a Responsible Officer of Owner Trustee reasonably
believes (and confirms by telephone call with Owner Participant) that duplicates
or copies thereof have already been furnished to Owner Participant by some other
Person.
Section 6.03 No Representations or Warranties as to Certain Matters.
THE OWNER TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS THE OWNER TRUSTEE DOES NOT
MAKE AND SHALL NOT BE DEEMED TO HAVE MADE (a) ANY REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE TITLE, VALUE, CONDITION, DESIGN, OPERATION,
MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE AIRCRAFT, ANY
ENGINE THEREOF, ABSENCE OF LATENT OR OTHER DEFECTS (WHETHER OR NOT DISCOVERABLE)
OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT OR ANY
ENGINE WHATSOEVER, except that the Owner Trustee in its individual capacity
warrants that on the Delivery Date the Owner Trustee shall have received and
shall hold whatever title to the Aircraft was conveyed to it by Lessee free and
clear of Lessor's Liens attributable to the Owner Trustee in its individual
capacity, shall be in compliance with the last sentence of Section 5.04 hereof
and that the Aircraft shall during the Lease Term be free of Lessor's Liens
attributable to it in its individual capacity, or (b) any representation or
warranty as to the validity, legality or enforceability of this Trust Agreement
or any other Operative Agreement to which the Owner Trustee in its individual
capacity or as Owner Trustee is a party, or any other document or instrument, or
as to the correctness of any statement contained in any thereof except to the
extent that any such statement is expressly made herein or therein as a
representation by the Owner Trustee in its individual capacity and except that
the Owner Trustee in its individual capacity hereby represents and warrants that
it has all corporate power and authority to execute, deliver and perform this
Trust Agreement and that this Trust Agreement has been, and (assuming the due
authorization, execution and delivery of the Trust Agreement by the Owner
Participant) the other Operative Agreements to which the Owner Trustee is a
party have been (or at the time of execution and delivery of any such instrument
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by the Owner Trustee hereunder or pursuant to the terms of the Participation
Agreement that such an instrument will be) duly executed and delivered by one of
its officers who is or will be, as the case may be, duly authorized to execute
and deliver such instruments on behalf of the Owner Trustee and that this Trust
Agreement has been duly authorized, executed and delivered by First Union and
constitutes the legal, valid and binding obligation of First Union enforceable
against it in accordance with its terms, except as such terms may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the rights of creditors generally and by general principles of equity,
regardless of whether considered in a proceeding in equity or at law.
Section 6.04 No Segregation of Monies Required; Investment Thereof.
Monies received by the Owner Trustee hereunder need not be segregated in any
manner except to the extent required by Applicable Law, and may be deposited
under such general conditions as may be prescribed by Applicable Law, and shall
be invested as provided in Section 4.02 hereof or Section 15 of the Lease.
Section 6.05 Reliance Upon Certificates, Counsel and Agents. The
Owner Trustee shall incur no liability to anyone in acting in reliance upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper reasonably believed by it to be
genuine and reasonably believed by it to be signed by the proper party or
parties. Unless other evidence in respect thereof is specifically prescribed
herein, any request, direction, order or demand of the Owner Participant, Lessee
or the Indenture Trustee mentioned herein or in any of the other Operative
Agreements to which the Owner Trustee is a party shall be sufficiently evidenced
by written instruments signed by a person purporting to be an officer of the
Owner Participant, Lessee or the Indenture Trustee, as the case may be. The
Owner Trustee may accept a copy of a resolution of the Board of Directors of
Lessee, the Owner Participant or the Indenture Trustee, as the case may be,
certified by the Secretary or an Assistant Secretary of Lessee, the Owner
Participant or the Indenture Trustee, as the case may be, as duly adopted and in
full force and effect, as conclusive evidence that such resolution has been duly
adopted by said Board and that the same is in full force and effect. As to any
fact or matter the manner of ascertainment of which is not specifically
described herein, the Owner Trustee may, absent actual knowledge to the
contrary, for all purposes hereof rely on a certificate signed by an officer of
Lessee, the Owner Participant or the Indenture Trustee, as the case may be, as
to such fact or matter, and such certificate shall constitute full protection to
the Owner Trustee for any action taken or omitted to be taken by it in good
faith in reliance thereon.
In the administration of the trusts hereunder, the Owner Trustee may
exercise its powers and perform its duties hereunder directly or through agents
or attorneys and the Owner Trustee shall not be liable for the default or
misconduct of any agents or attorneys selected by it with reasonable care. In
the administration of the trusts hereunder, the Owner Trustee may consult with
counsel, accountants and other skilled persons and the Owner Trustee shall not
be liable for anything done, suffered or omitted in good faith by it in
accordance with the advice or opinion of any such counsel, accountants or other
skilled persons selected by it with reasonable care.
12
<PAGE>
Section 6.06 Not Acting in Individual Capacity. In acting hereunder,
the Owner Trustee acts solely as trustee and not in its individual capacity
except as otherwise expressly provided herein; and, except as may be otherwise
expressly provided in this Trust Agreement, including without limitation,
Section 6.01, the Lease, the Participation Agreement or the Trust Indenture, all
Persons having any claim against the Owner Trustee by reason of the transactions
contemplated hereby shall look only to the Trust Estate for payment or
satisfaction thereof.
Section 6.07 Fees; Compensation. Except as provided in Section 5.03
or 7.01, the Owner Trustee agrees that it shall have no right against the Owner
Participant or the Trust Estate for any fee as compensation for its services
hereunder.
Section 6.08 Tax Returns. The Owner Trustee shall be responsible for
the keeping of all appropriate books and records relating to the receipt and
disbursement by it of all monies under this Trust Agreement or any agreement
contemplated hereby. The Owner Trustee shall be responsible for causing to be
prepared and filed, at Lessee's expense, all income tax returns required to be
filed with respect to the trust created hereby as requested by the Owner
Participant and shall execute and file such returns as directed by the Owner
Participant.
Section 6.09 Fixed Investment Trust. Notwithstanding anything herein
to the contrary, the Owner Trustee shall not be authorized and shall have no
power to "vary the investment" of the Owner Participant within the meaning of
section 301.7701-4(c) of the Treasury Regulations.
ARTICLE VII
INDEMNIFICATION OF THE OWNER TRUSTEE
BY THE OWNER PARTICIPANT
Section 7.01 The Owner Participant to Indemnify the Owner Trustee.
The Owner Participant hereby agrees, whether or not any of the transactions
contemplated hereby shall be consummated, to assume liability for, and does
hereby indemnify, protect, save, defend and hold harmless the Owner Trustee in
its individual capacity, and its successors, assigns (but not security assigns),
directors, officers, representatives, agents, employees and servants, from and
against any and all liabilities, obligations, losses, damages, penalties, taxes
(excluding any taxes payable by the Owner Trustee on or measured by any
compensation received by the Owner Trustee for its services hereunder), claims,
actions, suits, costs, expenses or disbursements (including, without limitation,
reasonable legal fees, but excluding internal costs and expenses such as
salaries and overhead) and expenses of any kind and nature whatsoever which may
be imposed on, incurred by or asserted against the Owner Trustee in its
individual capacity (whether or not also indemnified against by Lessee under the
Lease or under the Participation Agreement or also indemnified against by any
other Person; provided that Owner Participant shall be subrogated to the rights
of Owner Trustee against Lessee or any other indemnitor) in any way relating to
or arising out of this Trust Agreement
13
<PAGE>
or any of the other Operative Agreements 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,
possession, use, operation, condition, sale, return or other disposition of the
Airframe, any Engine or any Part of the foregoing (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 Estate or the action or inaction
of the Owner Trustee hereunder, except (a) in the case of willful misconduct or
gross negligence on the part of the Owner Trustee either as trustee or in its
individual capacity in the performance or nonperformance of its duties hereunder
or under any of the other Operative Agreements to which it is a party or (b)
those resulting from the inaccuracy of any representation or warranty of the
Owner Trustee in its individual capacity (or from the failure of the Owner
Trustee in its individual capacity to perform any covenant) in Section 6.03, or
in any of the Operative Agreements, or (c) those arising or resulting from any
of the matters described in the last sentence of Section 6.01, or (d) those
resulting from its failure to perform the terms of the last sentence of Section
5.04 hereof or from its failure to use ordinary care in the receipt and
disbursement of funds or in connection with its obligation to invest funds
pursuant to Section 15 of the Lease or Section 4.02 hereof or in compliance with
the first Section of Section 6.08, or (e) any liability on the part of Owner
Trustee arising out of its negligence or willful or negligent misconduct in
connection with its obligations under Section 5.01, 6.08 or 9.02 hereof or
Section 3.05 of the Trust Indenture, or (f) those arising under any
circumstances or upon any terms where Lessee would not have been required to
indemnify Owner Trustee, in its individual capacity, pursuant to Section 6.01 or
7.01 of the Participation Agreement; provided, that before asserting its right
to indemnification, if any, pursuant to this Section 7.01, Owner Trustee shall
first demand its corresponding right to indemnification pursuant to Section 6.01
or 7.01 of the Participation Agreement (but need not exhaust any or all remedies
available thereunder). The indemnities contained in this Section 7.01 extend to
the Owner Trustee only in its individual capacity and shall not be construed as
indemnities of the Indenture Estate or the Trust Estate. The indemnities
contained in this Section 7.01 shall survive the termination of this Trust
Agreement and the resignation or removal of the Owner Trustee. In addition, if
necessary, the Owner Trustee shall be entitled to indemnification from the Trust
Estate, subject however to the provisions of Section 4.01 hereof and the Lien
created under the Trust Indenture, for any liability, obligation, loss, damage,
penalty, tax, claim, action, suit, cost, expense or disbursement indemnified
against pursuant to this Section 7.01 to the extent not reimbursed by Lessee,
the Owner Participant or others, but without releasing any of them from their
respective agreements of reimbursement.
14
<PAGE>
ARTICLE VIII
[RESERVED]
ARTICLE IX
SUCCESSOR OWNER TRUSTEES; CO-TRUSTEES
Section 9.01 Resignation of the Owner Trustee; Appointment of
Successor. Resignation or Removal. (a) The Owner Trustee or any successor Owner
Trustee (i) shall resign if required to do so pursuant to Section 5.02(b) of the
Participation Agreement and (ii) may resign at any time without cause by giving
at least 60 days prior written notice to the Owner Participant, the Indenture
Trustee and Lessee, such resignation to be effective upon the acceptance of
appointment by the successor Owner Trustee under Section 9.01(b). In addition,
the Owner Participant may at any time remove the Owner Trustee, or revoke the
trusts created by this Trust Agreement, in either case with or without cause by
a notice in writing delivered to the Owner Trustee, the Indenture Trustee and
Lessee. Any such removal shall be effective upon the acceptance of appointment
by the successor Owner Trustee under Section 9.01(b). In the case of the
resignation or removal of the Owner Trustee, the Owner Participant may appoint a
successor Owner Trustee by an instrument in writing. If a successor Owner
Trustee shall not have been appointed within 30 days after such notice of
resignation or removal, the Owner Trustee or the Indenture Trustee may apply to
any court of competent jurisdiction to appoint a successor Owner Trustee to act
until such time, if any, as a successor shall have been appointed as above
provided. Any successor Owner Trustee so appointed by such court shall
immediately and without further act be superseded by any successor Owner Trustee
appointed as above provided within one year from the date of the appointment by
such court.
(b) Execution and Delivery of Documents, etc. Any successor
Owner Trustee, however appointed, shall execute and deliver to the
predecessor Owner Trustee, with a copy to Owner Participant, Lessee
and Indenture Trustee, an instrument accepting such appointment and
assuming the obligations of Owner Trustee, in its individual
capacity and as Owner Trustee, under the Operative Agreements to
which Owner Trustee is a party, and thereupon such successor Owner
Trustee, without further act, shall become vested with all the
estates, properties, rights, powers, duties and trusts of the
predecessor Owner Trustee in the trust hereunder with like effect as
if originally named the Owner Trustee herein; but nevertheless, upon
the written request of such successor Owner Trustee, such
predecessor Owner Trustee shall execute and deliver an instrument
transferring to such successor Owner Trustee upon the trusts herein
expressed, all the estates, properties, rights, powers and trusts of
such predecessor Owner Trustee, and such predecessor Owner Trustee
shall duly assign, transfer, deliver and pay over to such successor
Owner Trustee all monies or other property then
15
<PAGE>
held by such predecessor Owner Trustee upon the trusts herein
expressed. Upon the appointment of any successor Owner Trustee
hereunder, the predecessor Owner Trustee will complete, execute and
deliver to the successor Owner Trustee such documents as are
necessary to cause registration of the Aircraft included in the
Trust Estate to be transferred upon the records of the FAA or other
governmental authority having jurisdiction, into the name of the
successor Owner Trustee.
(c) Qualification. Any successor Owner Trustee, however
appointed, shall be a Citizen of the United States, shall be
qualified to act as a trustee in Delaware (if the trust created
hereby is to remain in such state) and shall also be a bank or trust
company organized under the laws of the United States of America or
any state thereof having a combined capital and surplus of at least
$100,000,000, if there be such an institution willing, able and
legally qualified to perform the duties of the Owner Trustee
hereunder upon reasonable and customary terms.
(d) Merger, etc. Any corporation into which the Owner 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 Owner Trustee shall be a party, or any
corporation to which substantially all the corporate trust business
of the Owner Trustee may be transferred, shall, subject to the terms
of Section 9.01(c), be the Owner Trustee hereunder without further
act; provided that such corporation shall not also be the Indenture
Trustee.
Section 9.02 Co-Trustees and Separate Trustees. If at any time or
times it shall be necessary or prudent in order to conform to any Applicable Law
of any jurisdiction in which all or any part of the Trust Estate is located, or
the Owner Trustee shall be advised by counsel that it is so necessary or prudent
in the interest of the Owner Participant or the Owner Trustee, or the Owner
Trustee shall have been directed to do so by the Owner Participant, the Owner
Trustee and the Owner Participant shall execute and deliver an agreement
supplemental hereto and all other instruments and agreements necessary or proper
to constitute another bank or trust company or one or more Persons (any and all
of which shall be a Citizen of the United States) approved by the Owner Trustee
and the Owner Participant, either to act as co-trustee or co-trustees, jointly
with the Owner Trustee, or to act as separate trustee or trustees hereunder (any
such co-trustee or separate trustee being herein sometimes referred to as an
"additional trustee"). In the event (i) the Owner Participant shall not have
joined in the execution of such agreements supplemental hereto within ten days
after the receipt of a written request from the Owner Trustee so to do, or (ii)
an Indenture Event of Default not arising from an Event of Default shall occur
and be continuing, the Owner Trustee may act under the foregoing provisions of
this Section 9.02 without the concurrence of the Owner Participant; and the
Owner Participant hereby appoints the Owner Trustee its agent and
attorney-in-fact to act for it under the foregoing provisions of this Section
9.02 in either of such contingencies.
16
<PAGE>
Every additional trustee hereunder shall, to the extent permitted by
Applicable Law, be appointed and act, and the Owner Trustee and its successors
shall act, subject to the following provisions and conditions:
(a) all powers, duties, obligations and rights conferred upon
the Owner Trustee in respect of the custody, control and management
of monies, the Aircraft or documents authorized to be delivered
hereunder or under the Participation Agreement shall be exercised
solely by the corporation designated as the Owner Trustee in the
first paragraph of this Trust Agreement, or its successors as the
Owner Trustee hereunder;
(b) all other rights, powers, duties and obligations conferred
or imposed upon the Owner Trustee and any limitations thereon shall
be conferred or imposed upon and exercised or performed by the
corporation designated as the Owner Trustee in the first paragraph
of this Trust Agreement or its successors as the Owner Trustee, and
such additional trustee or trustees jointly, except to the extent
that under any Applicable Law of any jurisdiction in which any
particular act or acts are to be performed (including the holding of
title to the Trust Estate), the Owner Trustee shall be incompetent
or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations shall be exercised and
performed by such additional trustee or trustees;
(c) no power given to, or which it is provided hereby may be
exercised by, any such additional trustee or trustees shall be
exercised hereunder by such additional trustee or trustees, except
jointly with, or with the consent in writing of, the corporation
designed as the Owner Trustee in this Trust Agreement or its
successor as the Owner Trustee, anything herein contained to the
contrary notwithstanding;
(d) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder;
(e) the Owner Participant, at any time, by an instrument in
writing may remove any such additional trustee. In the event that
the Owner Participant shall not have joined in the execution of any
such instrument within ten days after the receipt of a written
request from the Owner Trustee so to do, the Owner Trustee shall
have the power to remove any such additional trustee without the
concurrence of the Owner Participant; and the Owner Participant
hereby appoints the Owner Trustee its agent and attorney-in-fact to
act for it in such connection in such contingency; and
(f) no appointing of, or action by, any additional trustee
will relieve the Owner Trustee of any of its obligations under, or
otherwise affect any of the
17
<PAGE>
terms of the Trust Indenture or affect the interests of the
Indenture Trustee or the Holders of the Equipment Notes in the Trust
Estate.
In case any separate trustee under this Section 9.02 shall die,
become incapable of acting, resign or be removed, the title to the Trust Estate
and all rights and duties of such separate trustee shall, so far as permitted by
Applicable Law, vest in and be exercised by Owner Trustee, without the
appointment of a successor to such separate trustee.
ARTICLE X
SUPPLEMENTS AND AMENDMENTS TO TRUST AGREEMENT
AND OTHER DOCUMENTS
Section 10.01 Supplements and Amendments. (a) Supplements and
Amendments. At any time and from time to time, upon the written request of the
Owner Participant, (i) the Owner Trustee, together with the Owner Participant,
shall, subject to Section 5.11 of the Participation Agreement, execute a
supplement to this Trust Agreement for the purpose of adding provisions to, or
changing or eliminating provisions of, this Trust Agreement (except Section
11.11) as specified in such request, and (ii) the Owner Trustee shall, subject
to compliance with the applicable provisions of Section 13.02 of the Trust
Indenture, enter into such written amendment of or supplement to any other
Operative Agreement to which the Owner Trustee is a party as the Indenture
Trustee and Lessee may agree to and as may be specified in such request, or
execute and deliver such written waiver or modification of or consent under the
terms of any such Operative Agreement as Lessee and the Indenture Trustee may
agree to and as may be specified in such request.
(b) Delivery of Amendments and Supplements to Certain Parties. Until
the Trust Indenture shall have been terminated pursuant to Section 10(a) thereof
or the Aircraft shall have been released from the Indenture Estate, a signed
copy of each amendment or supplement to the Trust Agreement shall be delivered
by the Owner Trustee to the Indenture Trustee without in any way affecting the
Trust Indenture or the Equipment Notes and without imposing any duty on the
Indenture Trustee with respect to such amendment or supplement
Section 10.02 Discretion as to Execution of Documents. If in the
opinion of the Owner Trustee any document required to be executed pursuant to
the terms of Section 10.01 adversely affects any right, duty, immunity or
indemnity in favor of the Owner Trustee hereunder or under any other Operative
Agreement to which the Owner Trustee is a party, the Owner Trustee may in its
discretion decline to execute such document unless Owner Trustee is furnished
with indemnification from Lessee or any other party upon terms and in amounts
reasonably satisfactory to Owner Trustee to protect the Trust Estate and Owner
Trustee against any and all liabilities, costs and expenses arising out of the
execution of such documents.
18
<PAGE>
Section 10.03 Absence of Requirements as to Form. It shall not be
necessary for any written request furnished pursuant to Section 10.01 to specify
the particular form of the proposed documents to be executed pursuant to such
Section, but it shall be sufficient if such request shall indicate the substance
thereof.
Section 10.04 Distribution of Documents. Promptly after the
execution by the Owner Trustee of any document entered into pursuant to Section
10.01, the Owner Trustee shall mail, by certified mail, postage prepaid, a
conformed copy thereof to the Owner Participant, but the failure of the Owner
Trustee to mail such conformed copy shall not impair or affect the validity of
such document.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Termination of Trust Agreement. This Trust Agreement
and the trusts created hereby shall terminate and this Trust Agreement shall be
of no further force or effect upon the earliest of (a) the later of (x) the
termination of the Trust Indenture pursuant to Section 14.01 thereof and the
sale or other final disposition by the Owner Trustee of all property
constituting part of the Trust Estate and the final distribution by the Owner
Trustee of all monies or other property or proceeds constituting part of the
Trust Estate in accordance with Article IV hereof, provided that at such time
Lessee shall have fully complied with all of the terms of the Participation
Agreement and the Lease, and (y) the expiration or termination of the Lease in
accordance with its terms or (b) 110 years after the earlier execution of this
Trust Agreement by either party hereto, but if this Trust Agreement and the
trusts created hereby shall be or become authorized under applicable law for a
period subsequent thereto (or, without limiting the generality of the foregoing,
if legislation shall become effective providing for the validity of this Trust
Agreement and the trusts created hereby and the effective grant of such rights,
privileges and options for a period in gross) exceeding the period for which
this Trust Agreement and the trusts created hereby are hereinabove stated to
extend and be valid), then such rights, privileges or options shall not
terminate as aforesaid but shall extend to and continue in effect, but only if
such non-termination and extension shall then be valid under Applicable Law,
until such time as the same shall under Applicable Law cease to be valid,
whereupon all monies or other property or proceeds constituting part of the
Trust Estate shall be distributed in accordance with the terms of Article IV
hereof, otherwise this Trust Agreement and the trusts created hereby shall
continue in full force and effect in accordance with the terms hereof.
Notwithstanding the foregoing, this Trust Agreement and trust
created hereby shall terminate and the Trust Estate shall be distributed to the
Owner Participant, and this Trust Agreement shall be of no further force and
effect, upon the election of the Owner Participant by notice to the Owner
Trustee, if such notice shall be accompanied by the written agreement (in form
and substance satisfactory to the Owner Trustee) of the Owner Participant
assuming all obligations of the Owner Trustee under or contemplated by the
Operative Agreements or incurred by it as trustee
19
<PAGE>
hereunder and releasing the Owner Trustee therefrom; provided, however, that
such notice may be given only after the time the Lien of the Trust Indenture is
discharged under Section 14.01 of the Trust Indenture and after the Lease shall
no longer be in effect.
Section 11.02 The Owner Participant Has No Legal Title in Trust
Estate. The Owner Participant does not have legal title to any part of the Trust
Estate. No transfer, by operation of law or otherwise, of any right, title and
interest of the Owner Participant in and to the Trust Estate hereunder shall
operate to terminate this Trust Agreement or the trusts hereunder or entitle any
successors or transferees of the Owner Participant to an accounting or to the
transfer of legal title to any part of the Trust Estate.
Section 11.03 Assignment, Sale, etc., of Aircraft. Any assignment,
sale, transfer or other conveyance of the Aircraft, any Engine, any Part or any
interest therein by the Owner Trustee made pursuant to the terms hereof or of
the Lease or the Participation Agreement shall bind the Owner Participant and
shall be effective to transfer or convey all right, title and interest of the
Owner Trustee and the Owner Participant in and to the Aircraft, such Engine,
such Part or interest therein. No purchaser or other grantee shall be required
to inquire as to the authorization, necessity, expediency or regularity of such
assignment, sale, transfer or conveyance or as to the application of any sale or
other proceeds with respect thereto by the Owner Trustee.
Section 11.04 Trust Agreement for Benefit of Certain Parties Only.
Except for the terms of Section 4.01, Articles V and IX, Sections 10.01, 11.01
and 11.03 hereof, nothing herein, whether express or implied, shall be construed
to give any Person other than the Owner Trustee and the Owner Participant any
legal or equitable right, remedy or claim under or in respect of this Trust
Agreement; but this Trust Agreement shall be held to be for the sole and
exclusive benefit of the Owner Trustee and the Owner Participant.
Section 11.05 Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be given in the manner set
forth in Section 12.01 of the Participation Agreement.
Section 11.06 Severability. Any provision hereof 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 11.07 Waivers, etc. No term or provision hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing entered into in compliance with the terms of Article X hereof; and any
waiver of the terms hereof shall be effective only in the specified instance and
for the specific purpose given.
20
<PAGE>
Section 11.08 Counterparts. This Trust 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 instrument.
Section 11.09 Binding Effect, etc. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Owner
Trustee and its successors and permitted assigns, and the Owner Participant, its
successors and permitted assigns. Any request, notice, direction, consent,
waiver or other instrument or action by the Owner Participant shall bind its
successors and permitted assigns.
Section 11.10 Headings; References. The headings of the various
Articles and Sections herein are for convenience of reference only and shall not
define or limit any of the terms or provisions hereof.
Section 11.11 GOVERNING LAW. (a) THIS TRUST AGREEMENT SHALL IN ALL
RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF DELAWARE, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO
HEREBY IRREVOCABLY AGREES, ACCEPTS AND SUBMITS ITSELF TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN THE CITY AND COUNTY OF
NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN
CONNECTION WITH ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO ANY MATTER
RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS TRUST AGREEMENT.
(c) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES THAT
THE SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS NOTICES AND DOCUMENTS OF ANY
OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE MADE
BY MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, AT
THE ADDRESS REFERRED TO IN SECTION 11.05. EACH PARTY HERETO HEREBY AGREES THAT
SERVICE UPON IT IN ACCORDANCE WITH THIS SECTION 11.11(c) SHALL CONSTITUTE VALID
AND EFFECTIVE PERSONAL SERVICE UPON SUCH PARTY.
(d) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION, AS A
DEFENSE, OR OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER IN
ANY OF THE ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN AN
INCONVENIENT FORUM, THAT VENUE FOR THE ACTION OR PROCEEDING IS IMPROPER OR THAT
THIS TRUST
21
<PAGE>
AGREEMENT OR ANY OTHER OPERATIVE AGREEMENT MAY NOT BE ENFORCED IN OR BY SUCH
COURTS.
(e) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO
HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION IN ANY COURT IN ANY JURISDICTION BASED UPON OR ARISING OUT OF OR RELATING
TO THIS TRUST AGREEMENT.
Section 11.12 Administration of Trust. The principal place of
administration of the trust created by this Trust Agreement shall be in the
State of Delaware.
* * *
22
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
NCC CHARLIE COMPANY
By
---------------------------
Name:
Title:
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
By
---------------------------
Name:
Title:
23
Note to Exhibit 10.4
The following Trust Indenture and Security Agreement is
substantially identical in all material respects to three additional Trust
Indenture and Security Agreement except as follows:
<TABLE>
<CAPTION>
- - ----------------------------------------------------------------------------------------
Aircraft
Owner Participant Date (Tail No.) Amortization
- - ----------------------------------------------------------------------------------------
<S> <C> <C> <C>
NCC Charlie Company* September 10, 1998* N575ML* *
- - ----------------------------------------------------------------------------------------
NCC Charlie Company September 10, 1998 N576ML **
- - ----------------------------------------------------------------------------------------
General Electric Capital Corporation November 10, 1998 N577ML ***
- - ----------------------------------------------------------------------------------------
</TABLE>
- - ----------
* Filed document
** As attached to the following document.
*** As attached to this Note.
<PAGE>
Annex B
Amortization Schedule
Series A Series B Series C Series D
Equipment Equipment Equipment Equipment
Payment Date Notes Notes Notes Notes
- - ------------ --------- --------- --------- ---------
Jan 2 1999 0.00 0.00 1,077,749.79 0.00
Jul 2 1999 0.00 0.00 0.00 0.00
Jan 2 2000 218,236.59 94,446.99 270,514.98 0.00
Jul 2 2000 0.00 0.00 0.00 0.00
Jan 2 2001 218,235.60 94,446.00 34,495.40 285,532.33
Jul 2 2001 0.00 0.00 0.00 0.00
Jan 2 2002 218,235.60 94,445.99 8,997.21 365,047.67
Jul 2 2002 0.00 0.00 0.00 0.00
Jan 2 2003 218,235.60 94,446.00 433,192.82 0.00
Jul 2 2003 0.00 0.00 0.00 0.00
Jan 2 2004 218,235.60 94,446.00 497,976.86 0.00
Jul 2 2004 0.00 0.00 0.00 0.00
Jan 2 2005 218,235.59 430,616.61 231,272.94 0.00
Jul 2 2005 0.00 0.00 0.00 0.00
Jan 2 2006 218,235.60 735,224.50 0.00 0.00
Jul 2 2006 0.00 0.00 0.00 0.00
Jan 2 2007 218,235.60 436,158.94 0.00 0.00
Jul 2 2007 0.00 0.00 0.00 0.00
Jan 2 2008 218,235.60 579,875.58 0.00 0.00
Jul 2 2008 0.00 0.00 0.00 0.00
Jan 2 2009 574,770.58 286,925.24 0.00 0.00
Jul 2 2009 0.00 0.00 0.00 0.00
Jan 2 2010 926,981.25 0.00 0.00 0.00
Jul 2 2010 0.00 0.00 0.00 0.00
Jan 2 2011 995,603.92 0.00 0.00 0.00
Jul 2 2011 0.00 0.00 0.00 0.00
Jan 2 2012 1,069,306.60 0.00 0.00 0.00
Jul 2 2012 0.00 0.00 0.00 0.00
Jan 2 2013 942,365.22 207,168.15 0.00 0.00
Jul 2 2013 0.00 0.00 0.00 0.00
Jan 2 2014 801,371.05 0.00 0.00 0.00
Jul 2 2014 0.00 0.00 0.00 0.00
Jan 2 2015 0.00 0.00 0.00 0.00
<PAGE>
TRUST INDENTURE AND SECURITY AGREEMENT [N576ML]
dated as of September 10, 1998
between
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
not in its individual capacity except as expressly
provided herein, but solely
Owner Trustee
and
THE FIRST NATIONAL BANK OF MARYLAND,
as Indenture Trustee
COVERING ONE CANADAIR REGIONAL JET SERIES 200 ER AIRCRAFT
BEARING U.S. REGISTRATION NO. N576ML
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS......................................................-7-
Section 1.01 Definitions..................................................-7-
ARTICLE II ISSUE, EXECUTION, FORM ANDREGISTRATION OF EQUIPMENT NOTES........-8-
Section 2.03 Authentication...............................................-8-
Section 2.04 Form and Terms of Equipment Notes; Payments on Equipment
Notes........................................................-8-
Section 2.05 Payments from Trust Indenture Estate Only...................-11-
Section 2.06 Registration, Transfer and Exchange.........................-12-
Section 2.07 Mutilated, Defaced, Destroyed, Lost and Stolen Equipment
Notes.......................................................-13-
Section 2.08 Cancellation of Equipment Notes; Destruction Thereof........-13-
Section 2.09 Termination of Interest in Trust Indenture Estate...........-14-
Section 2.10 Equipment Notes in Respect of Replacement Aircraft..........-14-
Section 2.11 Assumption of Obligations Under Equipment Notes and Other
Operative Agreements........................................-14-
ARTICLE III COVENANTS.......................................................-15-
Section 3.01 Payment of Principal, Make-Whole Premium and Interest.......-15-
Section 3.02 Offices for Payments, etc...................................-15-
Section 3.03 Appointment to Fill a Vacancy in Office of Indenture
Trustee.....................................................-15-
Section 3.04 Paying Agents...............................................-15-
Section 3.05 Covenants of the Owner Trustee..............................-16-
Section 3.06 [Reserved]..................................................-17-
Section 3.07 Disposal of Trust Indenture Estate..........................-17-
Section 3.08 No Representations or Warranties as to Aircraft or
Documents...................................................-17-
Section 3.09 Further Assurances; Financing Statements....................-17-
ARTICLE IV HOLDER LISTS....................................................-18-
ARTICLE V RECEIPT, DISTRIBUTION AND APPLICATION OF INCOME FROM THE
TRUST INDENTURE ESTATE..........................................-18-
Section 5.01 Basic Rent Distribution.....................................-18-
Section 5.02 Event of Loss and Replacement; Prepayment...................-19-
Section 5.03 Payment After Indenture Event of Default, etc...............-21-
Section 5.04 Certain Payments............................................-23-
Section 5.05 Other Payments..............................................-23-
Section 5.06 Payments to Owner Trustee...................................-24-
Section 5.07 Application of Payments.....................................-24-
Section 5.08 Investment of Amounts Held by Indenture Trustee.............-24-
-i-
<PAGE>
Section 5.09 Withholding Taxes...........................................-25-
ARTICLE VI PREPAYMENT OF EQUIPMENT NOTES..................................-26-
Section 6.01 No Prepayment Except as Specified...........................-26-
Section 6.02 Prepayment of Equipment Notes...............................-26-
Section 6.03 Notice of Prepayment to Holders.............................-27-
Section 6.04 Deposit of Prepayment Price.................................-28-
Section 6.05 Equipment Notes Payable on Prepayment Date..................-28-
ARTICLE VII INDENTURE EVENTS OF DEFAULT; REMEDIES OF INDENTURE TRUSTEE
AND HOLDERS....................................................-28-
Section 7.02 Remedies....................................................-30-
Section 7.03 Return of Aircraft, etc.....................................-33-
Section 7.04 Indenture Trustee May Prove Debt............................-35-
Section 7.05 Remedies Cumulative.........................................-37-
Section 7.06 Suits for Enforcement.......................................-37-
Section 7.07 Discontinuance of Proceedings...............................-37-
Section 7.08 Unconditional Right of Holders to Payments on Equipment
Notes.......................................................-38-
Section 7.09 Control by Holders..........................................-38-
Section 7.10 Waiver of Past Indenture Default............................-38-
Section 7.11 Notice of Indenture Default.................................-39-
ARTICLE VIII RIGHTS OF THE OWNER TRUSTEEAND THE OWNER PARTICIPANT...........-39-
Section 8.01 Certain Rights of Owner Trustee and Owner Participant.......-39-
Section 8.02 Owner Participant's Right to Prepay or Purchase the
Equipment Notes.............................................-42-
Section 8.03 Certain Rights of Owner Participant.........................-43-
ARTICLE IX CONCERNING THE INDENTURE TRUSTEE...............................-44-
Section 9.01 Acceptance of Trusts........................................-45-
Section 9.02 Duties Before, and During, Existence of Indenture Event of
Default.....................................................-45-
Section 9.03 Certain Rights of the Indenture Trustee.....................-46-
Section 9.04 Indenture Trustee Not Responsible for Recitals, Equipment
Notes, or Proceeds..........................................-47-
Section 9.05 Indenture Trustee and Agents May Hold Equipment Notes;
Collections, etc............................................-48-
Section 9.06 Moneys Held by Indenture Trustee............................-48-
Section 9.07 Right of Indenture Trustee to Rely on Officer's
Certificate, etc............................................-48-
Section 9.08 Replacement Airframes and Replacement Engines...............-48-
Section 9.10 Effect of Replacement.......................................-51-
Section 9.11 Compensation................................................-52-
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<PAGE>
ARTICLE X CONCERNING THE HOLDERS.........................................-52-
Section 10.01 Evidence of Action Taken by Holders........................-52-
Section 10.02 Proof of Execution of Instruments and of Holding of
Equipment Notes............................................-52-
Section 10.03 Holders to Be Treated as Owners............................-53-
Section 10.04 Equipment Notes Owned by Owner Trustee or Lessee
Deemed Not Outstanding.....................................-53-
Section 10.05 ERISA......................................................-54-
ARTICLE XI INDEMNIFICATION OF INDENTURE TRUSTEE BY OWNER TRUSTEE..........-54-
ARTICLE XII SUCCESSOR TRUSTEES.............................................-55-
Section 12.01 Notice of Successor Owner Trustee..........................-55-
Section 12.02 Resignation and Removal of Indenture Trustee:
Appointment of Successor...................................-55-
Section 12.03 Persons Eligible for Appointment as Indenture Trustee......-56-
Section 12.04 Acceptance of Appointment by Successor Trustee.............-56-
Section 12.05 Merger, Consolidation or Succession to Business of
Indenture Trustee..........................................-57-
Section 12.06 Appointment of Separate Trustees...........................-58-
ARTICLE XIII SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE AND
OTHER DOCUMENTS................................................-59-
Section 13.01 Supplemental Indentures Without Consent of Holders.........-59-
Section 13.02 Supplemental Indentures With Consent of Holders............-61-
Section 13.03 Effect of Supplemental Indenture...........................-62-
Section 13.04 Documents to Be Given to Indenture Trustee.................-62-
Section 13.05 Notation on Equipment Notes in Respect of Supplemental
Indentures.................................................-62-
Section 13.06 No Request Necessary for Lease Supplement or Indenture
Supplement.................................................-62-
Section 13.07 Notices to Liquidity Providers.............................-63-
ARTICLE XIV SATISFACTION AND DISCHARGE OF INDENTURE; UNCLAIMED MONEYS......-63-
Section 14.01 Satisfaction and Discharge of Indenture: Termination of
Indenture..................................................-63-
-iii-
<PAGE>
Section 14.02 Application by Indenture Trustee of Funds Deposited for
Payment of Equipment Notes.................................-64-
Section 14.03 Repayment of Moneys Held by Paying Agent...................-64-
Section 14.04 Transfer of Unclaimed Money Held by Indenture Trustee
and Paying Agent...........................................-64-
ARTICLE XV MISCELLANEOUS....................................................-64-
Section 15.01 Capacity in Which Acting...................................-64-
Section 15.02 No Legal Title to Trust Indenture Estate in Holders........-64-
Section 15.03 Sale of Trust Indenture Estate by Indenture Trustee is
Binding....................................................-65-
Section 15.04 Indenture Benefits Trustees, Participants, Lessee, and
Liquidity Providers Only...................................-65-
Section 15.05 No Action Contrary to Lessee's Rights Under the Lease......-65-
Section 15.06 Notices....................................................-65-
Section 15.07 Officer's Certificates and Opinions of Counsel.............-65-
Section 15.08 Severability...............................................-66-
Section 15.09 No Oral Modifications or Continuing Waivers................-66-
Section 15.10 Successors and Assigns.....................................-66-
Section 15.11 Headings...................................................-67-
Section 15.12 Normal Commercial Relations................................-67-
Section 15.13 Governing Law; Counterparts................................-67-
Section 15.14 Lessee's Right of Quiet Enjoyment..........................-67-
Annex A - Principal Amount of Equipment Notes
Annex B - Amortization Schedule
Exhibit A - Form of Indenture Supplement
Exhibit B - Form of Equipment Note
Schedule I - Principal Amortization
-iv-
<PAGE>
TRUST INDENTURE AND SECURITY AGREEMENT [N576ML]
TRUST INDENTURE AND SECURITY AGREEMENT [N576ML] dated as of
September 10, 1998 (the "Indenture"), between FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, a national banking association, not in its individual
capacity, except as otherwise specifically set forth herein (when acting in such
individual capacity, "Trust Company"), but solely as owner trustee (the "Owner
Trustee") under the Trust Agreement, as defined herein, and THE FIRST NATIONAL
BANK OF MARYLAND, a national banking association (when acting in its individual
capacity, "FNBM"), as Indenture Trustee hereunder (the "Indenture Trustee").
W I T N E S S E T H:
WHEREAS, capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and Trust Company have, prior to the
execution and delivery of this Indenture, entered into a Trust Agreement
[N576ML] dated as of September 10, 1998, (as amended or otherwise modified from
time to time in accordance with the provisions thereof and of the Participation
Agreement, the "Trust Agreement"), whereby, among other things, Trust Company
has declared a certain trust for the use and benefit of the Owner Participant,
subject, however, to the Lien of this Indenture for the use and benefit of, and
with the priority of payment to, the holders of the Equipment Notes issued
hereunder, and the Owner Trustee is authorized and directed to execute and
deliver this Indenture;
WHEREAS, the Owner Trustee desires by this Indenture, among other
things (i) to provide for the issuance by the Owner Trustee of Equipment Notes
as provided in the Participation Agreement, and (ii) to provide for the
assignment, mortgage and pledge by the Owner Trustee to the Indenture Trustee,
as part of the Trust Indenture Estate hereunder of, among other things, certain
of the Owner Trustee's estate, right, title and interest in and to the Aircraft
and the Indenture Documents and certain payments and other amounts (other than
Excepted Payments) received hereunder or thereunder in accordance with the terms
hereof, as security for, among other things, the Owner Trustee's and the
Lessee's obligations to the Holders and the Indenture Indemnitees and for the
benefit and security of such Holders;
<PAGE>
WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Owner Trustee, and authenticated, issued and delivered
hereunder, the valid obligations of the Owner Trustee; and
WHEREAS, all things necessary to make this Indenture the valid,
binding and legal obligation of the Owner Trustee, enforceable in accordance
with its terms, have been done and performed and have happened.
NOW, THEREFORE, the parties agree as follows:
GRANTING CLAUSE
NOW, THEREFORE, in consideration of the mutual promises contained
herein and to secure (i) the prompt payment of the principal of and Make-Whole
Premium, if any, and interest on, and all other amounts due with respect to, all
the Equipment Notes from time to time outstanding under this Indenture and all
other amounts due hereunder and (ii) the performance and observance by the Owner
Trustee and the Lessee of all the agreements, covenants and provisions in this
Indenture, the Equipment Notes, the Participation Agreement and in the Lease
contained for the benefit of the Holders, and the prompt payment of any and all
amounts from time to time owing under the Participation Agreement by the Owner
Trustee or the Lessee to the Holders and each of the Indenture Indemnitees
(provided that, with respect to amounts owed to the Liquidity Providers which
relate to amounts due under the Liquidity Facilities, the amounts secured hereby
shall only include such amounts to the extent due and owing pursuant to the
final paragraph of Section 2.04 hereof) (collectively the "Secured Obligations")
and for the uses and purposes and subject to the terms and provisions of this
Indenture, and in consideration of the premises and of the covenants in this
Indenture and in the Equipment Notes and of the purchase of the Equipment Notes
by their Holders, and of the sum of $1 paid to the Owner Trustee by the
Indenture Trustee at or before the delivery of this Indenture, the receipt and
sufficiency of which are hereby acknowledged, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged, granted a
first priority security interest in and confirmed, and does hereby grant,
bargain, sell, assign, transfer, convey, mortgage, pledge and grant a first
priority security interest in and confirm to the Indenture Trustee, its
successors and assigns, in trust for the equal and ratable security and benefit
of the Holders and each of the Indenture Indemnitees, a first priority security
interest in and first mortgage Lien on all estate, right, title and interest of
the Owner Trustee in, to and under the following described property, rights and
privileges other than Excepted Payments, which collectively, excluding Excepted
Payments but including all property specifically subjected to the Lien of this
Indenture by the terms hereof, by any supplement to this Indenture (including
the Indenture Supplement) or any mortgage supplemental to this Indenture, are
included within the Trust Indenture Estate, subject always to the rights granted
to
-2-
<PAGE>
the Owner Trustee or the Owner Participant hereunder and to the other terms and
conditions of this Indenture:
(1) The Airframe, as described in the Indenture Supplement, and any
airframe substituted in replacement thereof pursuant to the provisions of this
Indenture; the Engines, as the same are more particularly described in the
Indenture Supplement, whether or not such Engines shall be installed in or
attached to the Airframe or any other airframe, and any Replacement Engine
therefor; and all Parts in respect of the Airframe and the Engines and all
records, logs and other documents at any time maintained with respect to the
foregoing property;
(2) The Lease and all Rent thereunder, including, without
limitation, all amounts of Basic Rent and Supplemental Rent, and payments of any
kind thereunder and including all rights of the Owner Trustee to execute any
election or option or to give or receive any notice, consent, waiver or approval
under or in respect of the Lease or to accept any surrender of the Aircraft or
any part thereof as well as any rights, powers or remedies on the part of the
Owner Trustee, whether arising under the Lease or by statute or at law or in
equity or otherwise arising out of any Event of Default;
(3) The Purchase Agreement (to the extent assigned by the Purchase
Agreement Assignment), the Purchase Agreement Assignment, the PAA Consent, the
Engine Warranty Assignment, the Warranties (as defined in the Engine Warranty
Assignment), the Engine Manufacturer's Consent, the FAA Bill of Sale, the
Warranty Bill of Sale and the Participation Agreement (to the extent of amounts
payable to the Owner Trustee thereunder) (collectively, and together with the
Lease and the Equipment Notes, the "Indenture Documents"), including all rights
of the Owner Trustee to execute any election or option or to give or receive any
notice, consent, waiver or approval under or in respect of any of the foregoing
documents and instruments;
(4) All the tolls, rents, issues, profits, products, revenues and
other income (including sales proceeds) of the property subjected or required to
be subjected to the Lien of this Indenture, and all of the estate, right, title
and interest of the Owner Trustee in and to the same and every part of said
property;
(5) All other moneys and securities (including Permitted
Investments) 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 Agreement, except the Tax
Indemnity Agreement, the Deficiency Agreement and the Residual Agreement and
held or required to be held by the Indenture Trustee hereunder;
(6) All requisition and insurance proceeds with respect to the
Aircraft or any part thereof (to the extent of the Owner Trustee's interest
therein
-3-
<PAGE>
pursuant to the terms of the Lease), including insurance required to be
maintained by the Lessee under Section 9 of the Lease; and
(7) All proceeds of the foregoing.
EXCLUDING, HOWEVER, from the foregoing grant of the Lien and
security interest of this Indenture and from the Trust Indenture Estate, (i) all
Excepted Payments, including without limitation all right, title and interest of
the Owner Participant in, to and under the Tax Indemnity Agreement, the
Deficiency Agreement and the Residual Agreement and any moneys due or to become
due under the Tax Indemnity Agreement, the Deficiency Agreement and the Residual
Agreement and all rights to collect and enforce Excepted Payments and (ii)
rights granted to or retained by the Owner Trustee or the Owner Participant
hereunder and SUBJECT TO the following provisions:
(a) (i) whether or not an Indenture Event of Default shall occur and
be continuing, the Owner Trustee and the Owner Participant shall at all
times retain the right, to the exclusion of the Indenture Trustee: (A) to
Excepted Payments and to commence an action at law to obtain or otherwise
demand, sue for or receive and enforce the payment of such Excepted
Payments, (B) to exercise any election or option or make any decision or
determination or to give or receive any notice (including notice of
Default), consent, waiver or approval in respect of any such Excepted
Payment, (C) to adjust (and make any decision or determination or give any
notice or consent with respect to) Basic Rent and the percentages relating
to Termination Value and the EBO Amount, as provided in Section 3(d) of
the Lease and Section 13.01 of the Participation Agreement, (D) to
exercise any election or option to make any decision or determination, or
to give or receive any notice, consent, waiver or approval, or to take any
other action in respect of, but in each case only to the extent relating
to, Excepted Payments (except for, in respect of any portion of Basic Rent
constituting an Excepted Payment, any action changing the manner by which
such Basic Rent is to be paid), (E) to retain the rights of the "Lessor"
with respect to solicitations of bids, and the election to retain the
Aircraft pursuant to Section 14(c) of the Lease, (F) to retain the right
of "Lessor" to determine the Fair Market Rental Value or Fair Market Sales
Value pursuant to the respective definitions thereof, (G) to exercise all
other rights of the Lessor under Section 13 of the Lease with respect to
the retention or purchase by the Lessee or the Lessor of the Aircraft or
the exercise by the Lessee of the Lessee's renewal or purchase options,
(H) to retain all rights with respect to insurance maintained for its own
account which Section 9(f) of the Lease specifically confers on the "Owner
Participant", (I) to approve appraisers, lawyers and other professionals
and receive notices, certificates, reports, filings, opinions and other
documents, in each case with respect to matters relating to the Owner
Participant's tax position, (J) to select or approve any accountants or
experts to be used in the verification of any Rent adjustment,
-4-
<PAGE>
and (K) to exercise, to the extent necessary to enable it to exercise its
rights under Section 8.03 hereof, the rights of the "Lessor" under Section
18 of the Lease;
(ii) whether or not an Indenture Event of Default shall occur and be
continuing, the Owner Trustee and the Indenture Trustee shall each have
the rights separately but not to the exclusion of the other: (A) to
receive from the Lessee all notices, certificates, reports, filings,
opinions of counsel, copies of all documents and all information which the
Lessee is permitted or required to give or furnish to the "Lessor"
pursuant to the Lease or to the Owner Trustee pursuant to any other
Operative Agreement, (B) to exercise inspection rights pursuant to Section
6 of the Lease (provided that if an Indenture Event of Default shall be
continuing, no inspection right of the Owner Trustee shall interfere with
the efforts of the Indenture Trustee to exercise remedies under the Lease
or this Indenture), (C) to maintain separate insurance pursuant to Section
9(f) of the Lease and to retain all rights with respect to such insurance
maintained for its own account, and (D) to give any notice of default
under Section 16 of the Lease;
(iii) subject to the last sentence of this clause (a), so long as no
Indenture Event of Default shall have occurred and be continuing (but
subject to the provisions of Section 8.01), the Owner Trustee shall retain
the right, to the exclusion of the Indenture Trustee, to exercise all
rights of the "Lessor" under the Lease (other than the right to receive
any funds to be delivered to the "Lessor" under the Lease (except funds
which constitute or are delivered with respect to Excepted Payments)) and
under the Purchase Agreement;
(iv) subject to the last sentence of this clause (a), at all times
the Owner Trustee shall have the right as Lessor, but not to the exclusion
of the Indenture Trustee, to seek specific performance of the covenants of
the Lessee under the Lease relating to the protection, insurance,
maintenance, possession and use of the Aircraft;
(v) at all times the Owner Trustee and the Owner Participant shall
have the rights granted to them under Articles VI, VIII and X and Section
7.02 hereof; and
Notwithstanding the foregoing, but subject always to the provisions
of Section 15.05 hereof, the Indenture Trustee shall at all times have the
right, to the exclusion of the Owner Trustee and the Owner Participant, to (A)
(other than with respect to Excepted Payments) declare the Lease to be in
default under Section 17 thereof and (B) subject only to the provisions of this
Indenture (other than in connection with Excepted Payments), exercise the
remedies set forth in such Section 17 of the Lease.
-5-
<PAGE>
(b) The leasehold interest granted to the Lessee by the Lease shall
not be subject to the security interest granted by this Indenture, and nothing
in this Indenture shall affect the rights of the Lessee under the Lease so long
as no Event of Default has occurred and is continuing.
HABENDUM CLAUSE
TO HAVE AND TO HOLD the aforesaid property unto the Indenture Trustee, its
successors and assigns, in trust for the equal and ratable benefit and security
of the Holders and the Indenture Indemnitees, except as provided in Section 2.12
and Article V hereof, without any priority of any one Equipment Note over any
other and for the uses and purposes and subject to the terms and conditions set
forth in this Indenture and the rights of the Owner Trustee and the Owner
Participant under this Indenture.
It is expressly agreed that anything contained in this Indenture to the
contrary notwithstanding, the Owner Trustee shall remain liable under the
Indenture Documents to perform all of the obligations assumed by it under any of
those documents, all in accordance with and pursuant to the terms and provisions
of those documents, and the Indenture Trustee, the Holders and the Indenture
Indemnitees shall have no obligation or liability under the Indenture Documents
by reason of or arising out of the assignment under this Indenture, nor shall
the Indenture Trustee or the Holders or the Indenture Indemnitees be required or
obligated in any manner to perform or fulfill any obligations of the Owner
Trustee under or pursuant to the Indenture Documents or, except as expressly
provided in this Indenture, 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.
Effective upon the occurrence and continuance of an Indenture Event of
Default, to the extent permitted by Applicable Law, the Owner Trustee hereby
constitutes 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), subject to the terms and conditions of this Indenture, to ask,
require, demand, receive, compound and give acquittance for any and all Basic
Rent, Supplemental Rent payable to the Owner Trustee and Termination Value
payments, insurance proceeds and any and all moneys and claims for moneys due
and to become due under or arising out of the Lease (subject to Section 8.01
hereof) or the other Indenture Documents (other than Excepted Payments), to
endorse any checks or other instruments or orders in connection with the same
and to file any claims, take any action or institute any proceeding which the
Indenture Trustee may deem to be necessary or advisable in the premises. Without
limiting the generality of the foregoing, but subject to the rights of the Owner
Trustee and the Owner Participant under Sections 8.02, 7.02 and 7.03 hereof,
during the continuance of any Indenture
-6-
<PAGE>
Event of Default, to the extent permitted by Applicable Law, the Indenture
Trustee shall have the right under such power of attorney to accept any offer in
connection with the exercise of remedies as set forth herein of any purchaser to
purchase the Airframe and Engines and upon such purchase to execute and deliver
in the name of and on behalf of the Owner Trustee an appropriate bill of sale
and other instruments of transfer relating to the Airframe and Engines, when
purchased by such purchaser, and to perform all other necessary or appropriate
acts with respect to any such purchase, and in its discretion to file any claim
or take any other action or proceedings, either in its own name or in the name
of the Owner Trustee or otherwise, which the Indenture Trustee may deem
necessary or appropriate to protect and preserve the right, title and interest
of the Indenture Trustee in and to such Rents and other sums and the security
intended to be afforded hereby; provided, however, that no action of the
Indenture Trustee pursuant to this paragraph shall increase the obligations or
liabilities of the Owner Trustee to any Person beyond those obligations and
liabilities specifically set forth in this Indenture and in the other Operative
Agreements.
Under the Lease the Lessee is directed to make all payments of Rent (other
than Excepted Payments not constituting Basic Rent) payable to the Owner Trustee
and all other amounts (other than Excepted Payments not constituting Basic Rent)
which are required to be paid to or deposited with the Owner Trustee pursuant to
the Lease directly to the Indenture Trustee at such address in the United States
of America as the Indenture Trustee shall specify for application as provided in
this Indenture. The Owner Trustee agrees that if, notwithstanding such
provision, it shall have received any such amounts, promptly on receipt of any
such payment, it will transfer to the Indenture Trustee any and all moneys from
time to time received by the Owner Trustee constituting part of the Trust
Indenture Estate for distribution by the Indenture Trustee pursuant to this
Indenture, except that the Owner Trustee shall accept for distribution pursuant
to the Trust Agreement (i) any amounts distributed to it by the Indenture
Trustee under this Indenture and (ii) any Excepted Payments.
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, at the expense
of the Lessee, 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;
provided however, that the Owner Trustee shall have no obligation to execute and
deliver or cause to be executed or delivered to the Indenture Trustee any such
instrument or document if such execution and delivery would result in the
imposition of additional liabilities on the Owner Trustee or the Owner
Participant or would result in a burden on the Owner Participant's business
activities, unless the Owner Trustee or the Owner Participant, as the case may
be, is indemnified to its reasonable satisfaction against any losses,
liabilities and expenses incurred in connection with such execution and
delivery.
-7-
<PAGE>
The Owner Trustee does hereby warrant and represent that it has not
assigned, pledged or otherwise disposed of, and hereby covenants that it will
not assign or pledge or otherwise dispose of, so long as the assignment
hereunder shall remain in effect and shall not have been terminated pursuant to
Section 14.01 hereof, any of its right, title or interest hereby assigned, to
anyone other than the Indenture Trustee, and that it will not, except in respect
of Excepted Payments or otherwise as provided in or permitted by this Indenture,
enter into an agreement amending or supplementing any of the Indenture
Documents, settle or compromise any claim (other than claims in respect of
Excepted Payments) against the Lessee arising under any of the Indenture
Documents, or 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.
Concurrently with the delivery of this Indenture, the Owner Trustee has
delivered to the Indenture Trustee executed counterparts of the Trust Agreement.
It is hereby further covenanted and agreed by and between the parties as
follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. Unless the context otherwise requires, capitalized terms
utilized herein shall have the meanings set forth or incorporated by reference,
and shall be construed in the manner described, in Appendix A to the Lease
Agreement [N576ML] dated as of the date hereof between the Owner Trustee and
Midway Airlines Corporation.
ARTICLE
II
ISSUE, EXECUTION, FORM AND
REGISTRATION OF EQUIPMENT NOTES
2.1 Authentication and Delivery of Equipment Notes. Upon the execution and
delivery of this Indenture, and from time to time thereafter, Equipment Notes in
the aggregate principal amount set forth on Annex A hereto shall be executed by
the Owner Trustee and delivered to the Indenture Trustee for authentication, and
the Indenture Trustee shall thereupon authenticate and deliver said Equipment
Notes to or upon the oral or written order of the Owner Trustee, signed, if
written, by an
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authorized officer of the Owner Trustee, without any further action by the Owner
Trustee.
2.2 Execution of Equipment Notes. The Equipment Notes shall be signed on
behalf of the Owner Trustee by an authorized officer of Trust Company. Such
signatures may be the manual or facsimile signatures of such officer and minor
errors or defects in any reproduction of any such signature shall not affect the
validity or enforceability of any Equipment Note which has been duly
authenticated and delivered by the Indenture Trustee. In case any officer of
Trust Company who shall have signed any of the Equipment Notes shall cease to be
such officer before the Equipment Notes so signed shall be authenticated and
delivered by the Indenture Trustee, such Equipment Note nevertheless may be
authenticated and delivered as though the person who signed such Equipment Note
had not ceased to be such officer of Trust Company; and any Equipment Note may
be signed on behalf of the Owner Trustee by such person or persons as, at the
actual date of the execution of such Equipment Note, shall be the proper
officers of Trust Company, although at the date of the execution and delivery of
this Indenture any such person was not such an officer. Equipment Notes bearing
the facsimile signatures of individuals who were authorized officers of Trust
Company at the time such Equipment Notes were issued 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.
2.3 Authentication. Only such Equipment Notes as shall bear thereon a
certificate of authentication substantially in the form set forth in Exhibit B,
executed by the Indenture Trustee by manual signature of one of its authorized
officers, shall be entitled to the security and benefits of this Indenture or be
valid or obligatory for any purpose. Such certificate by the Indenture Trustee
upon any Equipment Note executed by the Owner Trustee shall be conclusive
evidence that the Equipment Note so authenticated has been duly authenticated
and delivered hereunder and that the Holder, as evidenced on the Register, is
entitled to the security and benefits of this Indenture.
2.4 Form and Terms of Equipment Notes; Payments on Equipment Notes. The
Equipment Notes and the Indenture Trustee's certificate of authentication shall
be substantially in the form set forth in Exhibit B hereto. The Equipment Notes
shall be issuable as registered securities without coupons and shall be
numbered, lettered, or otherwise distinguished in such manner or in accordance
with such plans as the Owner Trustee may determine with the approval of the
Indenture Trustee.
The Equipment Notes shall be issued in registered form only and in
denominations of $1,000 and any integral multiple thereof, shall be dated the
Delivery Date, shall be issued in four separate series consisting of Series A,
Series B, Series C, and Series D
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and shall be issued in the principal amounts, and shall bear interest at the
rates per annum, specified on Annex A. Interest shall be calculated on the basis
of a 360-day year of twelve 30-day months.
Any of the Equipment Notes may be issued with appropriate insertions,
omissions, substitutions and variations, and may have imprinted or otherwise
reproduced thereon such legend or legends, not inconsistent with the provisions
of this Indenture, as may be required to comply with any law or with any rules
or regulations pursuant thereto, or with the rules of any securities market in
which the Equipment Notes are admitted to trading, or to conform to general
usage.
Each Equipment Note shall bear interest from the date of original issuance
thereof or from the most recent date to which interest has been paid, and shall
be payable in arrears on January 2, 1999, and on each January 2 and July 2
thereafter until maturity; provided that, under certain circumstances provided
in the Registration Rights Agreement, including in the event a Registration
Event does not occur on or prior to the date (the "Increase Date") required
pursuant to the Registration Rights Agreement, such interest rate shall be
increased by 0.5% from and including the Increase Date to but excluding the date
such Registration Event does occur. The principal amount of each Equipment Note
shall be payable on the dates and in the installments as set forth in Annex B
hereto.
Notwithstanding the preceding paragraph, each Equipment Note shall bear
interest at the Past Due Rate on any principal, interest and any other amount
payable hereunder or under such Equipment Note, which shall not be paid in full
when due (whether at stated maturity, by acceleration, by mandatory prepayment
or otherwise), for the period from and including the due date thereof to but
excluding the date the same is paid in full, payable from time to time on demand
of the Indenture Trustee.
The principal of, and Make-Whole Premium, if any, and interest on, the
Equipment Notes shall be payable at the Corporate Trust Department of the
Indenture Trustee or at any office or agency maintained for such purpose
pursuant to Section 3.02 hereof in immediately available funds prior to 12:00
noon (New York time) on the due date thereof and the Indenture Trustee shall
remit all such amounts received by it to the Holders at such account or accounts
at such financial institution or institutions as the Holders shall have
designated to the Indenture Trustee in writing, in immediately available funds,
such payment to be made if the payment was received prior to 12:00 noon New York
time by the Indenture Trustee on any Business Day, by 1:00 p.m. New York time on
such Business Day; otherwise, the Indenture Trustee shall make payment promptly,
but not later than 11:00 A.M. New York time on the next succeeding Business Day.
If any amount payable under the Equipment Notes, or under this Indenture, falls
due on a day that is not a Business Day, then such sum shall be payable on the
next succeeding Business Day, without (provided that payment is made on such
next succeeding Business Day) additional interest thereon for the period of such
extension.
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The Holder at the close of business on any Record Date with respect to any
Payment Date shall be entitled to receive the interest if any payable on such
Payment Date notwithstanding any transfer or exchange of such Equipment Note
subsequent to the Record Date and prior to such Payment Date, except if and to
the extent the Owner Trustee shall default in the payment of the interest due on
such Payment Date, in which case such defaulted interest shall be paid to the
Holder at the close of business on a subsequent Record Date (which shall be not
less than five or more than 15 Business Days prior to the date of payment of
such defaulted interest) established by notice given by mail by or on behalf of
the Owner Trustee to the Holders not less than 15 days preceding such subsequent
Record Date.
The Owner Trustee agrees to pay to the Indenture Trustee (but only to the
extent not payable under Section 6(a) or 6(b) of the Note Purchase Agreement
(whether or not in fact paid)) for distribution in accordance with Section 5.04
hereof (a) any and all indemnity amounts received by the Owner Trustee which are
payable by the Lessee to (i) the Indenture Trustee in its individual capacity,
(ii) the Subordination Agent or (iii) each Liquidity Provider, in each case
pursuant to Article 6 or 7 of the Participation Agreement (it being acknowledged
that the Lessee has been instructed to pay such amounts to the Person or Persons
entitled thereto) and (b) the Owner Trustee's pro rata share of all amounts owed
to each Liquidity Provider by the Subordination Agent under each Liquidity
Facility other than amounts due as (i) repayments of the principal of advances
thereunder, (ii) interest on Downgrade Drawings and Non-Extension Drawings,
except to extent exceeding investment earnings thereon and (iii) interest on
Interest Drawings and Final Drawings except to the extent included in Net
Interest and Related Charges. As used in this Section, the 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 under this
Indenture other than the Series D Equipment Notes and the denominator of
which is the aggregate principal balance of all Equipment Notes issued
under this Indenture and the Related Indentures other than the Series D
Equipment Notes and the "Series D Equipment Notes" under the Related
Indentures, and
(B) with respect to all Net Interest and Related Charges (x) if
there exists a Payment Default under any Equipment Note issued under this
Indenture a fraction, the numerator of which is the aggregate principal
balance then outstanding of Equipment Notes issued under this Indenture
other than the Series D Equipment Notes and the denominator of which is
the aggregate principal balance then outstanding of all Equipment Notes
issued under this Indenture and the Related Indentures other than the
Series D Equipment Notes and the "Series D Equipment Notes" under the
Related Indentures, under which there exists a Payment Default or (y) at
all other times, zero.
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As used in this Section, "Net Interest and Related Charges" means the sum of (i)
the amount, if any, by which interest payable to each Liquidity Provider on any
Interest Drawing and Final Drawing exceeds the amount which would be payable if
such drawings bore interest at the weighted average Past Due Rate applicable to
amounts in default on all Equipment Notes 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 replacement Liquidity Facility)
which result from any Interest Drawing or Final Drawing. As used in this
Section, a "Payment Default" when used in connection with an Equipment Note
issued hereunder or an Equipment Note issued under any Related Indenture means a
default in the payment of principal thereof or interest thereon (which default
has not been cured), other than solely because of acceleration.
2.5 Payments from Trust Indenture Estate Only. All payments to be made by
the Owner Trustee under this Indenture shall be made only from the income and
the proceeds from the Lessor's Estate to the extent included in the Trust
Indenture Estate and from any other amounts of the type described in Section
8.03 hereof (but only to the extent actually received by the Indenture Trustee)
and only to the extent that the Owner Trustee shall have sufficient income or
proceeds from the Lessor's Estate to the extent included in the Trust Indenture
Estate (and such other amounts) to enable the Indenture Trustee to make
distributions of the amounts due in respect of the Equipment Notes in accordance
with the terms hereof and thereof. Each Holder by its acceptance of an Equipment
Note agrees that it will look solely to the income and proceeds from the Trust
Indenture Estate (and such other amounts of the type described in Section 8.03
hereof but only to the extent actually received by the Indenture Trustee) to the
extent available for distribution to it as provided herein and that none of the
Owner Participant, the Owner Trustee, Trust Company or the Indenture Trustee is
personally liable to such Holder for any amounts payable under this Indenture or
such Equipment Note or for any amounts payable or liability under any Equipment
Note or this Indenture, except as expressly provided herein in the case of Trust
Company, the Owner Trustee or the Indenture Trustee.
Trust Company is not personally liable to any Holder, the Lessee or the
Indenture Trustee for any amounts payable under this Indenture or for any
liability under this Indenture or the Equipment Notes, except as a result of
Trust Company's gross negligence or willful misconduct (or simple negligence in
the handling of funds), or as otherwise expressly provided herein or in the
Participation Agreement.
If (1) all or any part of the Lessor's Estate becomes the property of a
debtor subject to the reorganization provisions of the Bankruptcy Code, (2)
pursuant to such reorganization provisions the Owner Participant is required, by
reason of such Owner Participant being held to have recourse liability directly
or indirectly, to make payment on account of any amount payable as principal of
or interest, Make-Whole Premium or other amounts payable on the Equipment Notes,
and (3) the Indenture Trustee actually receives any Recourse Amount which
reflects any payment by an Owner Participant on account of (2) above, then the
Indenture Trustee shall promptly refund to such Owner
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Participant such Recourse Amount. Nothing contained in this paragraph shall
prevent the Indenture Trustee from enforcing any personal recourse obligation
(and retaining the proceeds thereof) of the Owner Participant under the
Participation Agreement, or from retaining any amount paid by the Owner
Participant under Sections 8.02 and 8.03 hereof.
2.6 Registration, Transfer and Exchange. The Indenture Trustee will keep,
on behalf of the Owner Trustee, at each office or agency to be maintained for
the purpose as provided in Section 3.02 hereof a Register or Registers on which,
subject to such reasonable regulations as it may prescribe, it will register,
and will register the transfer of, Equipment Notes as provided in this Article.
Such Register shall be in written form in the English language or in any other
form capable of being converted into such form within a reasonable period of
time. Upon due presentation for registration of transfer of any Equipment Note
at any such office or agency, the Owner Trustee shall execute and the Indenture
Trustee shall authenticate and deliver in the name of the transferee or
transferees, in authorized denominations, a new Equipment Note or Equipment
Notes of the same Series, and with same principal amount, interest rate and
amortization schedule, for an equal aggregate principal amount; provided, that
such Equipment Note being transferred shall be canceled in accordance with
Section 2.08 hereof simultaneously with the issuance of the new Equipment Note.
Any Equipment Note or Equipment Notes may be exchanged for an Equipment Note or
Equipment Notes of the same Series but in other authorized denominations, in an
equal aggregate principal amount. Equipment Notes to be exchanged shall be
surrendered at any office or agency to be maintained by the Indenture Trustee
for the purpose as provided in Section 3.02 hereof, and the Owner Trustee shall
execute and the Indenture Trustee shall authenticate and deliver in exchange
therefor the Equipment Note or Equipment Notes which the Holder making the
exchange shall be entitled to receive, bearing numbers not contemporaneously or
previously outstanding.
All Equipment Notes presented for registration of transfer, exchange,
prepayment or payment shall (if so required by the Owner Trustee or the
Indenture Trustee) be duly endorsed by, or be accompanied by a written
instrument or instruments of transfer in form satisfactory to the Owner Trustee
and the Indenture Trustee duly executed by the Holder or its attorney duly
authorized in writing and (except in the case of transfers pursuant to Article
13 of the Participation Agreement) the Indenture Trustee may require evidence
satisfactory to it as to the compliance of any such transfer with the Securities
Act. The Indenture Trustee may require payment from the Holder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any exchange or registration of transfer of Equipment Notes. No
service charge shall be levied for any such transaction. The Indenture Trustee
shall not be required to exchange or register a transfer of any Equipment Notes
(a) for a period of 15 days immediately preceding the first mailing of notice of
prepayment of such Equipment Notes or (b) with respect to which notice of
prepayment has been given pursuant to Section 6.03 hereof and such notice has
not been revoked. All Equipment Notes issued upon any transfer or exchange of
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Equipment Notes shall be valid obligations of the Owner Trustee, evidencing the
same debt, and entitled to the same security and benefits under this Indenture,
as the Equipment Notes surrendered upon such transfer or exchange. Any such
transferee of an Equipment Note, by its acceptance of an Equipment Note, agrees
to the provisions of the Participation Agreement applicable to Holders, and
shall be deemed to have covenanted to the parties to the Participation Agreement
as to the matters covenanted by the original Loan Participant in the
Participation Agreement.
2.7 Mutilated, Defaced, Destroyed, Lost and Stolen Equipment Notes. In
case any Equipment Note shall become mutilated, defaced or be apparently
destroyed, lost or stolen, the Owner Trustee in its discretion may execute, and
upon the written request of any Holder shall execute, and the Indenture Trustee
shall authenticate and deliver in replacement thereof, a new Equipment Note,
payable to the same Holder, bearing the same principal amount and interest rate
as the Equipment Note being replaced and bearing a number not contemporaneously
or previously outstanding, in exchange and substitution for the mutilated or
defaced Equipment Note, or in lieu of and substitution for the Equipment Note so
apparently destroyed, lost or stolen. In the case of any Equipment Note so
apparently destroyed, lost or stolen, the applicant for a substitute Equipment
Note shall furnish to the Owner Trustee and to the Indenture Trustee such
security or indemnity as may be required by them to indemnify and defend and to
hold each of them harmless and evidence to their satisfaction of the apparent
destruction, loss or theft of such Equipment Note and of the ownership thereof.
Upon the issuance of any substitute Equipment Note, the Owner Trustee or
the Indenture Trustee may require payment from the Holder of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses incurred in connection therewith. In
case any Equipment Note which has matured or is about to mature, or has been
called for prepayment in full, shall become mutilated or defaced or be
apparently destroyed, lost or stolen, the Owner Trustee may, instead of issuing
a substitute Equipment Note, pay or authorize the payment of the same (without
surrender thereof except in the case of a mutilated or defaced Equipment Note),
if the applicant of any Equipment Note so apparently destroyed, lost or stolen,
for such payment shall furnish to the Owner Trustee and to the Indenture Trustee
such security or indemnity as any of them may require to hold each of them
harmless and the applicant shall also furnish to the Owner Trustee and the
Indenture Trustee evidence to their satisfaction of the apparent destruction,
loss or theft of such Equipment Note and of the ownership thereof.
Every substitute Equipment Note issued pursuant to the provisions of this
Section by virtue of the fact that any Equipment Note is apparently destroyed,
lost or stolen shall constitute an original additional contractual obligation of
the Owner Trustee, whether or not the apparently destroyed, lost or stolen
Equipment Note shall be enforceable at any time by anyone and shall be entitled
to all the security and benefits of (but shall be subject to all the limitations
of rights set forth in) this
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Indenture equally and proportionately with any and all other Equipment Notes
duly authenticated and delivered hereunder. All Equipment Notes shall be held
and owned upon the express condition that, to the extent permitted by law, the
foregoing provisions are exclusive with respect to the replacement or payment of
mutilated, defaced, or apparently destroyed, lost or stolen Equipment Notes and
shall preclude any and all other rights or remedies notwithstanding any law or
statute existing or hereafter enacted to the contrary with respect to the
replacement or payment of negotiable instruments or other securities without
their surrender.
2.8 Cancellation of Equipment Notes; Destruction Thereof. All Equipment
Notes surrendered for payment, prepayment, registration of transfer or exchange,
if surrendered to the Owner Trustee or any agent of the Owner Trustee or the
Indenture Trustee, shall be delivered to the Indenture Trustee for cancellation
or, if surrendered to the Indenture Trustee, shall be canceled by it; and no
Equipment Notes shall be issued in lieu thereof except as expressly permitted by
any of the provisions of this Indenture. The Indenture Trustee shall destroy
cancelled Equipment Notes held by it and deliver a certificate of destruction to
the Owner Trustee. If the Owner Trustee shall acquire any of the Equipment
Notes, such acquisition shall not operate as a prepayment or satisfaction of the
indebtedness represented by such Equipment Notes unless and until the same are
delivered to the Indenture Trustee for cancellation.
2.9 Termination of Interest in Trust Indenture Estate. A Holder shall not,
as such, have any further interest in, or other right with respect to, the Trust
Indenture Estate when and if the principal amount of and Make-Whole Premium, if
any, and interest on and other amounts due under all Equipment Notes held by
such Holder and all other sums payable to such Holder hereunder and under the
other Operative Agreements shall have been paid in full.
2.10 Equipment Notes in Respect of Replacement Aircraft. Upon the
execution and delivery of a supplement to this Indenture covering a Replacement
Airframe and/or Replacement Engine, as provided in Section 9.09 hereof, each
Equipment Note shall be deemed to have been issued in connection with such
Replacement Airframe and/or Replacement Engine and (in the case of a Replacement
Airframe) each Equipment Note issued thereafter upon a transfer or exchange of,
or as a replacement for, an Equipment Note, shall be designated as having been
issued in connection with such Replacement Airframe, but without any other
change therein except as provided for in this Article II.
2.11 Assumption of Obligations Under Equipment Notes and Other Operative
Agreements. If, in accordance with and subject to the satisfaction of the
conditions set forth in Section 5.10 of the Participation Agreement, the Lessee
shall
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assume all of the obligations of the Owner Trustee hereunder, under the
Equipment Notes, and under all other Operative Agreements, the Owner Participant
and the Owner Trustee shall be released and discharged from any further
obligations hereunder and under the Equipment Notes and all other Operative
Agreements (except for any recourse obligations of the Owner Participant or the
Owner Trustee in its individual capacity with respect to matters arising out of
events occurring prior to such assumption).
2.12 Subordination.
(a) The Owner Trustee and, by acceptance of its Equipment Notes of any
Series, each 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 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
clause (iv), (v) or (vi) of Section 7.01 hereof, except as expressly provided in
Article V hereof.
(b) By the acceptance of its Equipment Notes of any Series (other than
Series A), each Holder of such Series agrees that in the event that such Holder,
in its capacity as a 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 2.12 or Article V hereof, it will hold any amount so
received in trust for the Senior Holder (as defined in Section 2.12(c) hereof)
and will forthwith turn over such payment to the Indenture Trustee in the form
received to be applied as provided in Article V hereof.
(c) As used in this Section 2.12, the term "Senior Holder" shall mean, (i)
the Holders of Series A Equipment Notes 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
Holders of Series B Equipment Notes until the Secured Obligations in respect of
Series B Equipment Notes have been paid in full, (iii) after the Secured
Obligations in respect of Series B Equipment Notes have been paid in full, the
Holders of Series C Equipment Notes until the Secured Obligations in respect of
Series C Equipment Notes have been paid in full, and (iv) after the Secured
Obligations in respect of Series C Equipment Notes have been paid in full, the
Holders of Series D Equipment Notes until the Secured Obligations in respect of
Series D Equipment Notes have been paid in full.
ARTICLE III
COVENANTS
3.1 Payment of Principal, Make-Whole Premium and Interest. The Owner
Trustee covenants and agrees that it will, subject to Section 2.05 hereof, duly
and punctually pay or cause to be paid the principal of, and interest and Make-
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Whole Premium, if any, and all other amounts due on, each of the Equipment Notes
and under this Indenture at the place or places, at the respective times and in
the manner provided in this Indenture and in the Equipment Notes.
3.2 Offices for Payments, etc. So long as any of the Equipment Notes
remain outstanding, the Indenture Trustee will maintain the following: (a) an
office or agency where the Equipment Notes may be presented for payment and (b)
a facility or agency where the Equipment Notes may be presented for registration
of transfer and for exchange and for prepayment as provided in this Indenture
(the "Registrar"). The Registrar shall keep a register (the "Register") with
respect to the Equipment Notes and their transfer and exchange. The Indenture
Trustee may appoint one or more co-registrars ("Co-Registrars") for the
Equipment Notes and may terminate any such appointment at any time upon written
notice. The term "Registrar" includes any Co-Registrar. The Indenture Trustee
shall initially act as Registrar.
3.3 Appointment to Fill a Vacancy in Office of Indenture Trustee. The
Owner Trustee, whenever necessary to avoid or fill a vacancy in the office of
Indenture Trustee, will, with the consent of the Lessee, appoint, in the manner
provided in Section 12.02 hereof, an Indenture Trustee, so that there shall at
all times be an Indenture Trustee hereunder.
3.4 Paying Agents. Whenever the Indenture Trustee in its sole discretion
shall appoint a paying agent (the "Paying Agent"), it will cause the Paying
Agent to execute and deliver an instrument in which the Paying Agent shall agree
with the Indenture Trustee, subject to the provisions of this Section:
(a) that it will hold all sums received by it as such agent for the
payment of the principal of, and interest and Make-Whole Premium, if any,
on the Equipment Notes (whether such sums have been paid to it by the
Indenture Trustee or the Owner Trustee) in trust for the benefit of the
Holders or of the Indenture Trustee, and
(b) that it will give the Indenture Trustee notice of any failure by
the Owner Trustee to make any payment of the principal of or interest or
Make-Whole Premium, if any, on the Equipment Notes when the same shall be
due and payable.
Anything in this Section to the contrary notwithstanding, the agreements
to hold sums in trust as provided in this Section are subject to the provisions
of Sections 14.03 and 14.04 hereof.
3.5 Covenants of the Owner Trustee.
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(a) The Owner Trustee hereby covenants and agrees as follows:
(i) in the event a Responsible Officer of the Owner Trustee shall
have actual knowledge of an Indenture Event of Default, an Indenture
Default or an Event of Loss, the Owner Trustee will give prompt written
notice of such Indenture Event of Default, Indenture Default or Event of
Loss to the Indenture Trustee, the Lessee and the Owner Participant;
(ii) the Owner Trustee will furnish to the Indenture Trustee,
promptly upon receipt thereof by a Responsible Officer of the Owner
Trustee, 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 from an insurer or an insurance broker received
pursuant to Section 9 of the Lease, to the extent that the Operative
Agreements do not provide that the same shall be furnished to the
Indenture Trustee;
(iii) the Owner Trustee will not enter into any business or other
activity other than the business of owning the Aircraft, the leasing
thereof to the Lessee and the carrying out of the transactions
contemplated hereby and by the Lease, the Participation Agreement, the
Trust Agreement and the other Indenture Documents; and
(iv) except as contemplated by the Operative Agreements, the Owner
Trustee will not contract for, create, incur or assume any debt, and will
not guarantee (directly or indirectly or by an instrument having the
effect of assuring another's payment or performance on any obligation or
capability of so doing, or otherwise), endorse or otherwise take action to
become contingently liable, directly or indirectly, in connection with the
debt of any other Person.
3.6 [Reserved]
3.7 Disposal of Trust Indenture Estate. At any time and from time to time
any part of the Trust Indenture Estate may be sold or disposed of in accordance
with the provisions of this Indenture and the Lease. The Indenture Trustee
shall, from time to time, release any part of the Trust Indenture Estate so sold
or disposed of or as to which an Event of Loss has occurred or as to which the
Lease has been terminated from the Lien of this Indenture. In addition, to the
extent that such property constitutes an Airframe or Engine, the further
requirements of Section 9.08 hereof shall be satisfied.
3.8 No Representations or Warranties as to Aircraft or Documents. NEITHER
THE INDENTURE TRUSTEE NOR THE OWNER TRUSTEE NOR
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TRUST COMPANY NOR THE OWNER PARTICIPANT MAKES OR SHALL BE DEEMED TO HAVE MADE
ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE,
AIRWORTHINESS, WORKMANSHIP, VALUE, CONDITION, DESIGN, COMPLIANCE WITH
SPECIFICATIONS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR USE OR PURPOSE OF
THE AIRCRAFT OR ANY ENGINE, 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 WHATSOEVER, except that Trust Company warrants that on
the Delivery Date (a) the Owner Trustee shall have received whatever title was
conveyed to it by the Seller, and (b) the Aircraft shall be free and clear of
Lessor's Liens attributable to Trust Company. Neither 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 Document or as to the
correctness of any statement contained in any thereof, except for the
representations and warranties of Trust Company and the Indenture Trustee made
under this Indenture or in the Participation Agreement.
3.9 Further Assurances; Financing Statements. At any time and from time to
time, upon the request of the Indenture Trustee, the Lessee or the Owner
Trustee, at the expense of the Lessee, the Owner Trustee shall promptly and duly
execute and deliver any and all such further instruments and documents as may be
specified (and in the form included) in such request and as are reasonably
necessary or advisable to perfect, preserve or protect the Liens 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 granted herein, 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 Liens or assignments
created or intended to be created hereby.
ARTICLE
IV
HOLDER LISTS
4.1 Holder Lists: Ownership of Equipment Notes.
(a) The Indenture Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of the names and
addresses of the Holders. If the Indenture Trustee is not the Registrar, the
Registrar shall furnish to the Indenture Trustee semi-annually not more than ten
days after each Record Date, as of such Record Date, or at such other times as
the Indenture Trustee may request in
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writing, a list, in such form and as of such date as the Indenture Trustee may
reasonably require, containing all the information in the possession or control
of the Registrar as to the names and addresses of the Holders and the amounts
and Maturities of the Equipment Notes held by such Holders.
(b) Ownership of the Equipment Notes shall be proved by the Register kept
by the Registrar.
ARTICLE V
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
5.1 Basic Rent Distribution. Except as otherwise provided in Section 5.03
hereof, each installment of Basic Rent, any payment of interest on overdue
installments of Basic Rent and any payment received by the Indenture Trustee
pursuant to Section 8.03(a) hereof and shall be distributed by the Indenture
Trustee no later than the time herein provided 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 principal and interest (as well
as any interest on any overdue principal and, to the extent
permitted by applicable law, on any overdue interest) then due under
all Series A Equipment Notes shall be distributed to the Holders of
Series A Equipment Notes 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 paragraph (i) above, so much of such
installment or payment as shall be required to pay in full the
aggregate amount of principal and interest (as well as any interest
on any overdue principal and, to the extent permitted by applicable
law, on any overdue interest) then due under all Series B Equipment
Notes shall be distributed to the Holders of Series B Equipment
Notes 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 paragraph (ii) above, so much of such
installment or payment as shall be required to pay in full the
aggregate amount of principal and interest (as well as any interest
on any overdue
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principal and, to the extent permitted by applicable law, on any
overdue interest) then due under all Series C Equipment Notes shall
be distributed to the Holders of Series C Equipment Notes 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 paragraph (iii) above, so much of such
installment or payment as shall be required to pay in full the
aggregate amount of principal and interest (as well as any interest
on any overdue principal and, to the extent permitted by applicable
law, on any overdue interest) then due under all Series D Equipment
Notes shall be distributed to the Holders of Series D Equipment
Notes 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 or as otherwise
directed in writing by the Owner Trustee for distribution pursuant
to the Trust Agreement; provided, however, that if an Event of
Default shall have occurred and be continuing, then such balance
shall not be distributed as provided in this clause "second" but
shall be held by the Indenture Trustee as part of the Trust
Indenture Estate and invested in accordance with Section 5.08 hereof
until whichever of the following shall first occur: (i) all Events
of Default shall have been cured or waived, in which event such
balance shall be distributed as provided in this clause "second",
(ii) Section 5.03 hereof shall be applicable, in which event such
balance shall be distributed in accordance with the provisions of
such Section 5.03, or (iii) the 120th day after the receipt of such
payment in which case such payment shall be distributed as provided
in this clause "second".
5.2 Event of Loss and Replacement; Prepayment.
(a) Except as otherwise provided in Section 5.03 hereof, any payment received by
the Indenture Trustee as the result of or in connection with an Event of Loss
with respect to the Aircraft (and with respect to which the Lessee has not made
the replacement election in Section 8(a)(i) of the Lease) or as the result of,
or in connection with any event under the Lease giving rise to, a prepayment
pursuant to Section 6.02 hereof, shall be promptly distributed by the Indenture
Trustee in the following order of priority:
first, (i) to reimburse the Indenture Trustee and the Holders for any costs
or expenses reasonably incurred in connection with such prepayment
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and (b) then to pay any other similar amounts then due to the other
Indenture Indemnitees;
second, (ii) to pay the amounts specified in paragraph (i) of clause "third"
of Section 5.03 hereof then due and payable in respect of the Series
A Equipment Notes;
(iii) after giving effect to paragraph (i) above, to pay the amounts
specified in paragraph (ii) of clause "third" of Section 5.03 hereof
then due and payable in respect of the Series B Equipment Notes;
(iv) after giving effect to paragraph (ii) above, to pay the amounts
specified in paragraph (iii) of clause "third" of Section 5.03
hereof then due and payable in respect of the Series C Equipment
Notes; and
(v) after giving effect to paragraph (iii) above, to pay the amounts
specified in paragraph (iv) of clause "third" of Section 5.03 hereof
then due and payable in respect of the Series D Equipment Notes;
provided, that payments pursuant to this clause "second" shall be
made without the payment of Make-Whole Premium; and
third, as provided in clause "fourth" of Section 5.03 hereof;
provided that if a Replacement Airframe shall be substituted for an Airframe
subject to an Event of Loss as provided in Section 8(a)(i) of the Lease and
Section 9.08 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 and, unless otherwise applied pursuant to Section
5.01 or 5.03 hereof, such proceeds shall be released to the Lessee upon the
release of such damaged Airframe and the replacement thereof as provided herein
and in the Lease.
(b) Any amounts received directly or indirectly from any governmental
authority, insurer or other party pursuant to any provision of Section 8 or 9 of
the Lease as the result of loss or damage not constituting an Event of Loss with
respect to the Aircraft, or as a result of such loss or damage constituting an
Event of Loss if and to the extent that such amounts would at the time be
required to be paid to the Lessee pursuant to Section 8 or 9 but for the fact
that a Specified Default exists shall be held by the Indenture Trustee as
security for the obligations of the Lessee under the Lease and the Participation
Agreement and shall be invested in accordance with the terms of Section 5.08
hereof and at such time as the conditions for payment to the Lessee specified in
Section 8 or 9, as the case may be, shall be fulfilled and no Specified Default
exists, such amount, and the proceeds of any investment thereof, shall, to the
extent not theretofore applied, be paid to the Lessee to the extent provided in
the Lease.
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5.3 Payment After Indenture Event of Default, etc. Except as otherwise
provided in Sections 5.02(b), 5.04(b), 5.04(c) and 5.05 hereof, all payments
(other than Excepted Payments) received and all amounts held or realized by the
Indenture Trustee after an Indenture Event of Default shall have occurred and be
continuing and the Equipment Notes shall have become due and payable as provided
in Section 7.02(b) or (c) hereof, shall be promptly distributed by the Indenture
Trustee in the following order of priority:
first, so much of such payments or amounts as shall be required to pay or
reimburse (i) the Indenture Trustee for any tax (except to the
extent resulting from a failure of the Indenture Trustee to withhold
pursuant to Section 5.09 hereof), 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 7.03(b) hereof) incurred by the
Indenture Trustee (to the extent not previously reimbursed), the
expenses of any sale, taking or other proceeding, attorneys' fees
and expenses, court costs, and any other expenditures incurred or
expenditures or advances made by the Indenture Trustee or the
Holders in the protection, exercise or enforcement of any right,
power or remedy or any damages sustained by the Indenture Trustee or
the Holders, liquidated or otherwise, upon such Indenture Event of
Default, shall be applied by the Indenture Trustee as between itself
and the Holders in reimbursement of such expenses and (ii) all
similar amounts payable to the other Indenture Indemnitees hereunder
and under the Participation Agreement; and in the case the aggregate
amount to be so distributed is insufficient to pay as set forth in
this clause "first", then ratably, without priority of one over the
other, in proportion to the amounts owed each hereunder;
second, so much of such payments or amounts remaining as shall be required
to reimburse the then existing or prior Holders for payments made
pursuant to Section 9.03(d) hereof (to the extent not previously
reimbursed) shall be distributed to such then existing or prior
Holders ratably, without priority of one over the other, in
accordance with the amount of the payment or payments made by each
such then existing or prior Holder pursuant to said Section 9.03(d)
hereof;
third, (i) so much of such payments or amounts remaining as shall be
required to pay in full the aggregate unpaid principal amount of all
Series A Equipment Notes, and the accrued but unpaid interest and
other amounts due thereon and all other Secured Obligations (other
than Make-Whole Premium) in respect of the Series A Equipment Notes
to the date of distribution, shall be distributed to the Holders of
Series A Equipment Notes, and in case the aggregate amount so to be
distributed shall be insufficient to pay in full as aforesaid, then
ratably, without priority of one over the
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other, in the proportion that the aggregate unpaid Principal Amount
of all Series A Equipment Notes held by each Holder plus the accrued
but unpaid interest and other amounts due hereunder or thereunder
(other than Make-Whole Premium) 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 (other than Make-Whole Premium) 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 (other than Make-Whole
Premium) in respect of the Series B Equipment Notes to the date of
distribution, shall be distributed to the Holders of Series B
Equipment Notes, 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
Premium) 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 (other than Make-Whole Premium) 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 (other than Make-Whole
Premium) in respect of the Series C Equipment Notes to the date of
distribution, shall be distributed to the Holders of Series C
Equipment Notes, 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
Premium) 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 (other than Make-Whole Premium) 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
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the accrued but unpaid interest and other amounts due thereon and
all other Secured Obligations (other than Make-Whole Premium) in
respect of the Series D Equipment Notes to the date of distribution,
shall be distributed to the Holders of Series D Equipment Notes, 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 Premium) 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 (other
than Make-Whole Premium) to the date of distribution;
(it being understood that amounts payable under this clause "third"
shall not in any event include Make-Whole Premium); 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.
5.4 Certain Payments.
(a) Any payments received by the Indenture Trustee which are to be held or
applied according to any provision in any other Indenture Document shall be held
or applied thereunder in accordance therewith, except to the extent this
Indenture expressly provides for such payments to be held or applied in a
different manner.
(b) Notwithstanding anything to the contrary contained in this Article V,
the Indenture Trustee will distribute, promptly upon receipt, any indemnity or
other payment received by it from the Owner Trustee or the Lessee in respect of
(i) the Indenture Trustee in its individual capacity, (ii) the Subordination
Agent, (iii) each Liquidity Provider, (iv) the Pass-Through Trustee, and (v) any
other Indenture Indemnitee, in each case whether pursuant to Article 6 or 7 of
the Participation Agreement or as Supplemental Rent, directly to the Person
(which may include the Indenture Trustee) entitled thereto. Any payment received
by the Indenture Trustee under clause (b) of the last paragraph of Section 2.04
shall be distributed to the Subordination Agent to be distributed in accordance
with the terms of the Intercreditor Agreement.
(c) Notwithstanding anything to the contrary contained herein, any sums
received by the Indenture Trustee which constitute Excepted Payments shall be
distributed promptly upon receipt by the Indenture Trustee directly to the
Person or Persons entitled thereto.
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(d) Notwithstanding any provision of this Indenture to the contrary, any
amounts held by Indenture Trustee pursuant to the terms of the Lease shall be
held by the Indenture Trustee as security for the obligations of Lessee under
the Indenture Documents and, if and when required by the Lease, paid and/or
applied in accordance with the applicable provisions of the Lease.
5.5 Other Payments. Any payments received by the Indenture Trustee for
which no provision as to the application thereof is made elsewhere in this
Indenture or in any other Indenture Document shall be distributed by the
Indenture Trustee (a) to the extent received or realized at any time prior to
the payment in full of all obligations to the Holders, in the order of priority
specified in Section 5.01 hereof, and (b) to the extent received or realized at
any time after payment in full of all obligations to the Holders, in the
following order of priority:
first, in the manner provided in clause "first" of Section 5.03 hereof, and
second, in the manner provided in clause "fourth" of Section 5.03 hereof.
Further, and except as otherwise provided in Sections 5.02, 5.03 and 5.04
hereof, all payments received and amounts realized by the Indenture Trustee
under the Lease or otherwise with respect to the Aircraft (including, without
limitation, all amounts realized upon the sale or release of the Aircraft after
the termination of the Lease with respect thereto), to the extent received or
realized at any time after payment in full of all Secured Obligations, shall be
distributed by the Indenture Trustee in the order of priority specified in
clause (b) of the immediately preceding sentence of this Section 5.05.
5.6 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 immediately available 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 hereunder for distribution in accordance with the Trust Agreement shall
be distributed by wire transfer of immediately available funds of the type
received by the Indenture Trustee to such account of the Owner Participant as
may be specified pursuant to Section 4.02 of the Trust Agreement.
5.7 Application of Payments. Each payment of principal of and interest or
other amounts due on each Equipment Note shall, except as otherwise provided
herein, be applied,
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first, to the payment of interest on such Equipment Note due and payable to
the date of such payment, as provided in such Certificate, as well
as any interest on overdue principal and Make-Whole Premium, if any,
and, to the extent permitted by law, interest and other amounts due
thereunder,
second, the payment of any other amount (other than the principal of such
Equipment Note), including any Make-Whole Premium, due hereunder to
the Holder of such Equipment Note or under such Equipment Note; and
third, to the payment of the principal of such Equipment Note if then due
hereunder or under such Equipment Note.
5.8 Investment of Amounts Held by Indenture Trustee. Amounts held by the
Indenture Trustee pursuant to Section 5.02(b) hereof or pursuant to any
provision of any Indenture Document providing for investment by the Indenture
Trustee of sums pursuant to Section 15 of the Lease or this Section 5.08 shall
be invested by the Indenture Trustee from time to time in securities selected by
(i) so long as no Event of Default shall have occurred and be continuing, the
Lessee (and in the absence of written direction by the Lessee, the Indenture
Trustee shall invest such monies in direct obligations of the United States of
America) or (ii) so long as an Event of Default shall have occurred and be
continuing, the Indenture Trustee and in each case shall be of the type meeting
the criteria for Permitted Investments. Unless otherwise expressly provided in
this Indenture, any income realized as a result of any such investment, net of
the Indenture Trustee's reasonable fees and expenses in making such investment,
shall be held and applied by the Indenture Trustee in the same manner as the
principal amount of such investment is to be applied and any losses, net of
earnings and such reasonable fees and expenses, shall be charged against the
principal amount invested. The Lessee shall be responsible for and will promptly
pay to the Indenture Trustee or the Owner Trustee, as the case may be, on
demand, the amount of any loss realized as the result of any such investment
(together with any fees, commissions and other costs and expenses, if any,
incurred by the Indenture Trustee or the Owner Trustee in connection with such
investment), such amount to be disposed of in accordance with the terms hereof
or the Lease, as the case may be. The Indenture Trustee shall not be liable for
any loss resulting from any investment made by it or any investment sold by it
under this Indenture in accordance with instructions from the Lessee 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.
Unless otherwise confirmed in writing, an account statement delivered by
the Indenture Trustee to the Owner Trustee (with a copy to the Lessee) shall be
deemed written confirmation by the Owner Trustee that the investment
transactions identified therein accurately reflect the investment directions
given to the Indenture Trustee by
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or on behalf of the Lessee, unless the Lessee notifies the Indenture Trustee in
writing to the contrary within 30 days of the date of receipt of such statement.
5.9 Withholding Taxes. The Indenture Trustee, as agent for the Owner
Trustee, shall exclude and withhold from each payment of principal, premium, if
any, and interest and other amounts due hereunder or under the Equipment Notes,
any and all 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 taxes or similar charges are required
to be withheld with respect to any amounts payable in respect of the Equipment
Notes, it will withhold such amounts and timely pay the same to the appropriate
authority in the name of and on behalf of the Holders, 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 Holder
appropriate documentation showing the payment thereof, together with such
additional documentary evidence as such Holder may reasonably request from time
to time.
ARTICLE
VI
PREPAYMENT OF EQUIPMENT NOTES
6.1 No Prepayment Except as Specified. Except as provided in Sections 6.02
and 8.02 hereof, the Equipment Notes may not be prepaid.
6.2 Prepayment of Equipment Notes.
(a) The Outstanding Equipment Notes shall be prepaid in full and not in
part:
(i) If an Event of Loss occurs with respect to the Airframe or
with respect to the Airframe and the Engines or engines then installed on
the Airframe (unless pursuant to Section 8(a)(i) of the Lease and Section
9.08 hereof replacement equipment is substituted therefor);
(ii) If the Lessee, pursuant to Section 13(b) of the Lease,
gives notice of purchase of the Aircraft (and Section 2.11 hereof is not
applicable in connection with such purchase);
(iii) If the Owner Participant, or the Owner Trustee on behalf
of the Owner Participant, gives notice of prepayment to the Indenture
Trustee pursuant to Section 8.02 hereof;
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(iv) If the Lessee, pursuant to Section 14(a) of the Lease,
gives notice of a voluntary termination for obsolescence or surplus, but
subject to Section 6.02(c) below;
(v) Pursuant to Section 13.01 of the Participation Agreement
in connection with a refinancing of the Equipment Notes, but subject to
Section 6.02(c) below; or
(vi) At the option of the Owner Trustee, with the prior
written consent of the Lessee and the Owner Participant, upon not less
than 25 days' prior written notice.
(b) In the event of a prepayment of the Equipment Notes pursuant to
Sections 6.02(a)(ii), (iv) or (v) above, the Owner Trustee, a Responsible
Officer of which having received notice from the Lessee in accordance with and
subject to the terms of Section 13(b) or 14(a) of the Lease or Article 13 of the
Participation Agreement, as the case may be, shall give written notice to the
Indenture Trustee and to the Holders of all of the Equipment Notes specifying
the Business Day on which the Equipment Notes shall be prepaid. In the case of a
prepayment of the Equipment Notes pursuant to Section 6.02(a)(i) above, the
Equipment Notes shall be prepaid in full on the Termination Date specified in
Section 8(a)(ii) of the Lease. In the case of a prepayment of the Equipment
Notes pursuant to Section 6.02(a)(ii) above, the Equipment Notes shall be paid
in full on the EBO Date. In the case of a prepayment of the Equipment Notes
pursuant to Section 6.02(a)(iii) above, the Equipment Notes shall be prepaid in
full on the date so designated in the notice referred to in Section 8.02 hereof.
In the case of a prepayment of the Equipment Notes pursuant to Section
6.02(a)(iv) above, the Equipment Notes shall be prepaid in full on the
Termination Date specified in Section 14(a) of the Lease. In the case of a
prepayment of the Equipment Notes pursuant to Section 6.02(a)(v) above, the
Equipment Notes shall be prepaid on the effective date of the Refinancing. In
the case of a prepayment of the Equipment Notes pursuant to Section 6.02(a)(vi)
above, the Equipment Notes shall be prepaid on the date designated in the notice
referred to therein. The day on which the Equipment Notes are to be prepaid
pursuant to this Section 6.02(b) is herein referred to as the "Prepayment Date".
On or prior to the Prepayment Date, immediately available funds shall be
deposited with the Indenture Trustee in an amount in respect of the Equipment
Notes equal to:
(1) if such prepayment is made pursuant to Section
6.02(a)(i) or (iii) (if clause (i), but not clause (ii) or clause (iii) of
the first sentence of Section 8.02(a) of the Indenture is applicable and
such prepayment is made when an Event of Default has occurred and been
continuing for 180 days or more, or if clause (ii) or clause (iii) of the
first sentence of Section 8.02(a) hereof is applicable), the sum of (A)
the aggregate principal amount of such Equipment Notes then Outstanding,
(B) accrued interest on the Equipment
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Notes to the Prepayment Date and (C) all other aggregate sums due the
Indenture Trustee hereunder or under the Participation Agreement or the
Lease, but excluding any Make-Whole Premium or other premium or penalty,
or
(2) if such prepayment is made pursuant to Section
6.02(a)(ii) or (iii) (if clause (i), but not clause (ii) or clause (iii)
of the first sentence of Section 8.02(a) of the Indenture is applicable
and such prepayment is made when an Event of Default has occurred and been
continuing for less than 180 days) 6.02(a)(iv), 6.02(a)(v) or 6.02(a)(vi)
above, the sum of the amounts specified in clauses (A), (B) and (C) of the
preceding clause (1) plus any Make-Whole Premium payable in respect of all
Equipment Notes
(the aggregate amount required to be paid pursuant to this sentence being herein
referred to as the "Prepayment Price").
(c) Notwithstanding the foregoing provisions of this Section 6.02, if (x)
a prepayment notice has been given in respect of Section 6.02(a)(iv) and no
termination of the Lease actually occurs or (y) a prepayment notice has been
given in respect of Section 6.02(a)(v) and no refinancing shall occur pursuant
to Article 13 of the Participation Agreement, any notice of prepayment given
pursuant to Section 6.02(b) in respect thereof shall be deemed revoked.
6.3 Notice of Prepayment to Holders. In order to effect any prepayment set
forth in Section 6.02(a) hereof, the Indenture Trustee shall give prompt notice
by first class mail of prepayment to each Holder. Any notice of prepayment given
by the Owner Trustee shall be irrevocable except (x) as provided in Section
6.02(c) or (y) in the case of a notice given pursuant to Section 6.02(a)(vi),
which notice may be revoked by the Owner Trustee at any time on or before the
third Business Day preceding the Prepayment Date by prompt notice to the
Holders.
All notices of prepayment shall state: (1) the Prepayment Date, (2) the
applicable basis for determining the Prepayment Price, (3) that on the
Prepayment Date, subject to the provisions hereof, the Prepayment Price will
become due and payable and interest on the Equipment Notes shall cease to accrue
on and after such Prepayment Date, and (4) the place or places where such
Equipment Notes are to be surrendered for payment.
6.4 Deposit of Prepayment Price. On the Prepayment Date, the Owner Trustee
shall, to the extent an amount equal to the Prepayment Price shall not then be
held in cash by the Indenture Trustee in immediately available funds and
deposited for the purpose, pay to the Indenture Trustee an amount equal to the
difference between (a) the amount then so held and (b) the Prepayment Price. If
there shall so be on deposit and/or deposited the applicable Prepayment Price on
or prior to a Prepayment Date, interest shall cease to accrue in respect of all
the Outstanding Equipment Notes on and after such Prepayment Date.
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6.5 Equipment Notes Payable on Prepayment Date. On the Prepayment Date,
the Outstanding Equipment Notes shall (except (A) if the Owner Trustee has
requested the Indenture Trustee to revoke such notice of prepayment in
accordance with Section 6.03 hereof or such notice is deemed to be revoked
pursuant to Section 6.02(c) hereof or (B) as otherwise provided in the Lease)
become due and payable and from and after such Prepayment Date (unless there
shall be a default in the payment of the Prepayment Price) such Equipment Notes
shall cease to bear interest. Upon surrender by any Holder of its Equipment Note
for prepayment in accordance with said notice, such Holder shall be paid the
principal amount of its Equipment Note then outstanding, accrued interest
thereon to the Prepayment Date, all other sums due to such Holder hereunder
plus, if a Make-Whole Premium is payable pursuant to Section 6.02(b) hereof, the
Make-Whole Premium in respect of such Equipment Certificate.
If any Equipment Note called for prepayment shall not be so paid upon
timely surrender thereof for prepayment, the principal shall, until paid,
continue to bear interest from the Prepayment Date at the interest rate
applicable to such Equipment Note.
ARTICLE
VII
INDENTURE EVENTS OF DEFAULT; REMEDIES
OF INDENTURE TRUSTEE AND HOLDERS
7.1 Indenture Event of Default. "Indenture Event of Default" means any of
the following events (whatever the reason for such Indenture Event of Default
and whether it 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):
(i) any Event of Default specified in Section 16 of the Lease (other
than an Event of Default arising solely as the result of the failure to
make an Excepted Payment unless the Owner Participant shall notify the
Indenture Trustee in writing that such failure shall constitute an
Indenture Event of Default); or
(ii) the failure of the Owner Trustee other than by reason of a
Default or an Event of Default (i) to pay principal, interest or
Make-Whole Premium, if any, on any Equipment Note when due, and such
failure shall have continued unremedied for ten Business Days after the
date when due or (ii) to pay any other amounts hereunder or under the
Equipment Notes when due and
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such failure shall have continued unremedied for a period of 30 days after
the Owner Trustee and the Owner Participant shall receive written demand
therefor from the Indenture Trustee or by any Holder; or
(iii) (A) any representation or warranty made by the Owner Trustee,
the Owner Participant or any Owner Participant Guarantor in any Operative
Agreement or in any certificate the Owner Trustee, the Owner Participant
or any Owner Participant Guarantor furnished to the Indenture Trustee or
any Holder in connection herewith or therewith or pursuant hereto or
thereto shall prove to have been false or incorrect in any material
respect when made and was and remains in any respect materially adverse to
the interests of the Holders and such misrepresentation shall not have
been corrected within 30 days following notice thereof identified as a
"Notice of Indenture Event of Default" being given to the Owner Trustee
and the Owner Participant by the Indenture Trustee or by a Majority in
Interest of Holders, unless such misrepresentation is capable of being
corrected, and Owner Trustee or Owner Participant shall, after the
delivery of such notice, be diligently proceeding to correct such
misrepresentation and shall in fact correct such misrepresentation within
60 days after delivery of such notice; or
(B) any (x) covenant made by the Owner Trustee in the fifth
paragraph following the Habendum Clause hereof or in Section 5.02(b) of
the Participation Agreement shall be breached in any material respect and
any such breach shall not be cured within 10 Business Days after the Owner
Participant has received notice thereof from any Holder or the Indenture
Trustee (for purposes of Section 7.02(b) of the Participation Agreement,
it being agreed that such breach may be cured by replacement of the Owner
Trustee), or (y) any other covenant made by the Owner Trustee, by the
Owner Participant or by any Owner Participant Guarantor in any Operative
Agreement shall be breached in any material respect and such breach shall
remain unremedied for a period of 30 days after there has been given to
the Owner Trustee and the Owner Participant by Holders holding not less
than a Majority in Interest of Holders a written notice identified as a
"Notice of Indenture Event of Default" specifying such breach and
requiring it to be remedied unless such failure is curable and the Owner
Trustee or the Owner Participant shall, after the delivery of such notice,
be diligently proceeding to correct such failure and shall in fact correct
such failure 60 days after delivery of such notice; or
(iv) the Owner Trustee, the Lessor's Estate, the Owner Participant
or any Owner Participant Guarantor shall file any petition or answer
seeking for itself any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any present
or future bankruptcy, insolvency or similar statute, law or regulation;
(v) an order for relief shall be entered in respect of the Owner
Trustee, the Owner Participant or any Owner Participant Guarantor or the
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Lessor's Estate by a court having jurisdiction in the premises in an
involuntary case under the federal bankruptcy laws as now or hereafter in
effect; or the Owner Trustee, the Owner Participant or any Owner
Participant Guarantor or the Lessor's Estate shall file any answer
admitting or not contesting the material allegations of a petition filed
against the Owner Trustee, the Owner Participant or any Owner Participant
Guarantor or the Lessor's Estate in any proceeding referred to in clause
(vi) below or seek or consent or acquiesce in the appointment of any
trustee, custodian, receiver or liquidator of the Owner Trustee, the Owner
Participant or any Owner Participant Guarantor or the Lessor's Estate, as
the case may be, or of all or any substantial part of its properties; or
(vi) without the consent or acquiescence of the Owner Trustee, the
Owner Participant or any Owner Participant Guarantor or the Lessor's
Estate, as the case may be, an order shall be entered constituting an
order for relief or approving a petition for relief or reorganization or
any other petition seeking any reorganization, arrangement, composition,
readjustment, liquidation, dissolution or other similar relief under any
present or future bankruptcy, insolvency or similar statute, law or
regulation, or if any such petition shall be filed against the Owner
Trustee, the Owner Participant or any Owner Participant Guarantor or the
Lessor's Estate, as the case may be, and such petition shall not be
dismissed within 60 days, or if, without the consent or acquiescence of
the Owner Trustee, the Owner Participant or any Owner Participant
Guarantor or the Lessor's Estate, as the case may be, an order shall be
entered appointing a trustee, custodian, receiver or liquidator of the
Owner Trustee, the Owner Participant or any Owner Participant Guarantor or
the Lessor's Estate, as the case may be, or of all or any substantial part
of the properties of the Owner Trustee, the Owner Participant or any Owner
Participant Guarantor or the Lessor's Estate, as the case may be, and such
order shall not be dismissed within 60 days;
7.2 Remedies.
(a) If an Indenture Event of Default shall have occurred and be continuing
and so long as the same shall be continuing unremedied, then and in every such
case, the Indenture Trustee may, and when required by the provisions of Article
IX or Section 7.02(c) hereof, shall (i) exercise any or all of the rights and
powers and pursue any and all of the remedies pursuant to this Article VII, and
(ii) in the event such Indenture Event of Default is an Indenture Event of
Default referred to in clause (i) of Section 7.01 hereof, exercise any and all
of the remedies pursuant to Section 17 of the Lease; provided that without the
consent of the Owner Trustee and the Owner Participant such exercise of remedies
shall not occur until after the latest date on which the Owner Trustee may cure
the related Event of Default pursuant to Section 8.03 hereof. The Indenture
Trustee may (subject to the provisions of the next succeeding paragraph) take
possession of all or any part of the properties covered or intended to be
covered by the Lien and security interest created hereby or pursuant hereto and
may exclude the Owner Participant, the Owner Trustee, the Lessee and any
transferee of the Lessee
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(subject to Section 15.05 hereof), and all Persons claiming under any of them
wholly or partly therefrom. In addition, the Indenture Trustee may (subject to
the provisions of the next succeeding paragraph) exercise any other right or
remedy in lieu of or in addition to the foregoing that may be available to it
under applicable law, or proceed by appropriate court action to enforce the
terms hereof, of the Lease, or both, or to rescind the Lease. 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 as a result of an
Indenture Event of Default which arises solely by reason of one or more events
or circumstances which constitute a Lease Event of Default unless the Indenture
Trustee as security assignee of the Owner Trustee shall have declared the Lease
to be in default and shall have exercised or concurrently be exercising one or
more of the dispossessory remedies provided for in Section 17 of the Lease with
respect to the Aircraft; provided, however, that such requirement to exercise
one or more of such remedies under the Lease shall not apply in circumstances
where the Indenture Trustee is, and has been, for a continuous period in excess
of 60 days or such other period as may be specified in Section 1110(a)(1)(A) of
the Bankruptcy Code (such 60-day or other period being the "Section 1110
Period"), involuntarily stayed or prohibited by applicable law or court order
from exercising such remedies under the Lease (a "Continuous Stay Period");
provided further, however, that the requirement to exercise one or more of such
remedies under the Lease shall nonetheless be applicable during a Continuous
Stay Period subsequent to the expiration of the Section 1110 Period to the
extent that the continuation of such Continuous Stay Period subsequent to the
expiration of the Section 1110 Period (A) results from an agreement by the
trustee or the debtor-in-possession in such proceeding during the Section 1110
Period with the approval of the relevant court to perform the Lease in
accordance with Section 1110(a)(1)(A) of the Bankruptcy Code and continues to
perform as required by Section 1110(a)(1)(A-B) of the Bankruptcy Code or (B) is
an extension of the Section 1110 Period with the consent of the Indenture
Trustee pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from
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 and
Lessee's continuous performance of the Lease as so assumed or (D) is the
consequence of the Indenture Trustee's own failure to give any requisite notice
to any person. In the event that the applicability of Section 1110 of the
Bankruptcy Code to the Aircraft is being contested by Lessee in judicial
proceedings, both of the Indenture Trustee and the Owner Trustee shall have the
right to participate in such proceedings; provided that any such participation
by the Owner Trustee shall not affect in any way any rights or remedy of the
Indenture Trustee hereunder.
(b) If an Indenture Event of Default under clause (i) (attributable to an
Event of Default under Section 16(f), (g) and (h) of the Lease), (iv), (v) or
(vi) of Section 7.01 hereof shall occur and be continuing, the unpaid principal
of all
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Outstanding Equipment Notes, together with interest accrued but unpaid thereon
and all other amounts due thereunder, but without Make-Whole Premium, shall
immediately become due and payable, without presentment, demand, protest or
notice, all of which are hereby waived.
(c) If any Indenture Event of Default not described in the preceding
paragraph (b) shall have occurred and be continuing, then and in every such
case, the Indenture Trustee may on its own accord or at the direction of a
Majority in Interest of Holders, at any time, by written notice to the Owner
Trustee, the Owner Participant and the Lessee, declare the principal of all the
Equipment Notes to be due and payable, whereupon the unpaid principal amount of
all Outstanding Equipment Notes, together with accrued interest thereon and all
other amounts due thereunder, but without Make-Whole Premium, shall immediately
become due and payable without presentment, demand, protest or other notice, all
of which are hereby waived. At any time after such declaration and prior to the
sale or disposition of the Trust Indenture Estate, however, a Majority in
Interest of Holders, by notice to the Indenture Trustee, the Owner Trustee and
the Lessee, may rescind such declaration, whether made by the Indenture Trustee
on its own accord or as directed, if (x) there has been paid or deposited with
the Indenture Trustee a sum sufficient to pay all overdue installments of
interest on all Equipment Notes (together, to the extent permitted by law, with
interest on such overdue installments of interest), the principal on any
Equipment Notes that would have become due otherwise than by such declaration of
acceleration, all sums paid or advanced by the Indenture Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee, its agents and counsel, or (y) all Indenture Events of
Default (other than the nonpayment of principal that has become due solely
because of such acceleration) have been either cured or waived as provided in
Section 7.11 hereof. No such rescission shall affect any subsequent default or
impair any right consequent thereon.
(d) Each Holder shall be entitled at any sale to credit against any
purchase price bid at such sale by such Holder all or any part of the unpaid
obligations owing to such Holder secured by the Lien of this Indenture (but only
to the extent that an amount equal to such purchase price would have been paid
to such Holder pursuant to Article V hereof if such purchase price were paid in
cash and the foregoing provisions of this subsection (d) were not given effect).
(e) In the event of any sale of the Trust Indenture Estate, or any part
thereof, pursuant to any judgment or decree of any court or otherwise in
connection with the enforcement of any of the term of this Indenture, the unpaid
principal amount of all Equipment Notes then outstanding, together with accrued
interest thereon (without Make-Whole Amount), and other amounts due thereunder,
shall immediately become due and payable without presentment, demand, protest or
notice, all of which are hereby waived.
(f) Notwithstanding anything contained herein, so long as the Pass Through
Trustee under any Pass Through Trust Agreement (or its designee) is a
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Holder, the Indenture Trustee will not be authorized or empowered to acquire
title to the Trust Indenture Estate or take any action with respect to the Trust
Indenture Estate so acquired by it if such acquisition or action would cause any
Trust to fail to qualify as a "grantor trust" for federal income tax purposes.
7.3 Return of Aircraft, etc.
(a) Subject to Section 7.02 hereof, if an Indenture Event of Default shall
have occurred and be continuing, at the request of the Indenture Trustee, the
Owner Trustee shall promptly execute and deliver to the Indenture Trustee such
documents as the Indenture Trustee may reasonably 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 to which the Indenture Trustee shall at the time be entitled
under this Indenture. Subject to the foregoing, if the Owner Trustee shall for
any reason fail to execute and deliver such documents after such request by the
Indenture Trustee, the Indenture Trustee may pursue all or part of such Trust
Indenture Estate wherever it may be found and enter any of the premises of the
Lessee or the Owner Trustee wherever such Trust Indenture Estate may be or be
supposed to be and search for such Trust Indenture Estate and take possession of
and remove such Trust Indenture Estate. All expenses of pursuing, searching for
and taking such Trust Indenture Estate shall, until paid, be secured by the Lien
of this Indenture.
(b) Upon every such taking of possession, the Indenture Trustee may, from
time to time, at the expense of the Trust Indenture Estate, make all such
expenditures for maintenance, use, operation, storage, insurance, leasing,
control, management, disposition, modification, alterations and repairs to and
of such Trust Indenture Estate, as the Indenture Trustee may reasonably deem
proper. In each case subject to Section 7.02 hereof, the Indenture Trustee shall
have the right to maintain, use, operate, store, insure, lease, dispose of,
modify, alter, control or manage the Trust Indenture Estate and to carry on the
business 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
may reasonably 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, modification, alteration or disposition of all or
any part of the Trust Indenture Estate as the Indenture Trustee may determine.
Further, 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 other than 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 under this Indenture
(other than Excepted Payments). Such tolls, rents (including Rent), revenues,
issues, income, products and profits shall be applied to pay the expenses of the
use, operation, storage, insurance, leasing, control, management, modification,
alteration or disposition of the Trust Indenture Estate, and of all maintenance
and repairs, and of conducting the business thereof, and to make all payments
which the Indenture Trustee may be required or may reasonably elect to
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make for any taxes, assessments, insurance or other proper charges upon the
Trust Indenture Estate (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 the Lessee), and all other payments which the Indenture
Trustee may be required or authorized to make under any provision of this
Indenture, as well as just and reasonable compensation for the services of the
Indenture Trustee and of all persons properly engaged and employed for such
purposes by the Indenture Trustee; provided, that any excess amounts shall be
promptly distributed in accordance with Section 5.03 hereof.
(c) Subject to Section 7.02 hereof, if an Indenture Event of Default shall
have occurred and be continuing and the Indenture Trustee shall be entitled to
exercise remedies hereunder, and subject to Article VIII hereof, the Indenture
Trustee, either with or without taking possession, and either before or after
taking possession, and without instituting any legal proceedings whatsoever, may
sell, assign, transfer and deliver the whole or, from time to time, to the
extent permitted by law, any part of the Trust Indenture Estate, or interest
therein, at any private sale or public auction to the highest bidder, with or
without demand, advertisement or notice, except that in respect of any private
sale 30 days' prior written notice by registered mail to the Owner Trustee and
the Owner Participant will be provided, for cash or, with the consent of the
Owner Trustee and the Owner Participant, credit or for other property, for
immediate or future delivery, and for such price or prices and on such terms as
the Indenture Trustee in exercising reasonable commercial discretion may
determine; provided, that any such action shall be at the time lawful and that
all mandatory legal requirements shall be complied with. Any notice required
pursuant to the terms hereof in the case of a public sale, shall state the time
and place fixed for such sale. Any such public sale shall be held at such time
or times within ordinary business hours as the Indenture Trustee shall fix in
the notice of such sale. At any such sale, the Trust Indenture Estate may be
sold in one lot as an entirety or in separate lots. The Indenture Trustee shall
not be obligated to make any sale pursuant to such notice. The Indenture Trustee
may, without notice or publication, adjourn any public or private sale or cause
the same to be adjourned from time to time by announcement at the time and place
fixed for such sale, and any such sale may be made at any time or place to which
the same may be so adjourned without further notice or publication. The
Indenture Trustee may exercise such right of sale without possession or
production of the Equipment Notes or proof of ownership thereof, and as
representative of the Holders may exercise such right without notice to the
Holders or without including the Holders as parties to any suit or proceedings
relating to the foreclosure of any part of the Trust Indenture Estate. The Owner
Trustee shall execute any and all such bills of sale, assignments and other
documents, and perform and do all other acts and things requested by the
Indenture Trustee in order to permit consummation of any sale of the Trust
Indenture Estate in accordance with this Section 7.03(c) and to effectuate the
transfer or conveyance referred to in the first sentence of this Section
7.03(c). Notwithstanding any other provision of this Indenture, the Indenture
Trustee shall not sell the Trust Indenture Estate or any part thereof unless the
Equipment Notes shall have been accelerated.
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(d) To the extent permitted by Applicable Law, and subject to Section 7.02
hereof, the Indenture Trustee or any Holder may be a purchaser of the Trust
Indenture Estate or any part thereof or any interest therein at any sale
thereof, whether pursuant to foreclosure or power of sale or otherwise. The
Indenture Trustee may apply against the purchase price therefor the amount then
due hereunder or under any of the Equipment Notes secured hereby and any Holder
may apply against the purchase price therefor the amount then due to it
hereunder, under any other Indenture Document or under the Equipment Notes held
by such Holder to the extent of such portion of the purchase price as it would
have received had it been entitled to share any distribution thereof. The
Indenture Trustee or any Holder or nominee thereof shall, upon any such
purchase, acquire good title to the property so purchased, free of the Lien of
this Indenture and, to the extent permitted by applicable law, free of all
rights of redemption in the Owner Trustee or the Owner Participant in respect of
the property so purchased.
(e) The Indenture Trustee shall, as a matter of right, be entitled to the
appointment of a receiver (who may be the Indenture Trustee or any successor or
nominee) 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
the taking of possession thereof or otherwise, and the Owner Trustee hereby
consents to the appointment of such receiver and will not oppose any such
appointment. Any receiver appointed for all or any part of the Trust Indenture
Estate shall be entitled to exercise all of the rights and powers of the
Indenture Trustee with respect to the Trust Indenture Estate.
(f) Subject to the provisions of this Indenture, to the extent permitted
by Applicable Law, upon the occurrence and during the continuation of an
Indenture Event of Default the Owner Trustee irrevocably appoints the Indenture
Trustee the true and lawful attorney-in-fact of the Owner Trustee (which
appointment is coupled with an interest) in its name and stead and on its
behalf, for the purpose of effectuating any sale, assignment, transfer or
delivery for the enforcement of the Lien of this Indenture, whether pursuant to
foreclosure or power of sale, assignments and other instruments as may be
necessary or appropriate, with full power substitution, the Owner Trustee hereby
ratifying and confirming all that such attorney or any substitute shall do by
virtue hereof in accordance with applicable law. Nevertheless, if so requested
by the Indenture Trustee or any purchaser, the Owner Trustee shall ratify and
confirm any such sale, assignment, transfer or delivery, by executing and
delivering to the Indenture Trustee or such purchaser all bills of sale,
assignments, releases and other proper instruments to effect such ratification
and confirmation as may be designated in any such request.
7.4 Indenture Trustee May Prove Debt. If the Owner Trustee shall fail to
pay any amount payable hereunder or under the Equipment Notes, the Indenture
Trustee, in its own name and as trustee of an express trust, shall be entitled
and empowered to institute any action or proceedings at law or in equity for the
collection of the sums so due and unpaid, and may prosecute any such action or
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proceedings to judgment or final decree, and may enforce any such judgment or
final decree against the Owner Trustee and collect in the manner provided by law
out of the property of the Owner Trustee wherever situated, the moneys adjudged
or decreed to be payable; provided, that any sale of any portion of the Trust
Indenture Estate shall be done in accordance with Sections 7.02 and 7.03(c)
hereof.
In case there shall be pending proceedings relative to the Owner Trustee
under the Bankruptcy Code or any other applicable Federal or state bankruptcy,
insolvency or other similar law, or in case a receiver, assignee or trustee in
bankruptcy or reorganization, liquidator, sequestrator or similar official shall
have been appointed for or taken possession of the Owner Trustee or its
property, or in case of any other comparable judicial proceedings relative to
the Owner Trustee, or to the creditors or property of the Owner Trustee, the
Indenture Trustee, irrespective of whether the principal of the Equipment Notes
shall then be due and payable as therein or herein expressed or by declaration
or otherwise and irrespective of whether the Indenture Trustee shall have made
any demand pursuant to the provisions of this Section, shall be entitled and
empowered, by intervention in such proceedings or otherwise:
(a) to file and prove a claim or claims for the whole amount
of principal, interest and other amounts owing and unpaid in respect of
the Equipment Notes or hereunder, and to file such other papers or
documents as may be necessary or advisable in order to have the claims of
the Indenture Trustee (including any claim for reasonable compensation to
the Indenture Trustee and each predecessor Indenture Trustee, and their
respective agents, attorneys and counsel, and for reimbursement of the
Indenture Trustee and each predecessor Indenture Trustee, except as a
result of negligence or bad faith) and of the Holders allowed in any
judicial proceedings relative to the Owner Trustee or to the creditors or
property of the Owner Trustee,
(b) unless prohibited by applicable law and regulations, to
vote on behalf of the Holders in any election of a trustee or a standby
trustee in arrangement, reorganization, liquidation or other bankruptcy or
insolvency proceedings or person performing similar functions in
comparable proceedings, and
(c) to collect and receive any moneys or other property
payable or deliverable on any such claims, and to distribute all amounts
received with respect to the claims of the Holders and of the Indenture
Trustee on their behalf;
and any trustee, receiver, or liquidator, custodian or other similar official is
hereby authorized by each of the Holders to make payments to the Indenture
Trustee, and, in the event that the Indenture Trustee shall consent to the
making of payments directly to the Holders, to pay to the Indenture Trustee such
amounts as shall be sufficient to cover reasonable compensation to the Indenture
Trustee, each predecessor Indenture Trustee and their respective agents,
attorneys and counsel, and all other expenses and
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liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence or willful
misconduct.
Nothing contained herein shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Holder any plan of reorganization, arrangement, adjustment or composition
affecting the Equipment Notes or the rights of any Holder thereof, or to
authorize the Indenture Trustee to vote in respect of the claim of any Holder in
any such proceeding except, as aforesaid, to vote for the election of a trustee
in bankruptcy or similar person.
All rights of action and rights to assert claims under this Indenture, or
under any of the Equipment Notes, may be enforced by the Indenture Trustee
without the possession of such Equipment Notes. Any trial or other proceedings
instituted by the Indenture Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents and attorneys, shall
be for the ratable benefit of the Holders, as provided herein.
In any proceedings brought by the Indenture Trustee (and also any
proceedings involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party) the Indenture Trustee shall be
held to represent all the Holders of the Equipment Notes, and it shall not be
necessary to make any Holders parties to such proceedings.
7.5 Remedies Cumulative. Each and every right, power and remedy given to
the Indenture Trustee in this Indenture shall be cumulative and shall be in
addition to every other right, power and remedy specifically given herein or now
or hereafter existing at law, in equity or by statute, and each and every right,
power and remedy whether specifically given herein 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 or the Holders, 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 later any other right, power
or remedy. No delay or omission by the Indenture Trustee or of any Holder 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
in any such default.
7.6 Suits for Enforcement. If an Indenture Event of Default has occurred,
has not been waived and is continuing, the Indenture Trustee may in its
discretion and subject to its rights of appropriate indemnification under
Sections 7.09 and 9.03 and Article XI hereof proceed to protect and enforce its
rights and rights of the Holders by such appropriate judicial proceedings as the
Indenture Trustee shall deem most effectual to protect and enforce any of such
rights, either at law or in equity
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or in bankruptcy or otherwise, whether for the specific enforcement of any
covenant or agreement contained in this Indenture or in aid of the exercise of
any power granted in this Indenture or to enforce any other legal or equitable
right vested in the Indenture Trustee or the Holders by this Indenture or by
law; provided that, any sale of any portion of the Trust Indenture Estate shall
be done in accordance with Sections 7.02 and 7.03(c) hereof.
7.7 Discontinuance of Proceedings. In case the Indenture Trustee or any
Holder shall have instituted any proceeding to enforce any right, power or
remedy under this Indenture 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 Indenture Trustee or such Holder, then the
Owner Trustee, the Indenture Trustee, any Owner Participant, the Holders and the
Lessee shall, subject to any binding determination in such proceeding, be
restored to their former positions and rights under this Indenture with respect
to the Trust Indenture Estate, and all rights, remedies and powers of the
Indenture Trustee and the Holders shall continue as if no such proceeding had
been instituted.
7.8 Unconditional Right of Holders to Payments on Equipment Notes.
Notwithstanding any other provision in this Indenture and any provision of any
Equipment Note, the right of any Holder to receive payment of the principal of
and interest and Make-Whole Premium, if any, on such Equipment Note on or after
the respective due dates and in the manner expressed in such Equipment Note or
to institute suit for the enforcement of any such payment on or after such
respective dates as provided herein, shall not be impaired or affected without
the consent of such Holder.
7.9 Control by Holders. The Majority in Interest of Holders shall have the
right to direct the Indenture Trustee as to the time, method, and place of
conducting any proceeding for any remedy available to the Indenture Trustee
under this Indenture, or exercising any trust or power conferred on the
Indenture Trustee by this Indenture; provided that such direction shall not be
otherwise than in accordance with law and the provisions of this Indenture and
the Indenture Trustee shall have received, to the extent provided in Sections
7.06 and 9.03 and Article XI hereof, such reasonable indemnification as it may
require against the costs, expenses and liabilities to be incurred by the
Indenture Trustee; and provided further that (subject to the provisions of
Section 9.02 hereof) the Indenture Trustee shall have the right to decline to
follow any such direction if the Indenture Trustee, being advised by counsel,
shall determine that the action or proceeding so directed may not lawfully be
taken or if the Indenture Trustee in good faith by its board of directors, the
executive committee, or a trust committee of directors or Responsible Officers
of the Indenture Trustee shall determine that the action or proceedings so
directed would involve the Indenture Trustee in personal liability or if the
Indenture Trustee in good faith shall so determine that the
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actions or forbearance specified in or pursuant to such direction shall be
unduly prejudicial to the interests of Holders not joining in the giving of said
direction, it being understood that (subject to Section 9.02 hereof) the
Indenture Trustee shall have no duty to ascertain whether or not such actions or
forbearance are unduly prejudicial to such Holders.
Nothing in this Indenture shall impair the right of the Indenture Trustee
in its discretion to take any action deemed proper by the Indenture Trustee and
which is not inconsistent with the direction by the Majority in Interest of
Holders.
7.10 Waiver of Past Indenture Default. Upon written instructions from the
Majority in Interest of Holders, the Indenture Trustee shall waive any past
Indenture Default 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 all Holders and each Liquidity Provider,
the Indenture Trustee shall not waive any Indenture Default (a) in the payment
of the principal of or Make-Whole Premium, if any, or interest on, or other
amounts due under, any Equipment Note then Outstanding, or (b) in respect of a
covenant or provision of this Indenture which, under Article XIII hereof, cannot
be modified or amended without the consent of each Holder.
7.11 Notice of Indenture Default. The Indenture Trustee shall transmit to
the Owner Trustee, the Holders, the Liquidity Provider and the Owner Participant
notice of any Indenture Event of Defaults actually known to a Responsible
Officer of the Indenture Trustee or any Indenture Event of Default or Indenture
Default arising under Section 7.01(i) (arising out of a Lease Event of Default
under Section 16(a) of the Lease) or 7.01(ii), such notice to be transmitted by
mail to the Holders, the Liquidity Provider, the Owner Trustee and any Owner
Participant promptly after the occurrence thereof, unless any such Indenture
Default or Indenture Event of Default shall have been cured before the giving of
such notice; provided that, except in the case of default in the payment of the
principal of or interest on or any other amount due under any of the Equipment
Notes, the Indenture Trustee shall be protected in withholding such notice to
the Holders if and so long as the board of directors, the executive committee,
or a trust committee of directors or trustees and/or Responsible Officers of the
Indenture Trustee in good faith determines that the withholding of such notice
is in the interests of the Holders. In the case of any Indenture Event of
Default relating to a Lease Event of Default, the Indenture Trustee agrees to
give the Holders, the Owner Trustee and the Owner Participant not less than ten
Business Days prior notice of the date on which the Indenture Trustee may
commence the exercise of any remedy made under Section 7.02.
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ARTICLE
VIII
RIGHTS OF THE OWNER TRUSTEE
AND THE OWNER PARTICIPANT
8.1 Certain Rights of Owner Trustee and Owner Participant.
(a) Except as provided in paragraph (a) immediately following the Granting
Clause hereof and in Section 13.01 hereof, without the consent of a Majority in
Interest of Holders, the respective parties to the Indenture Documents may not
modify, amend or supplement any of said agreements, or give any consent, waiver,
authorization or approval thereunder, for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions thereof or of
modifying in any manner the rights of the respective parties thereunder;
provided, however, that the actions specified in subsection (b) of this Section
8.01 may be taken without the consent of the Indenture Trustee or any Holder.
(b) Subject to the provisions of subsection (c) of this Section 8.01, the
Lessor and the respective parties to the Indenture Documents, at any time and
from time to time, without the consent of the Indenture Trustee or of any
Holder, may:
(1) so long as no Indenture Event of Default shall have
occurred and be continuing, modify, amend or supplement the Lease, or give
any consent, waiver, authorization or approval with respect thereto,
except that without compliance with subsection (a) of this Section 8.01
the parties to the Lease shall not modify, amend or supplement, or give
any waiver for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions thereof or of modifying in any
manner the rights of the respective parties thereunder, with respect to
the following provisions of the Lease as in effect on the effective date
hereof: Sections 2, 3(c) (except to the extent such Section relates to
amounts payable (whether directly or pursuant to this Indenture) to
Persons other than Holders, each Liquidity Provider, the Subordination
Agent and the Indenture Trustee in its individual capacity), 3(e) (except
insofar as it relates to the address or account information of the Owner
Trustee or the Indenture Trustee), 3(f), 3(g), 4, 6 (except in order to
increase the Lessee's liabilities or enhance the Lessor's or the Owner
Participant's rights thereunder), 8 (except that additional requirements
may be imposed on the Lessee), 9 (except for Section 9(f) and except that
additional insurance requirements may be imposed on the Lessee), 10, 11(b)
(except to impose additional requirements on the Lessee) 14(a) (except
that further restrictions may be imposed on the Lessee), 16 (except to
impose additional or more stringent Events of Default), 17 (except to
impose additional remedies), 20(b) and 23(e) and any definition of terms
used in the Lease, to the extent that any modification of such definition
would result in a modification of the Lease not permitted pursuant to
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this subsection (b); provided that the parties to the Lease may take any
such action without the consent of the Indenture Trustee or any Holder to
the extent such action relates to the payment of amounts constituting, or
the Owner Trustee's, the Owner Participant's or the Lessee's rights or
obligations with respect to, Excepted Payments;
(2) modify, amend or supplement the Trust Agreement and
any other Indenture Document (other than the Lease and the Participation
Agreement), or give any consent, waiver, authorization or approval with
respect thereto, in each case only to the extent any such action shall not
materially adversely impact the interests of the Holders;
(3) modify, amend or supplement the Participation
Agreement, or give any consent, waiver, authorization or approval with
respect thereto, except that without compliance with subsection (a) of
this Section 8.01 the parties to the Participation Agreement shall not
modify, amend or supplement, or give any consent, waiver, authorization or
approval for the purpose of adding provisions to or changing in any manner
or eliminating any of the provisions thereof or of modifying in any manner
the rights of the respective parties thereunder, with respect to the
following provisions of the Participation Agreement as in effect on the
effective date hereof: Article 4 and Section 8.01(b) (insofar as such
Article 4 and Section 8.01(b) relate to the Indenture Trustee, the
Pass-Through Trustee and the Holders), Articles 5, 6 and 7 and Sections
13.01 and 15.08 (insofar as such Articles and Sections relate to the
Indenture Trustee; it being understood that only the Indenture Trustee's
consent in respect thereof need be obtained) and any definition of terms
used in the Participation Agreement, to the extent that any modification
of such definition would result in a modification of the Participation
Agreement not permitted pursuant to this subsection (b); and
(4) modify, amend or supplement any of the Indenture
Documents in order to cure any ambiguity, to correct or supplement any
provisions thereof which may be defective or inconsistent with any other
provision thereof or of any provision of this Indenture, or to make any
other provision with respect to matters or questions arising thereunder or
under this Indenture which shall not be inconsistent with the provisions
of this Indenture, provided the making of any such other provision shall
not adversely affect the interests of the Holders.
(c) No modification, amendment, supplement, consent, waiver, authorization
or approval with respect to the Lease or the Participation Agreement, whether
effected pursuant to subsection (a) or pursuant to subsection (b) of this
Section 8.01 and anything in such subsections or elsewhere in this Indenture to
the contrary notwithstanding, shall, without the consent of the Holder of each
Outstanding Equipment Note affected thereby, and each Liquidity Provider,
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(1) modify, amend or supplement the Lease in such a way
as to (a) extend the time of payment of Basic Rent or Termination Value or
Supplemental Rent payable to the Holders or any Liquidity Provider or any
other amounts payable for the account of the Holders or any Liquidity
Provider (subject in any event to Section 3(f) of the Lease) upon the
occurrence of an Event of Loss or Termination Value and any other amounts
payable for the account of the Holders (subject in any event to Section
3(f) of the Lease) upon termination of the Lease with respect to the
Aircraft payable under, or as provided in, the Lease as in effect on the
Delivery Date, or (b) reduce the amount of any installment of Basic Rent
or Supplemental Rent so that the same is less than the payment of
principal of, and interest on the Equipment Notes and Make-Whole Premium,
if any, and amounts due to each Liquidity Provider, as the case may be, to
be made from such installment of Basic Rent or Supplemental Rent, or (c)
reduce the aggregate amount of Termination Value, or any other amounts
payable under, or as provided in, the Lease as in effect on the Delivery
Date, upon the occurrence of an Event of Loss so that the sum of the same
is, as of the applicable Termination Date, less than the accrued interest
on and the principal of the Equipment Notes at the time Outstanding or (d)
reduce the aggregate amount of Termination Value and any other amounts
payable under, or as provided in, the Lease as in effect on the Delivery
Date, upon termination of the Lease with respect to the Aircraft so that
the sum of the same is, as of the applicable Termination Date, less than
the accrued interest on, principal of and Make-Whole Premium, if any, of
Equipment Notes at the time Outstanding, or
(2) modify, amend or supplement the Lease in such a way
as to, or consent to any assignment of the Lease or give any consent,
waiver, authorization or approval which would, release the Lessee from its
absolute and unconditional obligations in respect of payment of Basic Rent
or Supplemental Rent, or Termination Value and any other amounts payable
for the account of the Holders (subject in any event to Section 3(f) of
the Lease) upon the occurrence of an Event of Loss, or Termination Value
and any other amounts payable for the account of the Holders (subject in
any event to Section 3(f) of the Lease) with respect to the Aircraft,
payable under, or as provided in, the Lease as in effect on the Delivery
Date, except as provided in the Lease as in effect on the Delivery Date.
(d) At all times so long as this Indenture is in effect and
notwithstanding that an Indenture Event of Default has occurred and is
continuing, the consent of the Owner Trustee (at the direction of the Owner
Participant) shall be required in order (i) to amend, modify or supplement the
Lease or any other Operative Agreement to which the Owner Trustee is a party or
to waive compliance by the Lessee or any other party with any of its obligations
thereunder and (ii) to grant any consent requested under the Lease or any other
Operative Agreement to which it is a party.
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Notwithstanding the foregoing, but subject always to the provision of Section
15.05 hereof, the Indenture Trustee shall at all times have the right, to the
exclusion of the Owner Trustee and the Owner Participant, to (A) declare the
Lease to be in default under Section 17 (other than with respect to Excepted
Payments) thereof and (B) subject only to the provisions of this Indenture,
exercise the remedies set forth in Section 17 of the Lease (other than in
connection with Excepted Payments).
Nothing in this Indenture shall be deemed to prohibit the Owner
Participant or the Owner Trustee from making demand on the Lessee for, or from
commencing an action at law to obtain the payment of, or from receiving payment
of, any Excepted Payment; provided, however, that if the Owner Trustee is
proceeding under the Lease, the Owner Trustee shall proceed pursuant to Section
17(e), and only Section 17(e), of the Lease.
8.2 Owner Participant's Right to Prepay or Purchase the Equipment Notes.
(a) If (i) an Event of Default shall have occurred and be continuing, (ii)
the Indenture Trustee shall have taken action, or notified the Owner Trustee or
Owner Participant that it intends to take action, to foreclose the Lien of this
Indenture or otherwise commence the exercise of any significant remedy under
Section 7.02 of this Indenture or Section 17 of the Lease or (iii) the Equipment
Notes shall have become due and payable pursuant to Section 7.02(b) or (c)
hereof, the Owner Participant (or the Owner Trustee on behalf of the Owner
Participant) may, but shall be under no obligation to do either of the
following:
(1) direct the Owner Trustee to cause the prepayment of all, but
not less than all, of the Equipment Notes then Outstanding by notifying the
Indenture Trustee of such election, which notice in order to be effective shall
state that it is irrevocable and shall designate a Prepayment Date which shall
be a Business Day which shall be not less than 15 days after the date of such
notice on which the Owner Trustee shall, in the manner provided for in Section
6.04 hereof, deposit the sum of amounts contemplated by paragraph "first" under
Section 5.03 and the aggregate Prepayment Price (determined in accordance with
Section 6.02(b) hereof) of all such Equipment Notes with the Indenture Trustee.
If such payment by the Owner Trustee to the Indenture Trustee is made, the
Equipment Notes shall cease to accrue interest from and after the Prepayment
Date, and after distribution of such payment to the Holders, the Indenture
Trustee shall release the Trust Indenture Estate from the Lien of this
Indenture; or
(2) purchase all, but not less than all, of the Outstanding
Equipment Notes by notifying the Indenture Trustee of such election, which
notice in order to be effective shall state that it is irrevocable and shall
designate a date which shall be a Business Day which shall be not less than 15
days after the date of such notice on which the Owner Trustee shall pay to the
Indenture Trustee an amount equal to the aggregate unpaid principal amount of
all Outstanding Equipment Notes, together with accrued interest on such amount
to the date of purchase, plus all other sums due any
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Holder or the Indenture Trustee hereunder or under the Participation Agreement
or the Lease, but without any Make-Whole Premium (provided that the Make-Whole
Premium shall be included if the purchase is made pursuant to clause (a)(i)
above (but not pursuant to clause (a)(ii) or (a)(iii) above) when the Event of
Default shall have occurred and been continuing for less than 180 days). Upon
receipt by the Indenture Trustee of such amount, each Holder will be deemed,
whether or not Equipment Notes shall have been delivered to the Indenture
Trustee on such date, to have thereupon sold, assigned, transferred and conveyed
(and shall promptly take such actions as the Owner Participant shall reasonably
request to evidence such sale, assignment, transfer and conveyance) to the Owner
Participant (without recourse or warranty of any kind except for its own acts),
all of the right, title and interest of such Holder in and to the Trust
Indenture Estate and this Indenture and all Equipment Notes held by such Holder
and the former Holders shall not be entitled to receive any interest on the
principal amount of such Equipment Notes after the purchase date, and the Owner
Participant shall be deemed to have assumed (and shall promptly take such
actions as any Holder shall reasonably request to evidence such assumption) all
of such Holder's obligations under the Participation Agreement and this
Indenture arising subsequent to such sale. If the Owner Trustee shall so
request, such Holder will comply with all the provisions of Section 2.06 of this
Indenture to enable new Equipment Notes to be issued to the Owner Participant in
such authorized denominations as the Owner Participant shall request. All
charges and expenses required pursuant to Section 2.06 hereof in connection with
the issuance of any such new Equipment Notes shall be borne by the Owner
Participant.
(b) From and after the deposit by the Owner Trustee of the applicable
Prepayment Price or purchase price with the Indenture Trustee pursuant to
Section 8.02(a) hereof, the Owner Trustee shall be entitled to exercise all
remedies of the Indenture Trustee under Article VII hereof as well as of the
Lessor under the Lease.
8.3 Certain Rights of Owner Participant.
(a) If (A) there shall occur an Event of Default under the Lease as a
result of the Lessee's failure to make any payment of an installment of Basic
Rent, and (B) the Owner Trustee shall have paid or caused to be paid on or prior
to the date which is 15 Business Days after the Owner Participant's receipt of
written notice of such Event of Default all principal and interest on the
Equipment Notes then due (as well as any interest on overdue principal and (to
the extent permitted by applicable law) interest), but not including any
principal or interest becoming due on account of such Event of Default, then the
failure of the Lessee to make the payment of such installment of Basic Rent or
of interest on account of such installment's being overdue shall not constitute
or result in an Indenture Event of Default under this Indenture and any
declaration based solely on the same shall be deemed to be automatically
rescinded. Nothing contained in the preceding sentence shall be deemed to
entitle the Owner Trustee to exercise any rights and powers or pursue any
remedies pursuant to Section 17 of the Lease or otherwise except as set forth in
this Indenture, and except that the Owner Trustee or the Owner Participant may
attempt to recover any amount paid by it or them under this Indenture by
demanding of the Lessee payment of such amount
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pursuant to Section 17(e), but only said Section 17(e), of the Lease. Upon
curing any such Event of Default pursuant to this Section 8.03, the Owner
Trustee or the Owner Participant, as the case may be, shall be subrogated on an
unsecured basis to all the rights of the Indenture Trustee under the Lease in
respect of the payment giving rise to such Event of Default, and any right to
any interest in respect of the same, and shall be entitled to any payment of
Basic Rent (or interest thereon) actually made by the Lessee in respect of such
cured payment upon receipt by the Indenture Trustee; provided that no such
amount shall be paid to the Owner Trustee or the Owner Participant until all
amounts then due and payable to each Holder hereunder and thereunder shall have
been paid in full and no Indenture Event of Default shall have occurred and be
continuing and the Owner Trustee will not be entitled to recover any such
payments, except pursuant to the foregoing right of subrogation, by demand or
suit for damages. Notwithstanding anything in this Indenture or the Lease to the
contrary, the Owner Participant and the Owner Trustee collectively, shall not be
entitled to cure more than six Events of Default (no more than three of which
may be consecutive) occasioned by defaults in the payment of Basic Rent.
(b) If (A) there shall occur an Event of Default under the Lease for any
reason other than the Lessee's failure to make any payment of an installment of
Basic Rent and (B) the Owner Trustee shall have taken or caused to be taken such
action necessary to cure and shall have cured such Event of Default prior to the
date which is 15 Business Days after the Owner Participant's receipt of the
written notice of such Event of Default, then the failure of the Lessee to
perform such covenant, condition or agreement, the observance or performance of
which was accomplished by the Owner Trustee hereunder shall not constitute or
result in an Indenture Event of Default under this Indenture and any declaration
based solely on the same shall be deemed to be automatically rescinded. Nothing
contained in the preceding sentence shall be deemed to entitle the Owner Trustee
or the Owner Participant to exercise any rights and powers or pursue any
remedies pursuant to Section 17 of the Lease or otherwise except as set forth in
this Indenture, and except that the Owner Trustee or the Owner Participant may
attempt to recover any amount paid by it or them in effecting such cure by
demanding of the Lessee payment of such amount, plus any interest due, or by
commencing an action at law or in equity against the Lessee for the payment of
such amount pursuant to Section 17(e), but only Section 17(e), of the Lease.
Upon curing any such Event of Default pursuant to this Section 8.03(b), the
Owner Trustee or the Owner Participant, as the case may be, shall be subrogated
to all the rights of the Indenture Trustee under the Lease in respect of the
payment, agreement or covenant giving rise to such Event of Default, and any
right to any interest in respect of the same, and shall be entitled to any
payment or other performance upon receipt by the Indenture Trustee; provided
that no such amount shall be paid to the Owner Trustee or the Owner Participant
until all amounts then due and payable to each Holder hereunder and thereunder
shall have been paid in full and no Indenture Event of Default shall have
occurred and be continuing.
ARTICLE IX
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CONCERNING THE INDENTURE TRUSTEE
9.1 Acceptance of Trusts. The Indenture Trustee in its individual capacity
hereby accepts the trusts imposed upon it by this Indenture, and covenants and
agrees to perform the same as expressed herein and agrees to receive and
disburse all moneys constituting part of the Trust Indenture Estate in
accordance with the terms hereof.
9.2 Duties Before, and During, Existence of Indenture Event of Default.
(a) The Indenture Trustee, prior to the occurrence of an Indenture Event
of Default and after the curing or waiving of all Indenture Events of Default
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture. So long as an Indenture Event
of Default has occurred and has not been cured or waived, the Indenture Trustee
shall exercise such of the rights and powers vested in it by this Indenture, and
use the same degree of care and skill in their exercise, as a prudent man would
exercise or use under the circumstances in the conduct of his own affairs. No
provision of this Indenture shall be construed to relieve the Indenture Trustee
from liability for its own gross negligence (or any simple negligence in the
handling of funds) or its own willful misconduct, except that:
(i) prior to the occurrence of an Indenture Event of Default and after the
curing or waiving of all Indenture Events of Default which may have occurred:
(x) the duties and obligations of the Indenture Trustee shall
be determined solely by the express provisions of this Indenture, and the
Indenture Trustee shall not be liable except for the performance of such
duties and obligations as are specifically set forth in this Indenture,
and no implied covenants or obligations shall be read in to this Indenture
against the Indenture Trustee; and
(y) in the absence of bad faith on the part of the Indenture
Trustee, the Indenture Trustee may conclusively rely, as to the truth of
the statements and the correctness of the opinions expressed therein, upon
any statements, certificates or opinions furnished to the Indenture
Trustee and conforming to the requirements of this Indenture; but in the
case of any such statements, certificate or opinions which by any
provision hereof are specifically required to be furnished to the
Indenture Trustee, the Indenture Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements of
this Indenture;
(ii) the Indenture Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer or Responsible Officers of the
Indenture
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Trustee, unless it shall be proved that the Indenture Trustee was negligent in
ascertaining the pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect to any action
taken or not taken by it in good faith in accordance with the direction of the
Holders of not less than a majority in aggregate principal amount of Outstanding
Equipment Notes relating to the time, method and place of conducting any
proceeding for any remedy available to the Indenture Trustee, or exercising any
trust or power conferred upon the Indenture Trustee, under this Indenture.
None of the provisions contained in this Indenture shall require the
Indenture Trustee to expend or risk its own funds or otherwise incur personal
financial liability in the performance of any of its duties or in the exercise
of any of its rights or powers, if the Indenture Trustee shall have determined
in good faith that the repayment of such funds or adequate indemnity against
such liability is not reasonably assured to it.
The Indenture Trustee agrees that it will execute and the Owner Trustee
agrees that it will, at the expense of the Lessee, 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 the Holders of not less
than 25% in aggregate principal amount of Equipment Notes (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
execute and file or cause to be filed any financing statement which it from time
to time deems appropriate.
(b) [Reserved].
(c) 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 XI hereof or under any other Operative
Agreement) promptly take such action as may be necessary duly to discharge all
Indenture Trustee's Liens on any part of the Trust Indenture Estate.
(d) [Reserved].
(e) The Indenture Trustee will furnish to each Holder promptly upon
receipt thereof, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and other instruments furnished to
the Indenture Trustee, to the extent that the same shall not have been otherwise
furnished to such Holder pursuant to this Indenture or to the extent the
Indenture Trustee does not reasonably believe that the same shall have been
furnished by the Lessee directly to such Holder.
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9.3 Certain Rights of the Indenture Trustee. Subject to Section 9.02
hereof:
(a) the Indenture Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officer's Certificate or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, bond, debenture, note, coupon, security 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, direction, order or demand of the Owner Trustee mentioned
herein shall be sufficiently evidenced by an Officer's Certificate (unless other
evidence in respect thereof be herein specifically prescribed) upon which the
Indenture Trustee may rely to prove or establish a matter set forth therein;
(c) the Indenture Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted to be taken by it hereunder in
good faith and in accordance with such advice or Opinion of Counsel;
(d) the Indenture Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Indenture Trustee reasonable
security or indemnity against the costs, expenses and liabilities which might be
incurred therein or thereby;
(e) the Indenture Trustee shall not be liable for any action taken or
omitted by it in good faith and believed by it to be authorized or within the
discretion, rights or powers conferred upon it by this Indenture;
(f) prior to the occurrence of an Indenture Event of Default hereunder and
after the curing or waiving of all Indenture Events of Default, the Indenture
Trustee shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, appraisal, bond, debenture, note,
coupon, security, or other paper or document unless requested in writing to do
so by the Majority in Interest of Holders; provided that, if the payment within
a reasonable time to the Indenture Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Indenture Trustee, not reasonably assured to the Indenture
Trustee by the security afforded to it by the terms of this Indenture, the
Indenture Trustee may require reasonable indemnity against such costs, expenses
or liabilities as a condition to proceeding; the reasonable expenses of every
such examination shall be paid by the Owner Trustee or, if paid by the Indenture
Trustee or any predecessor trustee, shall be repaid by the Owner Trustee upon
demand; and
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(g) the Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys not regularly in its employ and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of any such
agent or attorney appointed with due care by it hereunder.
9.4 Indenture Trustee Not Responsible for Recitals, Equipment Notes, or
Proceeds. The Indenture Trustee assumes no responsibility for the correctness of
the recitals contained herein and in the Equipment Notes, except the Indenture
Trustee's certificates of authentication. The Indenture Trustee makes no
representation as to the validity or sufficiency of this Indenture or of the
Equipment Notes. The Indenture Trustee shall not be accountable for the use or
application by the Owner Trustee of any of the Equipment Notes or of the
proceeds thereof.
9.5 Indenture Trustee and Agents May Hold Equipment Notes; Collections,
etc. The Indenture Trustee or any agent of the Indenture Trustee in its
individual or any other capacity may become the owner or pledgee of Equipment
Notes with the same rights it would have if it were not the Indenture Trustee or
such agent and may otherwise deal with the Owner Trustee and receive, collect,
hold and retain collections from the Owner Trustee with the same rights it would
have if it were not the Indenture Trustee or such agent.
9.6 Moneys Held by Indenture Trustee. Subject to Sections 5.08 hereof and
14.04 hereof, all moneys received by the Indenture Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the extent
required by mandatory provisions of law. Neither the Owner Trustee nor, subject
to Section 5.08 hereof, the Indenture Trustee nor any agent thereof shall be
under any liability for interest on any moneys received by it hereunder.
9.7 Right of Indenture Trustee to Rely on Officer's Certificate, etc.
Subject to Sections 9.02 and 9.03 hereof, whenever in the administration of the
trusts of this Indenture the Indenture Trustee shall deem it necessary or
desirable that a matter be proved or established prior to taking or suffering or
omitting any action hereunder, such matter (unless other evidence in respect
thereof be specifically prescribed herein) may, in the absence of bad faith on
the part of the Indenture Trustee, be deemed to be conclusively proved and
established by an Officer's Equipment Note delivered to the Indenture Trustee,
and such certificate, in the absence of bad faith on the part of the Indenture
Trustee, shall be full warrant to the Indenture Trustee for any action taken,
suffered or omitted by it under the provisions of this Indenture upon the faith
thereof.
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9.8 Replacement Airframes and Replacement Engines. At any time and from
time to time any Airframe or Engine may, or is required to, be replaced under
Section 8(a) or 7(e) of the Lease by a Replacement Airframe or Replacement
Engine, as the case may be, shall be replaced in accordance with the provisions
of this Section 9.08 and the provisions of such Sections of the Lease, the Owner
Trustee shall, from time to time, 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 as appropriate from the Lien of
this Indenture and the Indenture Trustee shall execute and deliver such
instrument as aforesaid without recourse or warranty, 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) to be so released.
(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 subject to the Event of Loss
including the manufacturer, model, FAA registration number (or other
applicable registration information) and manufacturer's serial number;
(ii) a description of the Replacement Airframe, including the
manufacturer, model, FAA registration number (or other applicable
registration information) and manufacturer's serial number;
(iii) that on the date of the supplement to this Indenture
relating to the Replacement Airframe the Owner Trustee will be the legal
owner of and have good title to such Replacement Airframe free and clear
of all Liens except Permitted Liens that such Replacement Airframe will on
such date be in at least as good operating condition and repair as
required by the terms of the Lease, and that such Replacement Airframe has
been or, substantially concurrently with such replacement, will be duly
registered in the name of the Owner Trustee under the Transportation Code
or under the law then applicable to the registration of the Airframe
subject to the Event of Loss and that an airworthiness certificate has
been duly issued under the Aviation Act (or such other applicable law)
with respect to such Replacement Airframe and that such registration and
certificate is, or will be, in full force and effect, and that the Lessee
will have the full right and authority to use such Replacement Airframe;
(iv) that the insurance required by Section 9 of the Lease is
in full force and effect with respect to such Replacement Airframe;
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(v) that the Replacement Airframe is of the same or an
improved make or model as the Airframe requested to be released from this
Indenture;
(vi) that the value of the Replacement Airframe as of the date
of such certificate is not less than the value of the Airframe requested
to be released (assuming such Airframe was in the condition and repair
required to be maintained under the Lease);
(vii) that no Event of Default exists or would result from the
making and granting of the request for release and the addition of a
Replacement Airframe;
(viii) that the release of the Airframe subject to the Event
of Loss will not impair the security of the Indenture in contravention of
any of the provisions of this Indenture;
(ix) that upon such replacement, the Lien of this Indenture
will apply to the Replacement Airframe and such Lien will be a first
priority security interest in favor of the Indenture Trustee; and
(x) that each of the conditions specified in Section 8(d) of
the Lease with respect to such Replacement Airframe has been satisfied.
(B) With respect to the replacement of any Engine:
(i) a description of the Engine subject to the Event of Loss
including the manufacturer's serial number;
(ii) a description of the Replacement Engine including the
manufacturer's name, the engine model and serial number;
(iii) that on the date of the supplement to this Indenture
relating to the Replacement Engine the Owner Trustee will be the legal
owner of such Replacement Engine free and clear of all Liens except
Permitted Liens, and that such Replacement Engine will on such date be in
at least as good operating condition and repair as required by the terms
of the Lease and will otherwise conform to the requirements set forth in
the definition of "Replacement Engine";
(iv) that the value of the Replacement Engine as of the date
of such certificate is not less than the value of the Engine to be
released (without regard to the number of hours or cycles remaining until
the next scheduled maintenance visit, and assuming such Engine was in the
condition and repair required to be maintained under the Lease);
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(v) that the release of the Engine subject to the Event of
Loss will not impair the security of the Indenture in contravention of any
of the provisions of this Indenture;
(vi) that upon such replacement, the Lien of this Indenture
will apply to the Replacement Engine and such Lien will be a first
priority security interest in favor of the Indenture Trustee; and
(vii) that each of the conditions specified in Section 7(e) of
the Lease with respect to such Replacement Engine has been satisfied.
(3) The appropriate instruments (i) transferring to the Owner
Trustee title to the Replacement Airframe or Replacement Engine to be received
as consideration for the Airframe or Engine to be released and (ii) assigning to
the Owner Trustee the benefit of all manufacturer's and vendor's warranties, if
any, generally available with respect to such Replacement Airframe or
Replacement Engine, and a supplement to this Indenture subjecting such
Replacement Airframe or Replacement Engine to the Trust Agreement and to the
Lien of this Indenture.
(4) A certificate from a firm of independent aircraft appraisers of
national standing reasonably satisfactory to the Indenture Trustee and the Owner
Trustee confirming the accuracy of the information set forth in clause (2)A(vi)
of this Section 9.08.
(5) The opinions of counsel to the Lessee (which may be Lessee's
General Counsel), or (with respect to those matters set forth in clause (ii)
below relating to the filing of documents pursuant to the Transportation Code)
of the Lessee's special aviation counsel, or (in either case) other counsel
reasonably satisfactory to the Indenture Trustee, stating that:
(i) the certificates, opinions and other instruments and/or
property which have been or are therewith delivered to and deposited with
the Indenture Trustee conform to the requirements of this 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; and
(ii) the Replacement Airframe or Replacement Engine has been
validly subjected to the Lien of this Indenture and covered by the Lease,
the instruments subjecting such Replacement Airframe or Replacement Engine
to the Lease and to the Lien of this Indenture, as the case may be, have
been duly filed for recordation pursuant to the Transportation Code or any
other law then applicable to the registration of the Aircraft, and no
further action, filing or recording of any document is necessary or
advisable in order to establish and perfect the title of the Owner Trustee
to and the Lien of this Indenture on such Replacement Airframe or
Replacement Engine and, with respect to a
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Replacement Airframe, the Indenture Trustee would be entitled to the
benefits of Section 1110 of the Bankruptcy Code with respect to such
Replacement Airframe, provided, that such opinion need not be to the
effect specified in the foregoing clause to the extent that the benefits
of such Section 1110 would not have been, by reason of a change in law or
governmental interpretation thereof after the date hereof, available to
the Indenture Trustee with respect to the Aircraft immediately prior to
such substitution had such Event of Loss not occurred.
Section 9.09 Indenture Supplement for Replacements. In the event of the
substitution of a Replacement Airframe or a Replacement Engine as contemplated
by Section 8(a) or 7(e) of the Lease, as the case may be, the Owner Trustee and
the Indenture Trustee agree for the benefit of the Holders and the Lessee,
subject to fulfillment of the conditions precedent and compliance by the Lessee
with its obligations set forth in Section 8(a) or 7(e) of the Lease, as the case
may be, to execute and deliver a supplement to this Indenture as contemplated by
Section 9.08(3) hereof and, provided no Event of Default shall have occurred and
be continuing, execute and deliver to the Lessee an appropriate instrument
releasing the Airframe or Engine being replaced from the Lien of this Indenture.
Section 9.10 Effect of Replacement. In the event of the substitution of a
Replacement Airframe or a Replacement Engine as contemplated by Section 8(a) or
7(e) of the Lease, as the case may be, and Section 9.08 hereof, all provisions
of this Indenture relating to the Airframe or Engine or Engines being replaced
shall be applicable to such Replacement Airframe or Replacement Engine or
Engines with the same force and effect as if such Replacement Airframe or
Replacement Engine or Engines were the same Airframe or engine or engines, as
the case may be, as the Airframe or Engine or Engines being replaced but for any
Event of Loss with respect to the Airframe or Engine or Engines being replaced.
Section 9.11 Compensation. The Owner Trustee covenants and agrees to pay,
and the Indenture Trustee shall be entitled to receive, reasonable compensation
and payment or reimbursement for its reasonable advances, expenses and
disbursements (including the reasonable compensation and expenses and
disbursements of its counsel, agents and other persons not regularly in its
employ) in connection with its services rendered hereunder or in any way
relating to or arising out of the administration of the Trust Indenture Estate
and shall have a priority claim on the Trust Indenture Estate for the payment of
such compensation, advances, expenses and disbursements to the extent that such
compensation, advances, expenses and disbursements 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; provided that, so long as
the Lease is in effect, the Indenture Trustee shall not make any claim for
payment under this Section 9.11 against the Owner Trustee or use or apply such
moneys without first making demand on the Lessee for payment of such claim. The
Indenture Trustee agrees that it shall have no right against any Holder (except
as provided in Section 9.03(d)
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above), Trust Company, or the Owner Participant for any fee as compensation for
its services as trustee under this Indenture.
ARTICLE X
CONCERNING THE HOLDERS
10.1 Evidence of Action Taken by Holders.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in writing,
and, except as otherwise expressly provided herein, 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 9.02 and
9.03 hereof) conclusive in favor of the Indenture Trustee and the Owner Trustee,
if made in the manner provided in this Article.
(b) For the purpose of determining the Holders entitled to vote or consent
to any direction, waiver or other action of such Holders under Section 7.10 or
7.11 hereof, the Lessee may set a record date for such vote or consent by
specifying such record date in an Officer's Certificate delivered to the
Indenture Trustee. Such record date shall be a date not more than 15 days prior
to the first solicitation of such vote or consent.
10.2 Proof of Execution of Instruments and of Holding of Equipment Notes.
Subject to Sections 9.02 and 9.03 hereof, the execution of any instrument by a
Holder or his agent or proxy may be proved in accordance with such reasonable
rules and regulations as may be prescribed by the Indenture Trustee. The holding
of Equipment Notes shall be proved by the Register or by a certificate of the
Registrar.
10.3 Holders to Be Treated as Owners. Prior to due presentment for
registration of transfer of any Equipment Note, the Owner Trustee, the Indenture
Trustee, any agent of the Owner Trustee or the Indenture Trustee, the Paying
Agent, if any, the Registrar and the Lessee shall deem and treat the Person in
whose name such Equipment shall be registered upon the Register as the absolute
owner of such Equipment Note (whether or not such Equipment Note shall be
overdue and notwithstanding any notation of ownership or other writing thereon)
for the purpose of receiving payment of or on account of the principal of and,
subject to the provisions of this Indenture, interest on such Equipment Note and
for all other purposes; and neither the Owner Trustee nor the Indenture Trustee
(nor any agent of the Owner Trustee or the Indenture Trustee) nor the Paying
Agent, if any, nor the Registrar nor
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the Lessee shall be affected by any notice to the contrary. All such payments so
made to any such person, or upon his order, shall be valid, and, to the extent
of the sum or sums so paid, effectual to satisfy and discharge the liability for
moneys payable upon any such Equipment Note.
10.4 Equipment Notes Owned by Owner Trustee or Lessee Deemed Not
Outstanding. In determining whether the Holders of the requisite aggregate
principal amount of Equipment Notes have concurred in any direction, consent or
waiver under this Indenture, Equipment Notes which are owned by the Owner
Trustee, any Owner Participant, the Lessee or any Affiliate thereof shall be
disregarded and deemed not to be Outstanding for the purpose of any such
determination; provided that for the purpose of determining whether the
Indenture Trustee shall be protected in relying on any such direction, consent
or waiver, only if a Responsible Officer of the Indenture Trustee has actual
knowledge that certain Equipment Notes are so owned by any person directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Owner Trustee, such Owner Participant, Trust Company or the
Lessee shall such Equipment Notes be so disregarded; and provided further that
if all Equipment Notes which would be deemed Outstanding in the absence of the
foregoing provision are owned by the Owner Trustee, Trust Company or any Owner
Participant or by any Affiliate thereof, then such Equipment Notes shall be
deemed Outstanding for the purpose of any such determination. Equipment Notes so
owned which have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Indenture Trustee the
pledgee's right so to act with respect to such Equipment Notes and that the
pledgee is not the Owner Trustee, the Owner Participant, Trust Company or the
Lessee or any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with the Owner Trustee, the Owner
Participant, Trust Company or the Lessee. In case of a dispute as to such right,
the advice of counsel shall be full protection in respect of any decision made
by the Indenture Trustee in accordance with such advice, unless the Lessee, the
Owner Trustee, Trust Company, or the Owner Participant are actually named in the
Register. Upon request of the Indenture Trustee, the Owner Trustee, the Owner
Participant, Trust Company and the Lessee shall furnish to the Indenture Trustee
promptly an Officer's Certificate listing and identifying all Equipment Notes,
if any, known by the Owner Trustee, the Owner Participant, Trust Company or the
Lessee to be owned or held by or for the account of any of the above-described
persons; and, subject to Sections 9.02 and 9.03 hereof, the Indenture Trustee
shall be entitled to accept such Officer's Certificate as conclusive evidence of
the facts set forth therein and of the fact that all Equipment Notes not listed
therein are outstanding for the purpose of any such determination.
10.5 ERISA. Any Person, other than the Subordination Agent and any
Pass-Through Trustee, who is acquiring the Equipment Notes will be deemed to
represent and warrant that (i) no assets of an employee benefit plan subject to
Title I of ERISA or an individual retirement account or plan subject to Section
4975 of the
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Code, or any trust established under any such plan or account, have been used to
acquire or hold any of the Equipment Notes, or (ii) that one or more
administrative or statutory exemptions from the prohibited transaction rules
under Section 406 of ERISA and Section 4975 of the Code applies to its purchase
and holding of the Equipment Notes such that its purchase and holding of the
Equipment Notes will not result in a non-exempt prohibited transaction under
Section 406 of ERISA and Section 4975 of the Code.
ARTICLE XI
INDEMNIFICATION OF INDENTURE
TRUSTEE BY OWNER TRUSTEE
The Owner Trustee, not individually but solely in its capacity as Owner
Trustee, hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated, to assume liability for, and does hereby indemnify,
protect, save and keep harmless the Indenture Trustee, in its individual
capacity, and its successors, assigns, agents and servants solely from the
Lessor's Estate, with respect to the claims of the Indenture Trustee for payment
or reimbursement under Section 9.11 hereof and 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 and any taxes
excluded from the Lessee's indemnity obligation under Section 6.01(b) of the
Participation Agreement), claims, actions, suits, costs, expenses or
disbursements (including reasonable legal fees and expenses) of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against the
Indenture Trustee (whether or not also agreed to be indemnified against by any
other person under any other document) in any way relating to or arising out of
this Indenture, or any 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, 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 (a) in the case of willful
misconduct or gross negligence of the Indenture Trustee in the performance of
its duties hereunder, (b) as may result from the inaccuracy of any
representation or warranty of the Indenture Trustee in the Participation
Agreement, (c) as otherwise provided in Section 9.02(c) hereof or (d) as
otherwise excluded by the terms of Article 6 or Article 7 of the Participation
Agreement from the Lessee's general indemnity or general tax indemnity to the
Indenture Trustee under said Article; provided that so long as the Lease is in
effect, the Indenture Trustee shall not make any claim under this Article XI for
any claim or expense indemnified by the Lessee under the Participation Agreement
without first making demand on the Lessee for payment of such claim or expense.
The Indenture Trustee shall be entitled
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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 Article XI 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 Article XI shall survive the termination of this Indenture and
the resignation or removal of the Indenture Trustee. Upon payment in full by the
Owner Trustee of any indemnity pursuant to this Article XI, the Owner Trustee
shall, so long as no Indenture Event of Default shall have occurred and be
continuing, be subrogated to the rights of the Indenture Trustee, if any, in
respect of the matter as to which the indemnity was paid.
ARTICLE XII
SUCCESSOR TRUSTEES
12.1 Notice of Successor Owner Trustee. In the case of any appointment of
a successor to the Owner Trustee pursuant to the Trust Agreement or any merger,
conversion, consolidation or sale of substantially all of the corporate trust
business of the Owner Trustee pursuant to the Trust Agreement, the successor
Owner Trustee shall give prompt written notice thereof to the Indenture Trustee.
12.2 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 days' prior written notice to the Owner
Trustee, the Owner Participant, the Lessee and each Holder, such resignation to
be effective upon the acceptance of the trusteeship by a successor Indenture
Trustee. In addition, the Lessee, the Majority in Interest of the Holders or the
Owner Trustee (with the consent of the Lessee and the Majority in Interest of
the Holders) may at any time remove the Indenture Trustee without cause by an
instrument in writing delivered to the Lessee, the Owner Trustee, the Owner
Participant, and the Indenture Trustee, and the Indenture Trustee shall promptly
notify each Holder thereof of such action 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, the
Majority in Interest of the Holders (based on the recommendation of the Lessee)
or the Owner Trustee (with the consent of the Lessee and the Majority in
Interest of the Holders), may appoint a successor Indenture Trustee by an
instrument signed by such Holders. If a successor Indenture Trustee shall not
have been appointed within 30 days after such notice of resignation or removal,
the Indenture Trustee, the Owner Trustee, the Lessee, the Owner Participant, or
any Holder may apply to any court of competent jurisdiction to appoint a
successor Indenture Trustee to act until such time,
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if any, as a successor shall have been appointed as provided above. The
successor Indenture Trustee so appointed by such court shall immediately and
without further act be superseded by any successor Indenture Trustee appointed
as provided above.
(b) In case at any time any of the following shall occur:
(i) the Indenture Trustee shall cease to be eligible in
accordance with the provisions of Section 12.03 hereof and shall fail to
resign after written request therefor by the Owner Trustee or by any
Holder; or
(ii) the Indenture Trustee shall become incapable of acting,
or shall be adjudged a bankrupt or insolvent, or a receiver or liquidator
of the Indenture Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Indenture Trustee or of
its property or affairs for the purpose of rehabilitation, conservation or
liquidation;
then the Owner Trustee may remove the Indenture Trustee and, with the consent of
the Lessee, appoint a successor trustee by written instrument, in duplicate,
executed by a Responsible Officer of the Owner Trustee, one copy of which
instrument shall be delivered to the Indenture Trustee so removed and one copy
to the successor trustee, or, subject to the provisions of Section 7.13 hereof,
any Holder who has been a bona fide Holder for at least six months may, on
behalf of himself and all others similarly situated Holders, petition any court
of competent jurisdiction for the removal of the Indenture Trustee and the
appointment of a successor trustee. Such court may thereupon, after such notice,
if any, as it may deem proper and prescribe, remove the Indenture Trustee and
appoint a successor trustee, which removal and appointment shall become
effective upon acceptance of appointment by the successor trustee as provided in
Section 12.04 hereof. The successor Indenture Trustee so appointed by such court
shall immediately and without further act be superseded by any successor
Indenture Trustee appointed as provided above within one year from the date of
appointment by such court.
12.3 Persons Eligible for Appointment as Indenture Trustee. There shall at
all times be an Indenture Trustee hereunder which shall be (i)(x) a bank or
trust company organized and doing business under the laws of the United States
of America or any state or the District of Columbia having a combined capital
and surplus of at least $75,000,000 or (y) a bank or trust company whose
obligations hereunder are fully guaranteed by a direct or indirect parent
thereof having a combined capital and surplus of at least $75,000,000 and (ii) a
Person authorized under applicable law to exercise corporate trust powers and
subject to supervision of examination by Federal, state or District of Columbia
authority. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section, 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 Indenture Trustee shall cease to be eligible in accordance
with the provisions
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of this Section, the Indenture Trustee shall resign immediately in the manner
and with the effect specified in Section 12.02 hereof.
12.4 Acceptance of Appointment by Successor Trustee. Any successor trustee
appointed as provided in Section 12.02 hereof shall execute and deliver to the
Owner Trustee, the Lessee, and to its predecessor trustee an instrument
accepting such appointment hereunder, in form and substance reasonably
satisfactory to the Owner Trustee, and thereupon the resignation or removal of
the predecessor trustee shall become effective and such successor trustee,
without any further act, deed or conveyance, shall become vested with all
rights, powers, duties and obligations of its predecessor hereunder, with like
effect as if originally named as trustee herein; but, nevertheless, on the
written request of the Owner Trustee or of the successor trustee, upon payment
of its charges then unpaid, the trustee ceasing to act shall, subject to Section
14.04 hereof, pay over to the successor trustee all moneys at the time held by
it hereunder and shall execute and deliver an instrument transferring to such
successor trustee all such rights, powers, duties and obligations. Upon request
of any such successor trustee, the Owner Trustee shall execute any and all
instruments in writing for more fully and certainly vesting in and confirming to
such successor trustee all such rights and powers. Any trustee ceasing to act
shall, nevertheless, retain a prior claim upon all property or funds held or
collected by such trustee to secure any amounts then due it pursuant to the
provisions of Article XI hereof.
No successor trustee shall accept appointment as provided in this Section
12.04 unless at the time of such acceptance such successor trustee shall be
eligible under the provisions of Section 12.03 hereof.
Upon acceptance of appointment by a successor trustee as provided in this
Section 12.04, the successor trustee shall mail notice thereof by first-class
mail to the Holders at their last addresses as they shall appear in the
Register, and shall mail a copy of such notice to the Lessee and the Owner
Trustee. If the acceptance of appointment is substantially contemporaneous with
the resignation, then the notice called for by the preceding sentence may be
combined with the notice called for by Section 12.02 hereof.
12.5 Merger, Consolidation or Succession to Business of Indenture Trustee.
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 succeeding to the corporate trust business of the Indenture
Trustee, shall be the successor to the Indenture Trustee hereunder, provided
that, anything herein to the contrary notwithstanding, such corporation shall be
eligible under the provisions of Section 12.03 hereof, without the execution or
filing of any paper or any further act on the part of any of the parties hereto.
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In case at the time such successor to the Indenture Trustee shall succeed
to the trusts created by this Indenture any of the Equipment Notes shall have
been authenticated but not delivered, any such successor to the Indenture
Trustee may adopt the certificate of authentication of any predecessor Indenture
Trustee and deliver such Equipment Notes so authenticated; and, in case at that
time any of the Equipment Notes shall not have been authenticated, any successor
to the Indenture Trustee may authenticate such Equipment Notes either in the
name of any predecessor hereunder or in the name of the successor Indenture
Trustee; and in all such cases such certificate shall have the full force which
it is anywhere in the Equipment Notes or in this Indenture provided that the
certificate of the Indenture Trustee shall have; provided, that the right to
adopt the certificate of authentication of any predecessor Indenture Trustee or
to authenticate Equipment Notes in the name of any predecessor Indenture Trustee
shall apply only to its successor or successors by merger, conversion or
consolidation.
12.6 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 a 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 or they shall be vested with such title to the Trust Indenture Estate or any
part thereof, and with such rights, powers, duties and obligations, as shall be
specified in the instrument of appointment, and such rights, powers, duties and
obligations shall be conferred or imposed upon and exercised or performed by the
Indenture Trustee, or the Indenture Trustee and such separate trustee or
separate trustees or co-trustee jointly with the Indenture Trustee subject to
all the terms of this Indenture, 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 shall be
exercised and performed by such separate trustee or separate trustees or
co-trustee, as the case may be. Any separate trustee or separate trustees or
co-trustee may, at any time by an instrument in writing, constitute the
Indenture Trustee its or his attorney-in-fact and agent with full power
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and authority to do all acts and things and to exercise all discretion on its or
his behalf and in its or his 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,
duties and 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 (including without limitation Article XI hereof) shall extend
to and apply to each separate trustee or co-trustee appointed pursuant to the
foregoing provisions of this Section 12.06.
(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 exercisable 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 liable either personally or in
its capacity as such trustee, 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 12.06, the powers
of any additional trustee or separate trustee shall not exceed those of the
Indenture Trustee hereunder.
ARTICLE XIII
SUPPLEMENTS AND AMENDMENTS TO THIS
TRUST INDENTURE AND OTHER DOCUMENTS
13.1 Supplemental Indentures Without Consent of Holders. The Owner Trustee
(when authorized by the Owner Participant) and the Indenture Trustee, without
consent of the Holders, may enter into an indenture or indentures supplemental
hereto for one or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge any property or assets
to the Indenture Trustee as security for the Equipment Notes;
(b) to evidence the succession of another corporation to the Owner Trustee
or successive successions, and the assumption by the successor corporation of
the covenants, agreements and obligations of the Owner Trustee herein and in the
Equipment Notes;
(c) to add to the covenants of the Owner Trustee such further covenants,
restrictions, conditions or provisions as it and the Indenture Trustee shall
consider to be for the protection of the Holders, and to make the occurrence, or
the occurrence and continuance, of a default in any such additional covenants,
restrictions, conditions or provisions an Indenture Event of Default permitting
the enforcement of all or any of the several remedies provided herein; provided,
that in respect of any such additional covenant, restriction, condition or
provision such supplemental indenture may provide for a particular period of
grace after default (which period may be shorter or longer than that allowed in
the case of other defaults) or may provide for an immediate enforcement upon
such an Indenture Event of Default or may limit the remedies available to the
Indenture Trustee upon such an Indenture Event of Default or may limit the right
of not less than the Majority in Interest of Holders to waive such an Indenture
Event of Default;
(d) to surrender any right or power conferred herein upon the Owner
Trustee or the Owner Participant;
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(e) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture; or to make such other provisions in regard to matters or questions
arising under this Indenture or under any supplemental indenture as the Owner
Trustee may deem necessary or desirable and which shall not adversely affect the
interests of the Holders;
(f) 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 or to subject any Replacement Airframe or Replacement
Engine to the Lien of this Indenture in accordance with the provisions hereof or
with the Lease or to release from the Lien of this Indenture property that has
been substituted on or removed from the Aircraft as contemplated in Section 3.07
hereof; provided that supplements to this Indenture entered into for the purpose
of subjecting any Replacement Airframe or Replacement Engine to the Lien of this
Indenture need only be executed by the Owner Trustee and the Indenture Trustee;
(g) to provide for the issuance under this Indenture of Equipment Notes in
coupon form (including Equipment Notes registrable as to principal only) and to
provide for exchangeability of such Equipment Notes with Equipment Notes issued
hereunder in fully registered form, and to make all appropriate changes for such
purpose;
(h) to effect the re-registration of the Aircraft pursuant to Section
4.02(b) of the Participation Agreement; and
(i) to add, eliminate or change any provision hereunder so long as such
action shall not adversely affect the interests of the Holders.
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture, to make any further appropriate agreements and
stipulations which may be contained therein 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.
Any such supplemental indenture may be executed without the consent of the
Holders notwithstanding any of the provisions of Section 13.02 hereof.
13.2 Supplemental Indentures With Consent of Holders. With the consent
(evidenced as provided in Article X) of the Majority in Interest of Holders, the
Owner Trustee (when authorized by the Owner Participant) and the Indenture
Trustee may, from time to time and at any time, enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any
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manner or eliminating any of the provisions of this Indenture or of any
supplemental indenture or of modifying in any manner the rights of the Holders;
provided, however, that, without the consent of each and every Holder and each
Liquidity Provider, no such amendment of or supplement to this Indenture or any
indenture supplemental hereto, or modification of the terms of, or consent
under, any thereof, shall (a) modify any of the provisions of Section 7.11
hereof or this Section 13.02, (b) reduce the amount or extend the time of
payment of any amount owing or payable under any Equipment Note or reduce the
interest payable on any Equipment Note, or alter or modify the provisions of
Article V hereof with respect to the order of priorities in which distributions
thereunder shall be made as among Holders of different Series of Equipment Notes
or as between the Holder and the Owner Trustee or the Owner Participant or with
respect to the amount or time of payment of any such distribution, or alter or
modify the circumstances under which a Make-Whole Premium shall be payable, or
alter the currency in which any amount payable under any Equipment Note is to be
paid, or impair the right of any Holder to commence legal proceedings to enforce
a right to receive payment hereunder or (c) create or permit the creation of any
Lien on the Trust Indenture Estate or any part thereof prior to or pari passu
with the Lien of this Indenture, except as expressly permitted herein, or
deprive any Holder of the benefit of the Lien of this Indenture on the Trust
Indenture Estate, except as provided in Section 7.02 hereof or in connection
with the exercise of remedies under Article VII. This Section 13.02 shall not
apply to any indenture or indentures supplemental hereto permitted by, and
complying with the terms of, Section 13.06 hereof.
Upon the request of the Owner Trustee (at the direction of the Owner
Participant) and upon the filing with the Indenture Trustee of evidence of the
consent of Holders and other documents, if any, required by Section 10.01, the
Indenture Trustee shall join with the Owner Trustee and the Lessee in the
execution of such supplemental indenture unless such supplemental indenture
affects the Indenture Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Indenture Trustee may in its
discretion, but shall not be obligated to, enter into such supplemental
indenture.
It shall not be necessary for the consent of the Holders under this
Section 13.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such consent shall approve the
substance thereof.
Promptly after the execution by the Owner Trustee, the Indenture Trustee
and the Lessee of any supplemental indenture pursuant to the provisions of this
Section, the Indenture Trustee shall mail a notice thereof by first-class mail
to the Holders at their addresses as they shall appear on the registry books of
the Registrar, setting forth in general terms the substance of such supplemental
indenture. Any failure of the Indenture Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.
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13.3 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, the Lessee and
the 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 any and all purposes.
13.4 Documents to Be Given to Indenture Trustee. The Indenture Trustee,
subject to the provisions of Sections 9.02 and 9.03, may receive an Officer's
Certificate and an Opinion of Counsel as conclusive evidence that any such
supplemental indenture complies with the applicable provisions of this
Indenture.
13.5 Notation on Equipment 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 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 Outstanding Equipment Notes.
13.6 No Request Necessary for Lease Supplement or Indenture Supplement.
Notwithstanding anything contained in Section 13.02 hereof, no written request
or consent of the Indenture Trustee, any Holder or the Owner Participant
pursuant to Section 13.02 hereof shall be required to enable the Owner Trustee
to enter into any supplement to the Lease with the Lessee in accordance with the
terms and conditions of the Lease to subject a Replacement Airframe or
Replacement Engine thereto or to execute and deliver any supplement to the
Indenture (including the Indenture Supplement) pursuant to the terms hereof.
13.7 Notices to Liquidity Providers. Any request made to any Holder for
consent to any amendment, supplement or waiver pursuant to Section 7.11, 8.01 or
this Article XIII shall be promptly furnished by the Indenture Trustee to each
Liquidity Provider.
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ARTICLE XIV
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS
14.1 Satisfaction and Discharge of Indenture: Termination of Indenture. If
at any time after (a) the Owner Trustee shall have paid or caused to be paid the
principal of and interest on all the Equipment Notes outstanding hereunder, as
and when the same shall have become due and payable and provided that there
shall be no Secured Obligations due to the Indenture Indemnitees, or (b) the
Owner Trustee shall have delivered to the Indenture Trustee for cancellation all
Equipment Notes theretofore authenticated (other than any Equipment Notes which
shall have been destroyed, lost or stolen and which shall have been replaced or
paid as provided in Section 2.07 hereof), then this Indenture shall cease to be
of further effect, and the Indenture Trustee, on demand of the Owner Trustee and
at the cost and expense of the Owner Trustee, shall execute proper instruments
acknowledging such satisfaction of and discharging this Indenture. The Owner
Trustee agrees to reimburse and indemnify the Indenture Trustee for any costs or
expenses thereafter reasonably and properly incurred and to compensate the
Indenture Trustee for any services thereafter reasonably and properly rendered
by the Indenture Trustee in connection with this Indenture or the Equipment
Notes.
Upon (or at any time after) payment in full to the Indenture Trustee, as
trust funds, of the principal of and interest on and Make-Whole Premium, if any,
and all other amounts due hereunder and under all Equipment Notes and of any
Secured Obligations owed to the Indenture Indemnitees, and provided that there
shall then be no other amounts due to the Indenture Trustee hereunder or under
the Participation Agreement or otherwise secured hereby, the Owner Trustee shall
direct the Indenture Trustee to execute and deliver to or as directed in writing
by the Owner Trustee an appropriate instrument releasing the Aircraft from the
Lien of this Indenture and releasing the Indenture Documents from the assignment
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 release; provided, however, that this
Indenture and the trusts created hereby shall terminate earlier and this
Indenture shall be of no further force or effect upon any sale or other final
disposition by the Indenture Trustee of all property forming a 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.
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14.2 Application by Indenture Trustee of Funds Deposited for Payment of
Equipment Notes. Subject to Section 14.04 hereof, all moneys deposited with the
Indenture Trustee pursuant to Section 14.01 hereof shall be held in trust and
applied by it to the prompt payment, either directly or through any Paying
Agent, to the Holders of the particular Equipment Notes for the payment or
prepayment of which such moneys have been deposited with the Indenture Trustee,
of all sums due and to become due thereon for principal, interest and Make-Whole
Premium, if any, but such money need not be segregated from other funds except
to the extent required by law.
14.3 Repayment of Moneys Held by Paying Agent. Upon the satisfaction and
discharge of this Indenture all moneys then held by any Paying Agent under the
provisions of this Indenture shall, upon demand of the Owner Trustee, be repaid
to it or paid to the Indenture Trustee and thereupon such Paying Agent shall be
released from all further liability with respect to such moneys.
14.4 Transfer of Unclaimed Money Held by Indenture Trustee and Paying
Agent. Any moneys deposited with or paid to the Indenture Trustee or any Paying
Agent for the payment of the principal of or interest or Make-Whole Premium on
any Equipment Note and not applied but remaining unclaimed for two years and
eleven months after the date upon which such principal, interest or Make-Whole
Premium shall have become due and payable, shall, unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be paid to the Owner Trustee (or, if the Trust Agreement shall no longer be
in effect, to the Owner Participant) by the Indenture Trustee or such Paying
Agent and the Holder of such Certificate, as a general unsecured creditor,
shall, unless otherwise required by mandatory provisions of applicable escheat
or abandoned or unclaimed property laws, thereafter look only to the Owner
Trustee (or the Owner Participant) for any payment which such Holder may be
entitled to collect, and all liability of the Indenture Trustee, or any Paying
Agent with respect to such moneys shall thereupon cease.
ARTICLE XV
MISCELLANEOUS
15.1 Capacity in Which Acting. Each of Trust Company (or its permitted
successors or assigns) and FNBM acts hereunder not in its individual capacity
but solely as trustee except as expressly provided herein and in the other
Operative Agreements, and, in the case of Trust Company (or its permitted
successors or assigns), in the Trust Agreement.
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15.2 No Legal Title to Trust Indenture Estate in Holders. No 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 Holder in and to the Trust Indenture Estate or hereunder shall
operate to terminate this Indenture or entitle such 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.
15.3 Sale of Trust Indenture Estate by Indenture Trustee is Binding. Any
sale or other conveyance of all or any part of the Trust Indenture Estate by the
Indenture Trustee made pursuant to the terms of this Indenture or of the Lease
shall bind the Lessee, the Owner Trustee, the Holders and the Owner Participant
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
therein and thereto. 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.
15.4 Indenture Benefits Trustees, Participants, Lessee, and Liquidity
Providers Only. Nothing in this Indenture, whether express or implied, shall be
construed to give to any person other than Trust Company, the Owner Trustee, the
Lessee, FNBM, the Indenture Trustee, the Owner Participant, each Liquidity
Provider and the Holders any legal or equitable right, remedy or claim under or
in respect of this Indenture. Upon termination of this Indenture pursuant to
Article XIV hereof, the Indenture Trustee in connection with the satisfaction of
the Indenture shall return to the Owner Trustee all property (and related
documents and instruments) constituting or evidencing the Trust Indenture
Estate.
15.5 No Action Contrary to Lessee's Rights Under the Lease.
Notwithstanding any of the provisions of this Indenture or the Trust Agreement
to the contrary, so long as no Event of Default shall have occurred and be
continuing, neither the Indenture Trustee nor the Owner Trustee will take any
action that interfere with the peaceful and quiet possession and enjoyment of
the Aircraft by the Lessee or any Permitted Sublessee.
15.6 Notices. Unless otherwise expressly specified or permitted by the
terms hereof, all notices, requests, demands, authorizations, directions,
consents, waivers or documents provided or permitted by this Indenture to be
made, given, furnished or filed shall be in writing, and shall be given and
become effective in the manner set forth in Section 12.01 of the Participation
Agreement. Any party hereto
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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.
15.7 Officer's Certificates and Opinions of Counsel. Upon any application
or demand by the Lessee or the Owner Trustee to the Indenture Trustee to take
any action under any of the provisions of this Indenture, the Lessee or the
Owner Trustee, as the case may be, shall furnish to the Indenture Trustee upon
request (a) an Officer's Certificate stating that all conditions precedent
provided for in this Indenture relating to the proposed action have been
complied with and that the proposed action is in conformity with the
requirements of this Indenture, and (b) 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 demand as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or demand, no
additional certificate or opinion need be furnished.
Any certificate, statement or opinion of an officer of the Lessee or the
Trust Company may be based, insofar as it relates to legal matters, upon a
certificate or opinion of or representations by counsel, unless such officer
knows that the certificate or opinion or representations with respect to the
matters upon which his certificate, statement or opinion may be based as
aforesaid are erroneous, or in the exercise of reasonable care should know that
the same are erroneous. Any certificate, statement or opinion of counsel may be
based, insofar as it relates to factual matters information with respect to
which is in the possession of the Lessee or Trust Company, upon the certificate,
statement or opinion of or representations by an officer or officers of the
Lessee or Trust Company, as the case may be, unless such counsel knows that the
certificate, statement or opinion or representations with respect to the matters
upon which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous.
Any certificate, statement or opinion of an officer of the Lessee or Trust
Company or of counsel thereto may be based, insofar as it relates to accounting
matters, upon a certificate or opinion of or representations by an accountant or
firm of accountants employed by the Lessee or the Owner Trustee, as the case may
be, unless such officer or counsel, as the case may be, knows that the
certificate or opinion or representations with respect to the accounting matters
upon which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same are
erroneous.
Any certificate or opinion of any independent firm of public accountants
filed with the Indenture Trustee shall contain a statement that such firm is
independent.
15.8 Severability. Any provision of this Indenture which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the
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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.
15.9 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.
15.10 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 Holder shall bind the successors and assigns of such 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.
15.11 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.
15.12 Normal Commercial Relations. Anything contained in this Indenture to
the contrary notwithstanding, the Owner Participant, the Indenture Trustee and
any Holder, or any bank or other affiliate of any such party, may conduct any
banking or other financial transactions, and have banking or other commercial
relationships, with the Lessee 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.
15.13 Governing Law; Counterparts. THIS INDENTURE IS DELIVERED IN THE
STATE OF NEW YORK. THIS INDENTURE AND EACH 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. This
Indenture may be executed by the parties hereto in separate
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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.
15.14 Lessee's Right of Quiet Enjoyment. Notwithstanding any of the
provisions of this Indenture to the contrary, so long as no Event of Default has
occurred and is continuing unremedied, the Indenture Trustee will comply with
Section 4(b) of the Lease to the same extent as if it were the Lessor under the
Lease. Each Holder, by its acceptance thereof, consents in all respects to the
terms of the Lease and agrees to the provisions of this Section 15.14. The
Indenture Trustee acknowledges that any right it may have to possess, use,
operate, store, lease, control, manage, sell, dispose of or otherwise deal with
the Aircraft or any other property in which Lessee has any interest pursuant to
the Lease is derivative of the rights of the Owner Trustee under the Lease and
subject to the agreement of the Owner Trustee under Section 4(b) of the Lease as
referred to in the second preceding sentence herein.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture and
Security Agreement to be executed by their respective officers thereunto duly
authorized as of the date first written above.
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
not in its individual capacity, except as
specifically set forth herein but solely as Owner
Trustee
By:
Name:
Title:
THE FIRST NATIONAL BANK OF MARYLAND, as
Indenture Trustee
By:
Name:
Title:
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Annex A
Series Principal Amount Interest Rate
------ ---------------- -------------
A 7,237,780 7.14%
B 3,132,300 8.14%
C 2,541,300 8.92%
D 808,620 8.86%
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Annex B
Amortization Schedule
Series A Series B Series C Series D
Equipment Equipment Equipment Equipment
Payment Date Notes Notes Notes Notes
- - ------------ --------- --------- --------- ---------
Jan 2 1999 0.00 0.00 1,165,219.89 0.00
Jul 2 1999 0.00 0.00 0.00 0.00
Jan 2 2000 217,134.40 93,970.00 205,931.45 72,517.85
Jul 2 2000 0.00 0.00 0.00 0.00
Jan 2 2001 217,133.40 93,969.00 0.00 328,543.35
Jul 2 2001 0.00 0.00 0.00 0.00
Jan 2 2002 217,133.40 93,969.00 0.00 383,213.10
Jul 2 2002 0.00 0.00 0.00 0.00
Jan 2 2003 217,133.40 93,969.00 418,734.80 24,345.70
Jul 2 2003 0.00 0.00 0.00 0.00
Jan 2 2004 217,133.40 93,969.00 508,656.79 0.00
Jul 2 2004 0.00 0.00 0.00 0.00
Jan 2 2005 217,133.40 430,209.01 242,757.07 0.00
Jul 2 2005 0.00 0.00 0.00 0.00
Jan 2 2006 217,133.40 746,134.52 0.00 0.00
Jul 2 2006 0.00 0.00 0.00 0.00
Jan 2 2007 217,133.40 263,151.39 0.00 0.00
Jul 2 2007 0.00 0.00 0.00 0.00
Jan 2 2008 217,133.40 549,679.67 0.00 0.00
Jul 2 2008 0.00 0.00 0.00 0.00
Jan 2 2009 850,079.31 1,437.74 0.00 0.00
Jul 2 2009 0.00 0.00 0.00 0.00
Jan 2 2010 914,560.76 0.00 0.00 0.00
Jul 2 2010 0.00 0.00 0.00 0.00
Jan 2 2011 982,263.98 0.00 0.00 0.00
Jul 2 2011 0.00 0.00 0.00 0.00
Jan 2 2012 1,054,979.13 0.00 0.00 0.00
Jul 2 2012 0.00 0.00 0.00 0.00
Jan 2 2013 464,699.10 671,841.67 0.00 0.00
Jul 2 2013 0.00 0.00 0.00 0.00
Jan 2 2014 1,016,996.12 0.00 0.00 0.00
Jul 2 2014 0.00 0.00 0.00 0.00
Jan 2 2015 0.00 0.00 0.00 0.00
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Exhibit A to
Trust Indenture and
Security Agreement
INDENTURE SUPPLEMENT NO. 1 [N576ML]
This Indenture Supplement No. 1 [N576ML] dated September _____, 1998, of
First Union Trust Company, National Association, a national banking association,
not in its individual capacity but solely as owner trustee (herein called the
"Owner Trustee") under the Trust Agreement [N576ML] dated as of September 10,
1998, (the "Trust Agreement") between First Union Trust Company, National
Association, and the Owner Participant named therein,
WITNESSETH:
WHEREAS, the Indenture provides for the execution and delivery of this
Indenture Supplement which shall particularly describe the Aircraft included in
the property covered by the Indenture.
WHEREAS, the Trust Indenture and Security Agreement [N576ML] dated as of
September 10, 1998 (the "Indenture") between the Owner Trustee and The First
National Bank of Maryland (herein called the "Indenture Trustee") provides for
the execution and delivery of an Indenture Supplement substantially in the form
of this Indenture Supplement No. 1, which Supplement shall particularly describe
the Aircraft included in the Trust Indenture Estate, and shall specifically
mortgage such Aircraft to the Indenture Trustee.
WHEREAS, the Indenture relates to the Aircraft and the Engines described
in the following paragraph and a counterpart of the Indenture is attached to and
made a part of this Indenture Supplement No. 1, and this Indenture Supplement
No. 1, together with such attachment, is being filed for recordation on or
promptly after the date of this Indenture Supplement No. 1 with the Federal
Aviation Administration as one document.
NOW, THEREFORE, to secure the prompt payment of the principal of and
Make-Whole Premium, if any, and interest on, and all other amounts due with
respect to, all Outstanding Equipment Notes under the Indenture and all other
amounts due hereunder and the performance and observance by the Owner Trustee of
all the agreements, covenants and provisions for the benefit of the Holders and
contained in the Indenture, the Participation Agreement and the Equipment Notes,
and the prompt payment of any and all amounts from time to time owing under the
Participation Agreement by the Owner Trustee or the Lessee to the Holders and
the Indenture
-1-
<PAGE>
Indemnitees and for the uses and purposes and subject to the terms and
provisions of the Indenture and the Equipment Notes, and in consideration of the
premises and of the covenants contained in the Indenture, and of the purchase of
the Equipment Notes by the Holders, 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 of which is hereby acknowledged, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged, granted a
security interest in, and confirmed, and does hereby grant, bargain, sell,
assign, transfer, convey, mortgage, pledge, grant a security interest in, and
confirm, unto the Indenture Trustee, its successors and assigns, in trust for
the equal and ratable security and benefit of the Holders, in the trust created
by the Indenture, and subject to all of the terms, conditions, provisions and
limitations set forth in the Indenture, a first priority security interest in
and mortgage lien on all estate, right, title and interest of the Owner Trustee
in, to and under the following described property:
AIRFRAME
One Airframe identified as follows:
FAA Manufacturer's
Registration Serial
Manufacturer Model Number Number
- - ------------ ----- ------------ --------------
Bombardier Inc. CL-600-2B19 N576ML 7257
together with all appliances, equipment, instruments and accessories (including,
without limitation, radio and radar) from time to time belonging thereto, owned
by the Owner Trustee and installed in or appurtenant to said aircraft.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more rated takeoff
horsepower or the equivalent thereof, identified as follows:
FAA Manufacturer's
Registration Serial
Manufacturer Model Number Number
- - ------------ ----- ------------ --------------
General Electric Company CF34-3B1 GE-E-872371
GE-E-872373
-2-
<PAGE>
together with all equipment and accessories belonging thereto, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to such
aircraft engines.
Together with all substitutions, replacements and renewals of the property
described above, and all property owned by the Owner Trustee which shall
hereafter become physically attached to or incorporated in the property
described above, 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 Holders, in the trust created by the Indenture, and
subject to all of the terms, conditions, provisions and limitations set forth in
the Indenture, all of the estate, right, title and interest of the Owner Trustee
in, to and under the Lease Supplement (other than Excepted Payments, if any)
covering the property described above.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, for the benefit and security of
the Holders for the uses and purposes and subject to the terms and provisions
set forth in the Indenture.
This Indenture Supplement shall be construed as supplemental to the
Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
This Indenture Supplement is being delivered in the State of New York.
-3-
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Indenture Supplement
No. 1 to be duly executed as of the date first written above by one of its
officers thereunto duly authorized.
First Union Trust Company, National Association,
not in its individual capacity, except as
specifically set forth herein, but solely as
Owner Trustee
By:
---------------------------------------------
Name:
Title:
-4-
<PAGE>
Exhibit B
to
Trust Indenture and
Security Agreement
[Form of Certificate]
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.
No._________ $____________
EQUIPMENT TRUST EQUIPMENT NOTE [N576ML]
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, not in its individual
capacity but solely as Owner Trustee under Trust Agreement [N576ML] dated as of
September 10, 1998.
SERIES _____
Interest Rate Maturity
- - ------------- --------
___% ____________, 2___
First Union Trust Company, National Association, a national banking
association, not in its individual capacity but solely as Owner Trustee (herein
in such capacity called the "Owner Trustee") under that certain Trust Agreement
[N576ML] dated as of September 10, 1998, between the Owner Participant named
therein and (herein as such Trust Agreement may be amended or supplemented from
time to time called the "Trust Agreement"), hereby promises to pay to The First
National Bank of Maryland, as Subordination Agent, or its registered assigns,
the principal sum of ______________________ ________________ Dollars, together
with interest on the principal outstanding from time to time, semiannually on
each January 2 and July 2, on such principal sum at the rate per annum set forth
above; provided that, under certain circumstances including, in the event a
Registration Event (as defined in the Indenture referred to below) does not
occur on or prior to the date (the "Increase Date") required pursuant to the
Registration Rights Agreement (as defined in the
-1-
<PAGE>
Indenture referred to below), such interest rate shall be increased by 0.5% from
and including the Increase Date to but excluding the date such Registration
Event does occur. The principal amount of this Equipment Note shall be payable
in installments on the dates and hereto in amounts set forth in Schedule I
hereto. Notwithstanding the foregoing, the final payment made on this Equipment
Note shall be in an amount sufficient to discharge in the full the unpaid
principal amount and all accrued and unpaid interest on, and any other amounts
due under, this Equipment Note. Notwithstanding anything to the contrary
contained herein, 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.
This Equipment Note shall bear interest at the Past Due Rate on any
principal hereof and on any other amount payable hereunder or under the
Indenture which shall not be paid in full when due (whether at stated maturity,
by acceleration, by mandatory prepayment or otherwise), for the period from and
including the date thereof to but excluding the date the same is paid in full,
payable from time to time on demand of the Indenture Trustee.
Principal and interest and other amounts due hereunder shall be payable at
the office or agency of The First National Bank of Maryland (the "Indenture
Trustee") maintained for such purpose in immediately available funds prior to
12:00 noon. (New York time) on the due date thereof and the Indenture Trustee
shall remit all such amounts received by it to the Holders at such account or
accounts at such financial institution or institutions as the Holders shall have
designated to the Indenture Trustee in writing, in immediately available funds,
such payment to be made if the payment was received prior to 12:00 noon, New
York time by the Indenture Trustee on any Business Day, by 1 p.m. New York time
on such Business Day; otherwise, the Indenture Trustee shall make payment
promptly, but not later than 11:00 A.M. New York time on the next succeeding
Business Day; provided that, at the option of the Indenture Trustee or its
Paying Agent, interest may be paid by mailing a check therefor payable to or
upon the written order of the registered holder entitled thereto at his last
address as it appears on the Register. If any amount payable under this
Certificate, or under the Indenture, falls due on a day that is not a Business
Day, then such sum shall be payable on the next succeeding Business Day, without
(provided that payment is made on such next succeeding Business Day) additional
interest thereon for the period of such extension.
First Union Trust Company, National Association and The First National
Bank of Maryland are not acting individually hereunder, but solely as Owner
Trustee and Indenture Trustee, respectively.
Any Person, other than the Subordination Agent and any Pass-Through
Trustee, who is acquiring the Equipment Notes will be deemed to represent and
warrant that
-2-
<PAGE>
(i) no assets of an employee benefit plan subject to Title I of ERISA or an
individual retirement account or plan subject to Section 4975 of the Code, or
any trust established under any such plan or account, have been used to acquire
or hold any of the Equipment Notes, or (ii) that one or more administrative or
statutory exemptions from the prohibited transaction rules under Section 406 of
ERISA and Section 4975 of the Code applies to its purchase and holding of the
Equipment Notes such that its purchase and holding of the Equipment Notes will
not result in a non-exempt prohibited transaction under Section 406 of ERISA and
Section 4975 of the Code.
This Equipment Note is one of a duly authorized issue of Equipment Notes
issued under the Trust Indenture and Security Agreement [N576ML] dated as of
September 10, 1998 (the "Indenture") between the Owner Trustee and the Indenture
Trustee. Capitalized terms not otherwise defined herein shall have the meanings
given to them in the Indenture. Reference is made to the Indenture and all
supplements and amendments thereto (a copy of which is on file with the
Indenture Trustee at its principal corporate trust office) for a more complete
statement of the terms and provisions thereof, including a statement of the
properties conveyed, pledged and assigned thereby, the nature and extent of the
security, the respective rights of the Owner Trustee, the Owner Participant, the
Lessee, the Indenture Trustee and the Holders, and the terms upon which the
Equipment Notes are, and are to be, executed and delivered, to all of which
terms and conditions in the Indenture each Holder hereof agrees by its
acceptance of this Equipment Note.
This Equipment Note is subject to redemption as provided in Section 6.02
of the Indenture but not otherwise. This Equipment Note is also subject to
exchange and to purchase by the Owner Participant or the Owner Trustee as
provided in Section 8.02 of the Indenture but not otherwise. In addition, this
Equipment Note may be accelerated as provided in Section 7.02 of the Indenture.
Except as expressly provided in the Indenture, all payments of principal,
Make-Whole Premium, if any, and interest and other amounts to be made to the
Holder hereof by or at the behest of the Owner Trustee hereunder or under the
Indenture shall be made only from the income and proceeds from the Lessor's
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
Lessor's Estate to the extent included in the Trust Indenture Estate to enable
the Indenture Trustee to make such distributions in accordance with the terms of
the Indenture; provided that under the Lease, the Lessee is obligated to pay or
cause to be paid, to the extent such payments are not required to be made from
the assets subject to the Lien of this Indenture or the income and proceeds
received by the Indenture Trustee therefrom, any net loss arising from the
investment of funds held by the Indenture Trustee which but for an Event of
Default would be payable to Lessee, and each Holder hereof, by its acceptance of
this Equipment Note, agrees that it will (except as aforesaid) look solely to
the income and proceeds from the Trust Indenture Estate to the extent available
for distribution to the Holder hereof as provided above and that neither the
Owner Participant, nor the Owner Trustee, nor First Union Trust Company,
National Association, nor the
-3-
<PAGE>
Indenture Trustee is personally liable to the Holder hereof for any amounts
payable or any liability under this Equipment Note or under the Indenture,
except as expressly provided in the Indenture, in the case of First Union Trust
Company, National Association, the Owner Trustee and the Indenture Trustee.
If, in accordance with and subject to the satisfaction of the conditions
set forth in Section 5.10 of the Participation Agreement, the Lessee shall
assume all of the obligations of the Owner Trustee hereunder, under the
Equipment Notes and all other Operative Agreements, the Owner Participant and
the Owner Trustee shall (except for prior acts) be released and discharged from
any further obligations hereunder and under the Equipment Notes and all other
Operative Agreements (except any obligations that have accrued prior to such
assumption).
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 A and Series
B Equipment Notes](2) [Series A, Series B, and Series C Equipment Notes](3) and
this Equipment Note is issued subject to such provisions. The Holder of this
Certificate, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Indenture Trustee on such Holder's
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 such Holder's attorney-in-fact for such purpose.*
This Equipment Notes shall be construed in accordance with and governed by
the laws of the State of New York.
This Equipment Note shall not be secured by or be entitled to any benefit
under the Indenture or be valid or obligatory for any purpose unless
authenticated by the Indenture Trustee as evidenced by the manual signature of
one of its authorized officers on the certificate below.
- - ----------
(1) To be inserted in the case of a Series B Equipment Note.
(2) To be inserted in the case of a Series C Equipment Note.
(3) To be inserted in the case of a Series D Equipment Note.
* To be inserted for each Equipment Note other than any Series A
Equipment Note.
-4-
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note to be
duly executed in its corporate name by its officer thereunto duly authorized.
Dated: _________________ FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
not in its individual capacity, but
solely as Owner Trustee
By:
---------------------------------------------
Name:
Title:
-5-
<PAGE>
[FORM OF INDENTURE TRUSTEE'S EQUIPMENT NOTE
OF AUTHENTICATION]
This is one of the Equipment Notes referred to in the within mentioned
Indenture.
Dated: _______________ THE FIRST NATIONAL BANK OF MARYLAND, as
Indenture Trustee
By:
-------------------------------------
Name:
Title:
-1-
<PAGE>
Schedule I to Certificate
Principal Amortization
Payment Date Principal Amount
- - ------------ ----------------
-2-
Note to Exhibit 10.5
The following Indenture Supplement is substantially identical in all
material respects to three additional Indenture Supplements except as follows:
- - --------------------------------------------------------------------------------
Owner Participant Date Aircraft (Tail No.)
- - --------------------------------------------------------------------------------
NCC Charlie Company* September 10, 1998* N575ML*
- - --------------------------------------------------------------------------------
NCC Charlie Company September 10, 1998 N576ML
- - --------------------------------------------------------------------------------
General Electric Capital Corporation November 10, 1998 N577ML
- - --------------------------------------------------------------------------------
- - ----------
* Filed document
<PAGE>
INDENTURE SUPPLEMENT NO. 1 [N576ML]
This Indenture Supplement No. 1 [N576ML] dated September 30, 1998, of
First Union Trust Company, National Association, a national banking association,
not in its individual capacity but solely as owner trustee (herein called the
"Owner Trustee") under the Trust Agreement [N576ML] dated as of September 10,
1998, (the "Trust Agreement") between First Union Trust Company, National
Association, and the Owner Participant named therein,
WITNESSETH:
WHEREAS, the Indenture provides for the execution and delivery of this
Indenture Supplement which shall particularly describe the Aircraft included in
the property covered by the Indenture.
WHEREAS, the Trust Indenture and Security Agreement [N576ML] dated as of
September 10, 1998 (the "Indenture") between the Owner Trustee and The First
National Bank of Maryland (herein called the "Indenture Trustee") provides for
the execution and delivery of an Indenture Supplement substantially in the form
of this Indenture Supplement No. 1, which Supplement shall particularly describe
the Aircraft included in the Trust Indenture Estate, and shall specifically
mortgage such Aircraft to the Indenture Trustee.
WHEREAS, the Indenture relates to the Aircraft and the Engines described
in the following paragraph and a counterpart of the Indenture is attached to and
made a part of this Indenture Supplement No. 1, and this Indenture Supplement
No. 1, together with such attachment, is being filed for recordation on or
promptly after the date of this Indenture Supplement No. 1 with the Federal
Aviation Administration as one document.
NOW, THEREFORE, to secure the prompt payment of the principal of and
Make-Whole Premium, if any, and interest on, and all other amounts due with
respect to, all Outstanding Equipment Notes under the Indenture and all other
amounts due hereunder and the performance and observance by the Owner Trustee of
all the agreements, covenants and provisions for the benefit of the Holders and
contained in the Indenture, the Participation Agreement and the Equipment Notes,
and the prompt payment of any and all amounts from time to time owing under the
Participation Agreement by the Owner Trustee or the Lessee to the Holders and
the Indenture
<PAGE>
Indemnitees and for the uses and purposes and subject to the terms and
provisions of the Indenture and the Equipment Notes, and in consideration of the
premises and of the covenants contained in the Indenture, and of the purchase of
the Equipment Notes by the Holders, 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 of which is hereby acknowledged, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged, granted a
security interest in, and confirmed, and does hereby grant, bargain, sell,
assign, transfer, convey, mortgage, pledge, grant a security interest in, and
confirm, unto the Indenture Trustee, its successors and assigns, in trust for
the equal and ratable security and benefit of the Holders, in the trust created
by the Indenture, and subject to all of the terms, conditions, provisions and
limitations set forth in the Indenture, a first priority security interest in
and mortgage lien on all estate, right, title and interest of the Owner Trustee
in, to and under the following described property:
AIRFRAME
One Airframe identified as follows:
FAA Manufacturer's
Registration Serial
Manufacturer Model Number Number
- - ------------ ----- ------ ------
Bombardier Inc. CL-600-2B19 N576ML 7257
together with all appliances, equipment, instruments and accessories (including,
without limitation, radio and radar) from time to time belonging thereto, owned
by the Owner Trustee and installed in or appurtenant to said aircraft.
AIRCRAFT ENGINES
Two aircraft engines, each such engine having 750 or more rated takeoff
horsepower or the equivalent thereof, identified as follows:
Manufacturer's
Serial
Manufacturer Model Number
- - ------------ ----- ------
General Electric Company CF34-3B1 GE-E-872371
GE-E-872373
<PAGE>
together with all equipment and accessories belonging thereto, by whomsoever
manufactured, owned by the Owner Trustee and installed in or appurtenant to such
aircraft engines.
Together with all substitutions, replacements and renewals of the property
described above, and all property owned by the Owner Trustee which shall
hereafter become physically attached to or incorporated in the property
described above, 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 Holders, in the trust created by the Indenture, and
subject to all of the terms, conditions, provisions and limitations set forth in
the Indenture, all of the estate, right, title and interest of the Owner Trustee
in, to and under the Lease Supplement (other than Excepted Payments, if any)
covering the property described above.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Indenture Trustee, its successors and assigns, for the benefit and security of
the Holders for the uses and purposes and subject to the terms and provisions
set forth in the Indenture.
This Indenture Supplement shall be construed as supplemental to the
Indenture and shall form a part thereof, and the Indenture is hereby
incorporated by reference herein and is hereby ratified, approved and confirmed.
This Indenture Supplement is being delivered in the State of New York.
* * *
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee has caused this Indenture Supplement
No. 1 to be duly executed as of the date first written above by one of its
officers thereunto duly authorized.
First Union Trust Company, National
Association, not in its individual capacity,
except as specifically set forth herein, but
solely as Owner Trustee
By:
Name:
Title:
Note to Exhibit 10.6
The following Lease is substantially identical in all material
respects to three additional Trust Agreements except as follows:
<TABLE>
<CAPTION>
- - ---------------------------------------------------------------------------------------------------
Rental
Lease and
Aircraft Termination Related
Owner Participant Date (Tail No.) Date Terms
- - ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NCC Charlie Company* September 10, 1998* N575ML* March 30, 2015* *
- - ---------------------------------------------------------------------------------------------------
NCC Charlie Company September 10, 1998 N576ML March 30, 2015 **
- - ---------------------------------------------------------------------------------------------------
General Electric November 10, 1998 N577ML May 12, 2015 **
Capital Corporation
- - ---------------------------------------------------------------------------------------------------
</TABLE>
- - ----------
* Filed document
** Confidential treatment requested for omitted information. Omitted
information has been filed separately with the Commission.
<PAGE>
================================================================================
LEASE AGREEMENT [N575ML]
dated as of September 10, 1998
between
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
Owner Trustee,
Lessor,
and
MIDWAY AIRLINES CORPORATION
Lessee.
Covering One Canadair Regional
Jet Series 200 ER Aircraft
Registration Number
N575ML
================================================================================
This Lease Agreement is subject to a security interest in favor of The First
National Bank of Maryland, as Indenture Trustee, under the Trust Indenture and
Security Agreement [N575ML] dated as of September 10, 1998, for the benefit of
the holders of the Equipment Notes referred to in such Trust Indenture and
Security Agreement. This Lease Agreement has been executed in counterparts. To
the extent, if any, that this Lease Agreement constitutes chattel paper (as such
term is defined in the Uniform Commercial Code as in effect in any
jurisdiction), no security interest in this Lease Agreement may be created
through the transfer or possession of any counterpart other than the counterpart
containing the receipt therefor executed by The First National Bank of Maryland,
as Indenture Trustee, on the signature page thereof.
<PAGE>
TABLE OF CONTENTS
Page
Section 1. Interpretation................................................. 1
(a) Definitions.................................................... 1
(b) References..................................................... 1
(c) Headings....................................................... 2
(d) Appendices, Schedules and Exhibits............................. 2
Section 2. Delivery and Leasing of the Aircraft........................... 2
(a) Leasing of the Aircraft........................................ 2
(b) Delivery and Acceptance of the Aircraft Under
the Lease...................................................... 2
Section 3. Term and Rent.................................................. 2
(a) Term........................................................... 2
(b) Basic Rent..................................................... 2
(c) Supplemental Rent.............................................. 3
(d) Adjustments to Basic Rent and Termination Values............... 3
(e) Manner of Payment.............................................. 5
(f) Minimum Rent................................................... 6
(g) Rent Obligations Unconditional................................. 6
Section 4. The Lessor's Representations and Warranties.................... 7
Section 5. Possession, Operation and Use,
Maintenance Registration and Insignia.......................... 8
(a) General........................................................ 8
(b) Possession..................................................... 8
(c) Operation and Use.............................................. 13
(d) Maintenance.................................................... 14
(e) Registration................................................... 15
Section 6. Inspection; Financial Information.............................. 15
Section 7. Replacement and Pooling of Parts; Alterations,
Modifications and Additions; Substitution of Engines........... 16
(a) Replacement of Parts........................................... 16
(b) Title to Parts................................................. 17
(c) Pooling or Parts Leasing....................................... 17
(d) Alterations, Modifications and Additions....................... 18
(e) Substitution of Engines........................................ 19
<PAGE>
Section 8. Loss, Destruction or Requisition............................... 22
(a) Event of Loss with Respect to the Airframe..................... 22
(b) Effect of Replacement.......................................... 24
(c) Effect of Termination Value Payment............................ 24
(d) Conditions to Airframe Replacement............................. 25
(e) Non-Insurance Payments Received on Account of
an Event of Loss............................................... 28
(f) Requisition for Use............................................ 29
(g) Certain Payments to be Held As Security........................ 29
Section 9. Insurance...................................................... 30
(a) Public Liability and Property Damage Insurance................. 30
(b) Insurance Against Loss or Damage to the
Aircraft and Engines........................................... 30
(c) Additional Insureds; Loss Payment.............................. 31
(d) Deductibles and Self-Insurance................................. 32
(e) Application of Hull Insurance Proceeds......................... 32
(f) Insurance for Own Account...................................... 33
(g) Reports, etc................................................... 33
(h) Right to Pay Premiums.......................................... 34
Section 10. Liens.......................................................... 34
Section 11. Recordation and Further Assurances............................. 35
(a) Recordation of Lease........................................... 35
(b) Further Assurances............................................. 35
(c) Markings....................................................... 36
Section 12. Return of Aircraft and Records................................. 36
(a) Return of Aircraft............................................. 36
(b) Return of Other Engines........................................ 36
(c) Fuel; Records.................................................. 37
(d) Condition of Aircraft.......................................... 37
(e) Failure to Return.............................................. 37
(f) Storage and Related Matters.................................... 38
Section 13. Renewal Option and Purchase Options............................ 38
(a) Renewal Terms.................................................. 38
(b) Lessee's Purchase Options...................................... 39
(i) Rights to Purchase....................................... 39
(ii) Option to Assume Equipment Notes......................... 40
(iii) Notice of Exercise of Option............................. 40
Section 14. Voluntary Termination for Obsolescence......................... 40
(a) Termination by Sale of Aircraft................................ 40
(b) Payments Due Upon Sale of Aircraft............................. 41
<PAGE>
(c) Preemptive Election by Lessor.................................. 42
(d) Termination of Lease........................................... 42
(e) Effect of No Sale or Preemptive Delivery to Lessor............. 43
(f) No Duty on Part of Lessor...................................... 43
Section 15. Investment of Security Funds................................... 43
Section 16. Events of Default.............................................. 44
Section 17. Remedies....................................................... 46
Section 18. Lessor's Right to Perform for the Lessee....................... 48
Section 19. Bankruptcy..................................................... 49
Section 20. Assignment: Benefit and Binding Effect......................... 49
(a) Assignment by the Lessee....................................... 49
(b) Assignment by the Lessor....................................... 49
(c) Benefit and Binding Effect..................................... 49
(d) Sublessee's Performance and Rights............................. 50
Section 21. Owner Trustee's Limitation on Liability........................ 50
Section 22. Certain Agreements of Lessee................................... 50
Section 23. Miscellaneous.................................................. 51
(a) Notices........................................................ 51
(b) Counterparts................................................... 51
(c) Amendments..................................................... 51
(d) Agreement to Lease............................................. 52
(e) Governing Law.................................................. 52
(f) Severability................................................... 53
(g) Survival....................................................... 53
(h) Article 2A..................................................... 53
Appendix A Definitions
Exhibit A Form of Lease Supplement
Exhibit B Certain Economic Information
Exhibit C Basic Rent
Exhibit D Termination Values
Exhibit E List of Countries
Exhibit F Return Conditions
<PAGE>
THIS LEASE AGREEMENT [N575ML], dated as of September 10, 1998,
between FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, a national banking
association, not in its individual capacity but solely as Owner Trustee, the
Lessor, and MIDWAY AIRLINES CORPORATION, a Delaware corporation, the Lessee.
W I T N E S S E T H:
WHEREAS, the Lessor intends to purchase the Aircraft pursuant to the
terms of the Participation Agreement;
WHEREAS, the Lessee desires to lease from the Lessor and the Lessor
is willing to lease to the Lessee the Aircraft upon and subject to the terms and
conditions of this Lease; and
WHEREAS, the parties intend this Lease to constitute a true lease
and not a security agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration the receipt and adequacy of
which is hereby acknowledged, and intending to be legally bound, the parties do
hereby agree as follows:
Section 1. Interpretation.
(a) Definitions.
Capitalized terms used herein and defined in Appendix A shall,
except as such definitions may be specifically modified in the body of this
Lease for the purposes of a particular section, paragraph or clause, have the
meanings given such terms in Appendix A and, unless otherwise specified, such
meanings shall be equally applicable to both the singular and the plural forms
of such terms.
(b) References.
References in this Lease to sections, paragraphs, clauses,
appendices, schedules and exhibits are to sections, paragraphs, clauses,
appendices, schedules and exhibits in and to this Lease unless otherwise
specified. Paragraphs identified with a letter and clauses identified with a
number or letter within a section may be referred to either by section reference
(for example, this is Section l(b)) or by paragraph and clause reference (for
example, this is also paragraph (b) of Section 1) with the same meaning.
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(c) Headings.
The headings of the various sections, paragraphs and clauses of this
Lease and the table of contents are for convenience of reference only and shall
not modify, define, expand or limit any of the terms or provisions hereof.
(d) Appendices, Schedules and Exhibits.
The appendices, schedules and exhibits are part of this Lease.
Section 2. Delivery and Leasing of the Aircraft.
(a) Leasing of the Aircraft.
Subject to the satisfaction or waiver of the conditions precedent
stated in the Participation Agreement, the Lessor agrees to lease to the Lessee,
and the Lessee agrees to lease from the Lessor, the Aircraft on the terms and
conditions set forth herein, such leasing to be evidenced by the execution and
delivery by the Lessor and the Lessee on the Delivery Date of a Lease
Supplement.
(b) Delivery and Acceptance of the Aircraft Under the Lease.
The Lessor hereby authorizes one or more persons designated by the
Lessee as the authorized representative or representatives of the Lessor to
accept delivery of the Aircraft from the Seller. By executing and delivering
Lease Supplement No. 1, the Lessee confirms to the Lessor that the Lessee has
duly and irrevocably accepted delivery of the Aircraft for all purposes of this
Lease.
Section 3. Term and Rent.
(a) Term.
The Aircraft is leased for a Term which shall comprise the Basic
Term and, at the option of the Lessee exercised in accordance with Section
13(a), one or more Renewal Terms. The Basic Term shall commence on the Delivery
Date and continue through the Expiration Date; and each Renewal Term, if any,
shall be for the applicable period provided in Section 13(a), except that the
Term (including the Basic Term or any Renewal Term, as the case may be) shall
end upon any earlier termination of this Lease according to its terms.
(b) Basic Rent.
The Lessee shall pay Basic Rent in consecutive semi-annual
installments on each Basic Rent Payment Date during the Basic Term, each such
installment to be in an amount determined by multiplying Lessor's Cost by the
percentage set forth in Exhibit C for the applicable Basic Rent Payment Date.
The Lessee shall pay Basic Rent
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during a Renewal Term in the amounts and at the times provided in Section 13(a)
for such Renewal Term.
(c) Supplemental Rent.
The Lessee shall pay to the Lessor, or to whoever shall be entitled
thereto, any and all Supplemental Rent when the same shall become due and owing.
Without limiting the foregoing, the Lessee shall pay as Supplemental Rent:
(i) to the Lessor, on demand, interest at the Past Due
Rate on any part of any installment of Basic Rent not paid
when due for the period for which the same shall be overdue;
(ii) to whoever shall have been entitled to receive the
relevant payment of Supplemental Rent, on demand, interest at
the Past Due Rate on any payment of Supplemental Rent (other
than interest payable under this clause (ii)) not paid when
due for the period for which the same shall be overdue;
(iii) to the Lessor, an amount equal to any Make-Whole
Premium as and when such amount is due and payable by the
Lessor under the terms of the Indenture (except in the case of
any prepayment pursuant to Section 6.02(a)(iii) of the
Indenture); and
(iv) the Administrative Fee and the Guarantee Fee (each
as defined in the Deficiency Agreement).
(d) Adjustments to Basic Rent and Termination Values.
All installments of Basic Rent remaining to be paid during the Basic
Term shall be recalculated and adjusted, upwards or downwards as the case may be
(and corresponding adjustments shall be made to the EBO Amount and the
Termination Values applicable during the remaining Basic Term) to maintain the
Net Economic Return and, to the greatest extent consistent with such maintenance
of such Net Economic Return, to minimize the net present value (calculated at a
discount rate equal to the Debt Rate or such other rate as may be specified by
the Lessee to the Owner Participant) of the remaining Basic Rent payments (or,
if the Lessee shall have so specified to the Owner Participant, the remaining
Basic Rent Payments to the EBO Date together with the EBO Amount, if:
(i) the Delivery Date shall not be September 30, 1998;
(ii) there shall be a refinancing or refunding of the debt evidenced
by the Equipment Notes pursuant to Section 13 of the Participation Agreement;
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(iii) the Transaction Costs payable by the Owner Participant
pursuant to Section 8.01(a) of the Participation Agreement shall be
greater or less than the percentage of Lessor's Cost set forth on Exhibit
B;
(iv) there shall be an adjustment of Termination Values as provided
in Section 16 of the Tax Indemnity Agreement; or
(v) there shall be any increase in the amount of interest due on the
Equipment Notes pursuant to the Registration Rights Agreement.
Adjustments to the installments of Basic Rent (expressed as percentages of
Lessor's Cost) set forth in Exhibit C and conforming adjustments to the EBO
Amount and the amounts of Termination Values (expressed as percentages of
Lessor's Cost) set forth in Exhibit D shall be calculated by the Owner
Participant in accordance with the terms of this Section 3(d), and the Owner
Participant shall deliver to the Lessee, the Lessor and the Indenture Trustee
schedules setting forth the revised EBO Amount and the revised percentages that
the Owner Participant proposes to include in Exhibits C and D, subject to review
by the Lessee and verification as provided herein. In the event of a dispute
regarding any such adjustment which is not resolved by agreement of the Lessee
and the Owner Participant, the adjustments, at the request of the Lessee
delivered to the Owner Participant within 30 days after receipt of the Owner
Participant's proposed adjustments, shall be subjected to verification by a
lease advisory firm or a nationally recognized firm of accountants to be
selected by the Owner Participant and reasonably acceptable to the Lessee. The
Owner Participant shall provide to such firm, but not, in any circumstances, to
Lessee or any representatives of Lessee, on a confidential basis such
information as such firm may reasonably require, including, without limitation,
a true copy of this Lease and a full description of the methodology and
assumptions employed by the Owner Participant in calculating the Basic Rent, EBO
Amount and Termination Values set forth in Exhibits C and D as in effect on the
Delivery Date and a true copy of the calculations of the same performed by the
Owner Participant at the time, to enable such firm to determine whether the
adjustments proposed by the Owner Participant are mathematically accurate, apply
the same methodology and assumptions (except to the extent changed by the events
giving rise to such recalculation) as were employed in the calculations of the
Basic Rent, EBO Amount and Termination Values in effect on the Delivery Date,
and are otherwise in conformity with the provisions of this Lease. The Lessee
and its financial advisors shall be entitled to submit such data and views as
the Lessee may elect to such firm concerning the proposed adjustments. The firm
shall be requested to deliver to each of the Owner Participant, the Lessee, the
Lessor and the Indenture Trustee within 30 days after its appointment its
determination as to the changes, if any, that are appropriate with respect to
the adjustments proposed by the Owner Participant. The adjustments proposed by
the Owner Participant, if not disputed by the Lessee as provided above, or the
determination of the firm as provided above, as the case may be, shall be
conclusive, final and binding upon the Lessor, the Lessee and the Owner
Participant, and the EBO Amount and Exhibits C and D shall be amended to reflect
them. No dispute concerning any adjustment shall release the Lessee from its
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obligation to pay Basic Rent, the EBO Amount or Termination Value as then set
forth in Exhibits C and D. All reasonable fees and expenses payable to a firm
pursuant to this paragraph shall be paid by the Lessee except that such fees and
expenses shall be paid entirely by the Owner Participant if, as a result of
changes determined by the firm, the net present value, discounted at the Debt
Rate or such other rate as the Lessee may have specified as provided above in
this paragraph, of Basic Rent remaining to be paid is ten basis points (0.10%)
or more lower than it would have been under the adjustments proposed by the
Owner Participant.
Any adjustments made pursuant to this Section 3(d) shall (i) be made so as to
avoid characterization of this Lease as a "disqualified leaseback or long-term
agreement" within the meaning of Section 467 of the Code and/or regulations
thereunder (or any successor or relevant Code provision or regulations) and (ii)
be in compliance with the requirements of Sections 4.02(5) and 4.07(l) of the
Revenue Procedure 75-28 (or any successor relevant procedure), except to the
extent that on the Delivery Date the Lease constituted such a "disqualified
leaseback or long-term agreement" or was not in compliance with the revenue
procedure referred to in clause (ii). In addition, notwithstanding any other
provisions herein, in no event shall the EBO Amount be adjusted to an amount
that is less than the greater of (A) the adjusted Termination Value as of the
applicable EBO Date, (B) the estimated fair market value of the Aircraft on the
applicable EBO Date (as set forth in the appraisal received pursuant to Section
3.01(b)(xiii) of the Participation Agreement), and (C) the present value as of
the applicable EBO Date of (x) the remaining scheduled Basic Rent through the
end of the Basic Term plus (y) Estimated Value (as identified on Exhibit B) (the
present value calculation described in this clause (C) shall utilize a
semi-annual compounded discount rate no lower than the rate per annum identified
on Exhibit B as the Compounded Discount Rate). All adjustments required pursuant
to this Section 3(d) shall be set forth in a Lease Supplement or in an amendment
to this Lease, and promptly after execution thereof by Lessor and Lessee, Lessee
shall give a copy thereof to the Indenture Trustee.
(e) Manner of Payment.
All Rent payable by the Lessee to the Lessor hereunder shall be paid
to the Lessor at its principal office at One Rodney Square, 920 King Street,
Suite 102, Wilmington, Delaware, 19801, Attention: Corporate Trust
Administration, or to such other address as the Lessor shall specify in a notice
to the Lessee, in Dollars in immediately available funds, so that the Lessor
receives the full amount of each payment not later than 12:00 noon Eastern Time
on the due date thereof, except that so long as the Indenture shall not have
terminated pursuant to its terms, all Rent payable to the Lessor (other than
Excepted Payments) shall be paid to the Indenture Trustee, in the manner
provided above, at its principal office as specified in the Indenture, or as the
Indenture Trustee may otherwise direct by a notice delivered to the Lessee prior
to the date of payment. If any Rent is due on a day that is not a Business Day,
such Rent shall be paid on the next succeeding Business Day with the same force
and effect as if paid on the scheduled date of payment and no interest shall
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accrue on the amount of such payment from and after such scheduled date to the
time of payment on such next succeeding Business Day. Whether or not the
Indenture remains in effect, Rent constituting Excepted Payments shall be paid
directly to the Person entitled thereto in the manner and at or before the time
specified above.
(f) Minimum Rent.
Anything herein to the contrary notwithstanding,
(i) each installment of Basic Rent, whether or not such
installment has been adjusted pursuant to Section 3(d), shall
be in an amount which is at least equal to the amount of any
principal of and interest on the Equipment Notes that falls
due and is payable by the Lessor pursuant to the terms of the
Indenture (other than by reason of acceleration of the
Equipment Notes) on the date when such installment of Basic
Rent is due, and
(ii) Termination Value, whether or not Termination Value
has been adjusted pursuant to Section 3(d), shall be in an
amount which (when taken together with any Basic Rent due and
payable in connection therewith) is at least equal to, as of
the applicable date of payment, the aggregate unpaid principal
of and accrued interest on the Equipment Notes (other than
overdue amounts attributable to an Indenture Event of Default
not caused solely by an Event of Default).
The preceding sentence is intended solely to provide for, and to allocate as
between the Lessor and the Lessee the risk of, the possibility of miscalculation
by the Lessor and the Lessee of amounts of Rent which it is contemplated will be
available to the Indenture Trustee, as the Lessor's security assignee under the
Indenture, for application to the payment of amounts payable by the Lessor on
the Equipment Notes. The Lessee does not guarantee, and nothing in this
paragraph (f) shall be construed to be a guarantee by the Lessee, that the
Lessor will repay any principal of or pay any premium or interest on any
Equipment Notes or that the Indenture Trustee will, or will be able to, apply
for such purposes any amount of Rent paid by the Lessee.
(g) Rent Obligations Unconditional.
The Lessee's obligations to pay all Rent due and owing under the
terms hereof shall be absolute and unconditional and shall not be affected by
any circumstance whatsoever including, without limitation, (i) any setoff,
counterclaim, recoupment or other right which the Lessee may have against the
Lessor, the Owner Participant, the Indenture Trustee, the holders of the
Equipment Notes or anyone else for any reason whatsoever, (ii) any defect in the
title, airworthiness, condition, design, operation or fitness for use of, or any
damage to or loss or destruction of, the Aircraft, or any interference,
interruption or cessation in or prohibition of the use or possession
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thereof by the Lessee for any reason whatsoever, including, without limitation,
any such interference, interruption, cessation or prohibition resulting from the
act of any governmental authority or any violation by the Lessor of Section 4
hereof, (iii) any Liens, encumbrances or rights of others with respect to the
Aircraft, (iv) the invalidity or unenforceability or lack of due authorization
or other infirmity or disaffirmance of this Lease or any provision hereof or any
other Operative Agreement or any lack of right, power or authority of the Lessor
or the Lessee to enter into this Lease or any other Operative Agreement, (v) any
insolvency, bankruptcy, reorganization or similar proceedings by or against the
Lessee, or any other Person, or (vi) any other cause whether similar or
dissimilar to the foregoing, any present or future law notwithstanding, it being
the intention of the parties that all Rent payable by the Lessee hereunder shall
continue to be payable in all events in the manner and at the times provided
herein. Such Rent shall not be subject to any abatement and the payments thereof
shall not be subject to any setoff or any reduction for any reason other than
manifest error in the calculation thereof or the documentation of this Lease. To
the extent permitted by Applicable Law, the Lessee waives any rights which it
may now have or which may be conferred upon it by statute or otherwise to
terminate, cancel, quit or surrender this Lease except in accordance with the
terms hereof. If for any reason whatsoever this Lease shall be terminated in
whole or in part by operation of law or otherwise except as specifically
provided in Sections 8, 13, 14 and 17, Lessee nonetheless agrees to pay to
Lessor an amount equal to the Rent payment at the time such payment would have
become due and payable in accordance with the terms hereof had this Lease not
been terminated in whole or in part. Subject to the following sentence, each
payment of Rent made by Lessee to Lessor shall be final as to Lessor and Lessee
and Lessee will not seek to recover all or any part of such payment of Rent for
any reason whatsoever. Nothing herein shall be construed as a waiver by the
Lessee of any claim it may have against any Person arising under any of the
Operative Agreements or otherwise, including, without limitation, any claim that
Rent payments demanded from or paid by the Lessee are or were not due, are or
were erroneous or were paid under mistake or protest, or be construed as a
limitation on any rights of the Lessee to assert any claim in any proceeding at
law, in equity or otherwise against the Lessor or any other Person and to pursue
and obtain relief on such claim in such manner as the Lessee shall deem
appropriate other than by setoff against Rent payments due under the terms
hereof.
Section 4. The Lessor's Representations and Warranties.
(a) THE LESSOR LEASES THE AIRCRAFT HEREUNDER "AS-IS" AND NEITHER THE
LESSOR, TRUST COMPANY INDIVIDUALLY NOR THE OWNER PARTICIPANT SHALL BE DEEMED TO
HAVE MADE, AND HEREBY DISCLAIMS, ANY REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, AS TO THE TITLE, AIRWORTHINESS, CONDITION, VALUE, DESIGN, OPERATION,
MERCHANTABILITY, COMPLIANCE WITH SPECIFICATIONS, CONSTRUCTION, PERFORMANCE OR
FITNESS FOR USE OR FOR ANY PURPOSE OF THE AIRCRAFT OR ANY PART THEREOF, AS TO
THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO
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THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT, AS TO THE
ABSENCE OF OBLIGATIONS BASED ON LIABILITY IN TORT, STRICT OR OTHERWISE, OR AS TO
THE QUALITY OF THE MATERIAL OR WORKMANSHIP OF THE AIRCRAFT OR ANY PART THEREOF
OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, WITH
RESPECT TO THE AIRCRAFT OR ANY PART THEREOF, except that the Lessor warrants
that on the Delivery Date the Lessor shall have received whatever title was
conveyed to it by the Seller and the Lessor warrants that the Aircraft shall be
free of Lessor's Liens during the Term.
(b) The Lessor covenants that during the Term, as long as no Event
of Default has occurred and is continuing, the Lessee's possession, use and
quiet enjoyment of the Aircraft leased hereunder shall not be interrupted by the
Lessor (or any Person lawfully claiming through the Lessor).
Section 5. Possession, Operation and Use,
Maintenance Registration and Insignia.
(a) General.
Except as otherwise expressly provided herein, the Lessee (and any
Permitted Sublessee) shall be entitled during the Term to operate, use, locate,
employ or otherwise utilize or not utilize the Airframe, Engines and Parts
leased hereunder in any lawful manner or place in accordance with the Lessee's
(or such Permitted Sublessee's) business judgment.
(b) Possession.
The Lessee shall not sublease, or otherwise in any manner deliver,
relinquish or transfer possession of the Airframe or any Engine leased hereunder
to any Person or install any Engine, or permit any Engine to be installed, on
any airframe other than the Airframe, during the Term, without the prior consent
of the Lessor, which consent may be withheld in its sole discretion, provided,
however, that so long as (A) only in the case of clause (x) below, no Default of
the type referred to in Section 16(a), (b), (f), (g) or (h) hereof shall have
occurred and be continuing, (B) no Event of Default shall have occurred and be
continuing, and (C) all approvals, consents or authorizations required from the
Aeronautical Authority in connection with any such sublease or such delivery,
transfer or relinquishment of possession have been obtained and remain in full
force and effect, the Lessee (or, except in the case of clause (x) below, any
Permitted Sublessee) may, without the prior consent of the Lessor:
(i) enter into a charter or wet lease or other similar
arrangement under which the Lessee (or such Permitted
Sublessee) has operational control of the Airframe and any
Engines installed thereon in the course of the Lessee's
business (which shall not be considered a transfer of
possession hereunder), provided that the
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Lessee's obligations under this Lease and such Permitted
Sublessee's obligations under the relevant Sublease shall
continue in full force and effect notwithstanding any such
charter or wet lease or other similar arrangement;
(ii) deliver possession of the Airframe or any Engine or
any Part to the manufacturer thereof or to any organization
for testing, service, repair, maintenance, overhaul work or
other similar purposes or for alterations or modifications or
additions required or permitted by the terms of this Lease;
(iii) subject the Airframe and any Engines installed
thereon to interchange agreements (provided that (x) any such
interchange agreement with respect to the Airframe shall not
result in the Lessee (or a Permitted Sublessee) being out of
possession of the Airframe for a period of more than two (2)
consecutive days at any one time; (y) such interchange
agreement is entered into with a Permitted Sublessee; and (z)
the party to such interchange agreement is not then subject to
a proceeding or final order under applicable bankruptcy,
insolvency or reorganization laws on the date such interchange
agreement is entered into) or any Engine to interchange or
pooling agreements or arrangements which are applicable to
other similar property owned by or leased to the Lessee (or
such Permitted Sublessee) and are entered into by the Lessee
(or such Permitted Sublessee) in the course of its airline
business with any air carrier, provided, that (A) no such
agreement or arrangement shall under any circumstances result
in, contemplate or require the transfer of title to the
Aircraft, Airframe or any Engine and (B) if the Lessor's title
to any Engine shall nevertheless 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 the Lessee
shall comply with Section 7(e) hereof in respect thereof;
(iv) install an Engine on an airframe owned by the
Lessee (or such Permitted Sublessee) free and clear of all
Liens except (A) Permitted Liens, (B) those which apply only
to the engines (other than the Engines), appliances, parts,
instruments, appurtenances, accessories, furnishings and other
equipment (other than Parts) installed on such airframe, and
(C) those created by the rights of other air carriers under
interchange or pooling agreements or other arrangements
customary in the airline industry which do not contemplate,
permit or require the transfer of title to such airframe or
engines installed thereon;
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(v) install an Engine on an airframe, leased to the
Lessee (or such Permitted Sublessee) or purchased by the
Lessee (or such Permitted Sublessee) subject to a conditional
sale or other security agreement, but only if (A) such
airframe is free and clear of all Liens, except (i) the rights
of the parties to such lease, or any such secured financing
arrangement, covering such airframe and (ii) Liens of the type
permitted by Section 5(b)(iv) and (B) Lessee (or such
Permitted Sublessee) shall have received from the lessor,
mortgagee, secured party or conditional seller, in respect of
such airframe, a written agreement (which may be a copy of the
lease, mortgage, security agreement, conditional sale or other
agreement covering such airframe), whereby such Person agrees
that it will not acquire or claim any right, title or interest
in, or Lien on, such Engine by reason of such Engine being
installed on such airframe at any time while such Engine is
subject to this Lease (or, in the case of such Permitted
Sublessee, the relevant Sublease) or is owned by Lessor;
(vi) install an Engine on an airframe, owned by the
Lessee (or such Permitted Sublessee), leased by the Lessee (or
such Permitted Sublessee) or purchased by the Lessee (or such
Permitted Sublessee) subject to a conditional sale or other
security agreement under circumstances where neither clause
(iv) nor clause (v) above is applicable, provided that any
such installation (so long as the same shall be continuing)
shall be deemed an Event of Loss with respect to such Engine
and the Lessee shall comply with Section 7(e) hereof;
(vii) transfer possession of the Airframe or Engine to
the United States of America or any instrumentality thereof
pursuant to the Civil Reserve Air Fleet Program (as
established and administered pursuant to Executive Order
11490, as amended, as superseded by United States Executive
Order No. 12656) or any similar or substitute program ("CRAF
Program"), in which event Lessee (or such Permitted Sublessee)
shall promptly notify Lessor and Indenture Trustee in writing
of any such transfer of possession and, in the case of any
transfer pursuant to the CRAF Program, in such notification
shall identify by name, address and telephone numbers the
Contracting Office Representatives of the Military Airlift
Command of the United States Air Force to whom notices must be
given and to whom requests or claims must be made to the
extent applicable under the CRAF Program;
(viii) transfer possession of the Airframe or any Engine
to the United States of America, or to a foreign government,
when required by Applicable Law (it being understood that
nothing in
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this clause (viii) shall relieve the Lessee from its
obligations under Section 8(a) if such transfer becomes an
Event of Loss), in which event Lessee shall promptly notify
Lessor and Indenture Trustee in writing of any such transfer
of possession;
(ix) [Reserved];
(x) subject to the provisions of this Section 5(b),
enter into a sublease with respect to any Engine or the
Airframe and Engines or engines then installed on the Airframe
to any Permitted Sublessee if (A) Lessee shall provide written
notice to Lessor, Owner Participant and Indenture Trustee at
least 10 days prior to entering into any such sublease, (B) in
any such case, the 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, (C) in the event that the sublessee
under such sublease is a foreign air carrier or Person based
in a country other than the United States, the United States
maintains normal diplomatic relations with the country in
which such proposed sublessee is principally based at the time
such sublease is entered into and (D) in the event that the
sublessee under such sublease is a foreign air carrier or
Person based in a country other than the United States, prior
to the effectiveness of such sublease Lessor shall have
received an opinion (in form and substance reasonably
acceptable to Lessor) of counsel to Lessee (reasonably
acceptable to Lessor) to the effect that (I) the terms of the
proposed sublease will be legal, valid, binding and (subject
to customary exceptions) enforceable against the proposed
sublessee in the country in which the proposed sublessee is
principally based, (II) there exist no possessory rights in
favor of the sublessee under such sublease under the laws of
such sublessee's country of domicile that would, upon
bankruptcy or insolvency of or other default by the Lessee and
assuming that at such time such sublessee is not insolvent or
bankrupt, prevent the return or repossession of the Aircraft
in accordance with and when permitted by the terms of Section
17(a) upon the exercise by Lessor of its remedies under
Section 17(a), (III) the laws of such 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 or title to such Engine or the
Airframe in the event of the requisition by such government of
such use or title (it being understood that in the event such
opinion cannot be given in a form reasonably satisfactory to
the Owner Participant, such opinion will be waived if
insurance reasonably satisfactory to the Owner Participant is
provided to cover such requisition), (IV) the laws of such
sublessee's country of domicile would give
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recognition to Lessor's title to such Engine or the Airframe,
to the registry of such Engine or the Airframe in the name of
Lessor (or Lessee, as "lessee", or the proposed sublessee, as
appropriate), (V) all filings, if any, required to be made in
such jurisdiction in connection with the execution of such
sublease in order to protect the interest of Lessor in such
Engine or the Airframe have been made, (VI) it is not
necessary for the Owner Participant or Lessor to register or
qualify to do business in such jurisdiction, if not already so
registered or qualified, as a result, in whole or in part, of
the proposed sublease, (VII) the agreement of such Permitted
Sublessee that its rights under the sublease are subject and
subordinate to all the terms of this Lease is enforceable
against such Permitted Sublessee under Applicable Law of such
country, and (VIII) there is no tort liability for owners not
in possession of aircraft in such country more onerous than
under the laws of the United States or any state thereof (it
being agreed that in the event such opinion cannot be given in
a form reasonably satisfactory to the Owner Participant, such
opinion will be waived if insurance reasonably satisfactory to
the Owner Participant is provided to cover the risk of such
tort liability); provided that no such sublease shall be made
to a Permitted Sublessee of the type described in clause (b)
of the definition thereof that is not domiciled in the United
States or of the type described in clause (b) of the
definition of Permitted Air Carrier or to any tax exempt
entity within the meaning of Section 168(h) of the Code prior
to the end of the Recovery Period, unless the Lessee prepays
on a lump sum basis any liability due under the Tax Indemnity
Agreement as a result of such sublease based upon the
assumption that such sublease will continue for the full term
of such sublease;
provided that (1) the rights of any transferee who receives possession by reason
of a transfer permitted by this Section 5(b) (other than by a transfer of an
Engine which is deemed an Event of Loss) shall be subject and subordinate to all
the terms of this Lease; (2) the Lessee shall remain primarily liable hereunder
for the performance of all the terms and conditions of this Lease and all of the
terms and conditions of this Lease and the other applicable Operative Agreements
shall remain in effect; (3) no sublease or transfer of possession otherwise in
compliance with this Section 5(b) shall (A) result in any registration or
re-registration of the Aircraft except to the extent permitted by Section 5(e)
or the maintenance, operation or use thereof except in compliance with Sections
5(c) and 5(d), (B) permit any action not permitted to the Lessee hereunder, (C)
extend beyond the end of the Term (except to the extent that the Lessee shall
have irrevocably committed to exercise a purchase option in accordance with the
terms hereof) or (D) contain any purchase option exercisable at an earlier date
or at a lower price than such date or price, as the case may be, as permitted
under Section 13(b) hereof; (4) if any such sublease or transfer of possession
shall, in the reasonable opinion of the Owner Participant, result in any risk of
adverse tax consequences, the Lessee
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shall, prior to entering into the same, provide an indemnity satisfactory in
form and substance to the Owner Participant against any such adverse tax
consequences; (5) the Lessee shall provide evidence reasonably satisfactory to
Lessor and Owner Participant that the insurance required by Section 9 remains in
effect; (6) all necessary documents shall have been duly filed or recorded in
applicable public offices as may be required to preserve the title of Lessor to
the Airframe and Engines; and (7) Lessee shall reimburse Lessor, Owner
Participant and Indenture Trustee, on an After Tax Basis, for all of their
reasonable out-of-pocket expenses (including fees and disbursements of counsel)
in connection with any such sublease or transfer.
In the case of any sublease permitted under this Section 5(b), the
Lessee will include in such sublease appropriate provisions which (a) make such
sublease expressly subject and subordinate to all of the terms of this Lease and
the Indenture, including the rights of the Lessor and the Indenture Trustee to
avoid such sublease in the exercise of their rights to repossession of the
Airframe and Engines hereunder and thereunder; (b) expressly prohibit any
further subleasing of the Airframe and Engines; (c) require that the Airframe
and Engines be maintained in accordance with a maintenance program approved by
the Aeronautical Authority applicable thereto; (d) require the sublessee to
comply with the terms of Section 9 hereof; (e) limit the term of such sublease
(including renewal rights) to a period not beyond the end of the Term unless the
Lessee shall then have irrevocably committed to exercise a purchase option in
accordance with the terms hereof; (f) require that the Airframe and Engines be
used in accordance with the limitations applicable to the Lessee's possession
and use provided in this Lease and (g) shall include provisions for the
maintenance, operation, possession and inspection of the Aircraft that are the
same in all material respects as the applicable provisions of this Lease.
The Lessor hereby agrees for the benefit of the lessor or secured
party of any engine or of any airframe (other than the Airframe) leased to the
Lessee or purchased by the Lessee subject to a conditional sale or other
security agreement, which lease or conditional sale or other security agreement
(in the case of any 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, that the
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 owned by such lessor
or is subject to such conditional sale or other security agreement or security
interest in favor of such secured party.
(c) Operation and Use.
The Lessee shall not operate, use or locate the Airframe or any
Engine, or suffer such Airframe or any Engine to be operated, used or located
(i) in any area excluded from coverage by any insurance required by the terms of
Section 9 hereof, except in the case of a requisition by the United States of
America where the Lessee obtains (and provides evidence of) indemnity from the
Government for the benefit of
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the Additional Insureds against substantially the same risks and for at least
the amounts of the insurance required by Section 9 hereof covering such area, or
(ii) outside the United States or Canada in any recognized or, in the Lessee's
reasonable judgment, threatened area of hostilities unless covered by war risk
insurance, or in either case unless the Airframe or such Engine is operated or
used under contract with the Government under which contract the Government
assumes liability for substantially the same risks in at least the same amounts
as would be covered by such insurance. The Lessee shall not permit the Airframe
or any Engine to be used or operated during the Term in violation of any
Applicable Law or in violation of any airworthiness certificate, license or
registration relating to the Aircraft or such Engines issued by any competent
governmental authority, unless (i) the validity thereof is being contested in
good faith and by appropriate proceedings which do not involve a non-de minimis
danger of the sale, forfeiture or loss of the Airframe or such Engine or the
interest of any Participant therein, any risk of criminal liability or any
material risk of civil liability against Lessor or any Participant, or (ii) it
is not possible for the Lessee (or a Permitted Sublessee) to comply with the
laws of a jurisdiction other than the United States (or other than any
jurisdiction in which the Aircraft is then registered) because of a conflict
with the applicable laws of the United States (or such jurisdiction in which the
Aircraft is then registered).
(d) Maintenance.
The Lessee, at its own cost and expense, shall during the Term
service, repair, maintain, overhaul and test the Aircraft, the Airframe and each
Engine or cause the same to be done in accordance with (1)(i) a maintenance
program approved by the Aeronautical Authority and (ii) maintenance standards
required by, or substantially equivalent to those required by, the FAA or the
central civil aviation authority of Canada, France, Germany, Japan, The
Netherlands or the United Kingdom, and shall keep or cause to be kept the
Aircraft, the Airframe and each Engine in as good operating condition as
originally delivered hereunder, ordinary wear and tear excepted, and shall keep
or cause to be kept the Aircraft, the Airframe and each Engine in such operating
condition as may be necessary to enable the airworthiness certification of the
Aircraft to be maintained in good standing at all times under the applicable
rules and regulations of the Aeronautical Authority, except when aircraft of the
same type, model or series as the Airframe (powered by engines of the same type
as those with which the Airframe shall be equipped at the time of grounding)
registered in the same country have been grounded by the Aeronautical Authority,
provided, however, that if the airworthiness certificate of the Aircraft shall
be withdrawn, then, subject to Section 8 hereof, so long as the Lessee (or a
Permitted Sublessee) is taking or causing to be taken all necessary action to
promptly correct the condition which caused such withdrawal, no Event of Default
shall arise from such withdrawal and (2) except during periods when a Sublease
is in effect, the same standards Lessee uses with respect to similar aircraft of
similar size in its fleet operated (whether owned or leased) by Lessee in
similar circumstances and during any period in which a Sublease is in effect,
the same standards the Permitted Sublessee uses with respect to similar aircraft
of similar size in its fleet and operated (whether owned or leased) by the
Permitted Sublessee in
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similar circumstances. Nothing herein shall be deemed to prevent the Lessee (or
a Permitted Sublessee) from taking the Aircraft out of service for maintenance
or modifications permitted hereunder or storage in accordance with applicable
Aeronautical Authority requirements and sound practice for such storage. The
Lessee shall maintain or cause to be maintained all records, logs and other
documents required by the Aeronautical Authority to be maintained in respect of
the Aircraft in English. Lessee further agrees that the Aircraft, Airframe and
Engines will be maintained, used, serviced, repaired, overhauled or inspected in
compliance with Applicable Law with respect to the maintenance of the Aircraft
and compliance with each applicable airworthiness certificate, license and
registration relating to the Aircraft, Airframe or any Engine issued by the
Aeronautical Authority.
(e) Registration
Except as otherwise permitted by Section 4.02(b) of the
Participation Agreement, or as otherwise required by the Federal Aviation Act or
rules, regulations, or orders promulgated thereunder, or to the extent that such
registration cannot be effected or continued due to the Lessor's or the Owner
Participant's failure to comply with the citizenship or other eligibility
requirements for registration of commercial aircraft under the Transportation
Code or any rule, regulation or order promulgated thereunder, the Aircraft shall
be duly registered in the name of the Lessor under the Transportation Code at
all times during the Term; provided that the Lessor shall execute and deliver
all such documents as the Lessee may reasonably request for the purpose of
effecting, continuing or (as provided in this Section 5(e) hereof and Section
4.02(b) of the Participation Agreement) changing such registration.
Section 6. Inspection; Financial Information.
At all reasonable times during the Term, but upon at least 15 days'
prior notice to the Lessee (unless an Event of Default shall have occurred and
be continuing, in which event a prior written notice of at least one (1)
Business Day is required) and at a time and place reasonably acceptable to the
Lessee, the Lessor, the Owner Participant and the Indenture Trustee or their
authorized representatives (which may include the Manufacturer) may at their own
expense (unless an Event of Default shall have occurred and be continuing, in
which event the Lessee shall bear such expense) and risk conduct a visual
walk-around inspection of the Aircraft and any Engine (including a visual
walk-around inspection of the Aircraft during any "C" check or other heavy
maintenance) and may inspect the books and records of the Lessee relating to the
operation and maintenance thereof and the Lessee shall provide copies of such
books and records to the Lessor and the Owner Participant or their authorized
representatives at its or their reasonable request; provided that (a) such
representatives shall be fully insured to the reasonable satisfaction of the
Lessee by the Lessor, the Owner Participant or the Indenture Trustee with
respect to any risks incurred in connection with any such inspection, (b) any
such inspection shall be subject to the safety, security and workplace rules
applicable at the location where such inspection is conducted and any applicable
governmental rules or regulations, (c) in the case of an
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inspection during a maintenance visit, such inspection shall not interfere with
the normal conduct of such maintenance visit or extend the time required for
such maintenance visit or, in any event, at any time interfere with the use or
operation of the Airframe or any Engine or with the normal conduct of the
Lessee's or a permitted sublessee's business, and (d) the Lessee shall not be
required to undertake or incur any additional liabilities in connection with any
such inspection. All information obtained in connection with any such inspection
shall be held confidential by the Lessor, the Indenture Trustee and the Owner
Participant and shall not be furnished or disclosed by them to anyone other than
each other, their bank examiners, auditors, accountants, agents and legal
counsel and any Person with whom the Owner Participant is in good faith
conducting negotiations relating to the possible transfer and sale of the Owner
Participant's interest in the Trust Estate or the Aircraft, if such Person shall
have entered into an agreement similar to that contained in this Section 6
whereby such Person agrees to hold such information confidential, and except as
may be required by an order of any court or administrative agency or by any
statute, rule, regulation or order of any governmental authority or as may be
necessary to enforce the terms of this Lease, provided, however, that the Lessor
or the Owner Participant may during any time it is offering the Aircraft for
sale make customary disclosures to prospective purchasers of the Aircraft as to
the then current flight and maintenance status of the Aircraft. The Lessor, the
Owner Participant and the 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.
In addition to any inspection as provided hereunder, upon each
request of Owner Participant to Lessee made not more than four times in a
calendar year, Lessee will make available to Owner Participant information with
respect to the cycles and hours of operation of the Airframe and Engines and the
status of the time controlled components of the Engines.
If requested by Lessor or Owner Participant, Lessee shall provide,
or shall cause any Permitted Sublessee to provide, the date (if then scheduled)
upon which the Airframe undergoes its next scheduled major check and, with
respect to any Engine, the next scheduled off the Airframe maintenance, and
shall advise Lessor and Owner Participant of the name and location (if then
known) of the relevant maintenance performer.
Section 7. Replacement and Pooling of Parts; Alterations,
Modifications and Additions; Substitution of Engines.
(a) Replacement of Parts.
Except as otherwise provided in the proviso to the third sentence of
Section 7(d) or if the Airframe or an Engine to which a Part relates has
suffered an Event of Loss, the Lessee, at its own cost and expense, will during
the Term promptly replace all Parts that may from time to time become worn out,
lost, stolen, destroyed, seized, confiscated, damaged beyond repair or
permanently rendered unfit for use for
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any reason whatsoever. In addition, in the ordinary course of maintenance,
service, repair, overhaul or testing, the Lessee (or a Permitted Sublessee), at
its own cost and expense, may remove any Parts, whether or not worn out, lost,
stolen, destroyed, seized, confiscated, damaged beyond repair or permanently
rendered unfit for use, provided that the Lessee (or such Permitted Sublessee),
at its own cost and expense, shall, except as otherwise provided in the proviso
to the third sentence of Section 7(d), replace such Parts as promptly as
practicable with replacement Parts or temporary replacement parts as provided in
Section 7(c) hereof. All replacement Parts shall be free and clear of all Liens
except for pooling arrangements to the extent permitted by Section 7(c) and
Permitted Liens and shall be in as good operating condition as, and shall have a
value and utility at least equal to, the Parts replaced assuming such replaced
Parts were in the condition and repair required to be maintained by the terms
hereof.
(b) Title to Parts.
Except as otherwise provided in the proviso to the third sentence of
Section 7(d), all Parts at any time removed from the Airframe or any Engine
shall remain the property of the Lessor and subject to this Lease, no matter
where located, until such time as such Parts shall be replaced by Parts that
have been incorporated or installed in or attached to such Airframe or Engine
and that meet the requirements for replacement Parts specified in Section 7(a).
Immediately upon any replacement Part becoming incorporated or installed in or
attached to an Airframe or Engine as provided in Section 7(a), without further
act, (i) title to the replaced Part shall thereupon vest in the Lessee (or the
relevant Permitted Sublessee), in "as-is, where-is" condition, free and clear of
all rights of the Lessor and the Indenture Trustee and any Lessor's Liens and
shall no longer be deemed a Part hereunder; (ii) title to such replacement Part
shall thereupon vest in the Lessor (subject only to Permitted Liens); and (iii)
such replacement Part shall become subject to this Lease and be deemed part of
such Airframe or Engine, as the case may be, for all purposes hereof to the same
extent as the Parts originally incorporated or installed in or attached to such
Airframe or Engine.
(c) Pooling or Parts Leasing.
Any Part removed from the Airframe or from any Engine as provided in
Section 7(a) may be subjected by the Lessee (or a Permitted Sublessee) to a
pooling or parts leasing agreement or arrangement of a type customary in the
airline industry entered into in the ordinary course of the Lessee's (or such
Permitted Sublessee's) business, provided the part replacing such removed Part
shall be incorporated or installed in or attached to such Airframe or Engine in
accordance with Sections 7(a) and 7(b) as promptly as practicable 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 7(a) may be owned by another airline or vendor as
customary in the airline industry, subject to a pooling or parts leasing
arrangement, provided that the Lessee (or a Permitted Sublessee), at its expense
as promptly thereafter as reasonably practicable, either (i) causes title to
such
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temporary replacement part to vest in the Lessor in accordance with Section 7(b)
by the Lessee (or such Permitted Sublessee) acquiring title thereto for the
benefit of the Lessor free and clear of all Liens except Permitted Liens, at
which time such temporary replacement part shall become a Part and become
subject to this Lease or (ii) replaces such temporary replacement part by
incorporating or installing in or attaching to such Airframe or Engine a further
replacement Part owned by the Lessee (or such Permitted Sublessee) free and
clear of all Liens except Permitted Liens and by causing title to such further
replacement Part to vest in the Lessor in accordance with Section 7(b).
(d) Alterations, Modifications and Additions.
The Lessee, at its own expense, shall make (or cause to be made)
alterations and modifications in and additions to the Airframe and any Engine as
may be required to be made from time to time during the Term by Applicable Law
or in order to maintain the insurance required under Section 9 regardless of
upon whom such requirements are, by their terms, nominally imposed; provided,
that the Lessee may, in good faith and by appropriate procedure, contest the
validity or application of any such standard in any reasonable manner which does
not materially adversely affect the interests of the Lessor or the Lien of the
Indenture and does not involve any non-de minimis risk of sale, forfeiture or
loss of the Aircraft or the interest of any Participant therein, any material
risk of civil penalty or any risk of criminal liability being imposed on Lessor
or Owner Participant. In addition, the Lessee (or a Permitted Sublessee), at its
own expense, may from time to time make or cause to be made such alterations and
modifications in and additions to the Airframe and any Engine as the Lessee (or
such Permitted Sublessee) may deem desirable in the proper conduct of its
business including, without limitation, removal of Parts which Lessee (or such
Permitted Sublessee) deems are obsolete or no longer suitable or appropriate for
use in the Aircraft, Airframe or such Engine so long as the aggregate value of
such removed Parts (based on their value as of the Delivery Date) does not
exceed $200,000, provided further that no such alteration, modification or
addition (i) diminishes the value, utility, estimated residual value (with
respect to the Airframe only), condition, remaining useful life or airworthiness
of such Airframe or Engine below the value, utility, estimated residual value,
condition, remaining useful life or airworthiness thereof immediately prior to
such alteration, modification or addition, assuming such Airframe or Engine was
then in the condition required to be maintained by the terms of this Lease or
(ii) causes the Aircraft to be limited use property, except that the value (but
not the utility, estimated residual value, condition, remaining useful life or
airworthiness) of the Aircraft may be reduced by the value of Parts which the
Lessee (or such Permitted Sublessee) has removed as permitted above. Title to
all Parts incorporated or installed in or attached or added to the Airframe or
any Engine as the result of any alteration, modification or addition effected by
the Lessee (or a Permitted Sublessee) shall, without further act, vest in the
Lessor free and clear of any Liens except Permitted Liens and become subject to
this Lease; provided that the Lessee (or such Permitted Sublessee) may, at any
time during the Term, remove any such Part from the Airframe or an Engine if (i)
such Part is in addition to, and not in replacement of or in substitution for,
any Part originally incorporated or installed in
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or attached to such Airframe or Engine at the time of delivery thereof hereunder
or any Part in replacement of, or in substitution for, any such original Part,
(ii) such Part is not required to be incorporated or installed in or attached or
added to such Airframe or Engine pursuant to the terms of Section 5(d) or the
first sentence of this Section 7(d) or pursuant to the terms of any insurance
policies required to be carried hereunder or under any Applicable Law and (iii)
such Part can be removed from such Airframe or Engine without diminishing or
impairing the value, condition, utility, estimated residual value, remaining
useful life or airworthiness which such Airframe or Engine would have had at the
time of removal had such alteration, modification or addition not been effected
by the Lessee (or such Permitted Sublessee) assuming the Aircraft was otherwise
maintained in the condition required by this Lease. Upon the removal by the
Lessee (or such Permitted Sublessee) of any such Part as above provided, title
thereto shall, without further act, vest in the Lessee (or such Permitted
Sublessee), in "as-is, where-is" condition, free and clear of all rights of the
Lessor and the Indenture Trustee and any Lessor's Liens and such Part shall no
longer be deemed a Part hereunder. Any Part not removed by the Lessee (or a
Permitted Sublessee) as above provided prior to the return of the Airframe or
respective Engine to the Lessor hereunder shall remain the property of the
Lessor; provided that nothing in this Section 7(d) shall prohibit the Lessee (or
a Permitted Sublessee) from removing any seats from the Aircraft (which seats
while so removed shall remain in the possession of the Lessee (or such Permitted
Sublessee)) so long as the Aircraft when returned to the Lessor pursuant to
Section 12 hereof shall be in the condition required thereby.
(e) Substitution of Engines.
So long as no Specified Default shall have occurred and be
continuing, the Lessee (or a Permitted Sublessee) shall have the right at its
option at any time, on at least 30 days' prior notice to the Lessor, the Owner
Participant and the Indenture Trustee, to substitute, and if an Event of Loss
shall have occurred with respect to an Engine under circumstances in which there
has not occurred an Event of Loss with respect to the Airframe, shall within 90
days of the occurrence of such Event of Loss and on at least five days' prior
notice to the Lessor substitute, a Replacement Engine for any Engine not then
installed or held for use on the Airframe. In such event, immediately upon the
effectiveness of such substitution on the date set forth in such notice and
without further act, (i) title to the Replacement Engine shall thereupon vest in
the Lessor free and clear of all Liens (other than Permitted Liens), (ii) title
to the replaced Engine shall thereupon vest in the Lessee (or its designee), in
"as-is, where-is" condition, free and clear of all rights of the Lessor and the
Indenture Trustee and any Lessor's Liens and shall no longer be deemed an Engine
hereunder, and (iii) such Replacement Engine shall become subject to this Lease
and be deemed part of the Aircraft for all purposes hereof to the same extent as
the Engine originally installed on or attached to the Airframe. Upon the
substitution of a Replacement Engine, the following conditions shall be
satisfied at the Lessee's sole cost and expense and the parties agree to
cooperate with the Lessee to the extent necessary to enable it to timely satisfy
such conditions:
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(i) the following documents shall be duly authorized,
executed and delivered by the respective party or parties
thereto, and an executed counterpart of each shall be
delivered to the Lessor, the Owner Participant and, if the
Indenture is in effect, the Indenture Trustee:
(A) a Lease Supplement covering the Replacement
Engine, which shall have been duly filed for recordation
with the FAA;
(B) so long as the Indenture shall not have been
satisfied and discharged, an Indenture Supplement
covering the Replacement Engine, which shall have been
duly filed for recordation with the FAA;
(C) a full warranty bill of sale (as to title), in
form and substance satisfactory to the Lessor and the
Owner Participant, covering the Replacement Engine,
executed by the owner thereof in favor of the Lessor;
(D) as long as the Indenture is in effect, such
documents as may be required under Section 9.08 of the
Indenture relating to the Replacement Engine;
(E) (i) so long as the Indenture shall not have
been satisfied and discharged, such Uniform Commercial
Code financing statements covering the security
interests created by the Indenture (or any similar
statements or other documents required to be filed or
delivered pursuant to the laws of the jurisdiction in
which the Replacement Engine may be registered in
accordance with Section 5(e)), and (ii) "precautionary"
Uniform Commercial Code financing statements as are
deemed necessary or desirable by counsel for the Owner
Participant or the Indenture Trustee to protect the
ownership interests of the Owner Trustee and the
security interests of the Indenture Trustee in the
Replacement Engine;
(F) an Officer's Certificate of the Lessee
certifying that (i) in the case of a voluntary
replacement only, no Specified Default shall have
occurred and be continuing and (ii) (x) in the case of a
voluntary replacement, the Replacement Engine has at
least the same number of hours or cycles (whichever is
applicable) of operation on such Replacement Engine
remaining until the next scheduled life limited part
replacement as the Engine it replaces, assuming
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such Engine had been maintained in the condition
required hereunder; or (y) in the case of a mandatory
replacement, the Lessee has not discriminated in its
selection of the Replacement Engine (based on the leased
status of the Aircraft);
(G) an opinion of qualified FAA counsel as to the
due recordation of the Lease Supplement, the Indenture
Supplement and all other documents or instruments the
recordation of which is necessary to perfect and protect
the rights of the Lessor and the Indenture Trustee in
the Replacement Engine;
(H) to the extent that an engine warranty in
respect of such Replacement Engine is available to the
Lessee, an engine warranty assignment covering such
Replacement Engine, in substantially the form of the
Engine Warranty Assignment or otherwise in such form and
substance satisfactory to the Lessor and the Owner
Participant and a consent to such engine warranty
assignment, in substantially the form of the Engine
Warranty Assignment or otherwise in such form and
substance satisfactory to the Lessor and the Owner
Participant; and
(I) evidence that the insurance requirements of
Section 9 with respect to an Engine are satisfied and
that the insurance covering such Replacement Engine
shall be of the type usually carried by the Lessee (or,
in the case of a voluntary replacement, such Permitted
Sublessee) with respect to similar engines, and covering
risks of the kind customarily insured against by the
Lessee (or, in the case of a voluntary replacement, such
Permitted Sublessee);
(ii) the Lessee shall furnish (or cause to be furnished
to) the Lessor, the Owner Participant and the Indenture
Trustee with an opinion, reasonably satisfactory in form and
substance to the Lessor, the Owner Participant and the
Indenture Trustee, of the Lessee's counsel, which may be the
Lessee's General Counsel or Associate General Counsel, to the
effect that (x) such bills of sale or other documents
reasonably requested by the Lessor, the Owner Participant or
the Indenture Trustee are sufficient to convey title to such
Replacement Engine to the Lessor and with respect to the
effectiveness of the interests in the Trust Indenture Estate
which the Indenture purports to create and, (y) the Lessor and
the Indenture Trustee (as assignee of Lessor under the
Indenture), are
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entitled to the benefits of Section 1110 with respect to such
Replacement Engine to the same extent as with respect to the
replaced Engine immediately preceding such replacement; and
(iii) either (x) the Owner Participant shall have
received an opinion of independent tax counsel (selected by
the Owner Participant and reasonably acceptable to the
Lessee), reasonably satisfactory to the Owner Participant, to
the effect that there shall be no risk of adverse tax
consequences resulting from such replacement (and the Owner
Participant shall use its best efforts to cause a timely
opinion to be delivered) or (y) the Lessee shall have
provided, or caused to be provided, an indemnity in respect of
any adverse tax consequences reasonably satisfactory (or, in
the case of any voluntary substitution, satisfactory) in form
and substance to the Owner Participant.
Upon satisfaction of all conditions to such substitution, (x) the
Lessor shall, at the expense of the Lessee, execute and deliver, and request the
Indenture Trustee to execute and deliver to the Lessee such bills of sale and
other documents and instruments as the Lessee shall reasonably request to
evidence the transfer to the Lessee and vesting of all right, title and interest
in and to the replaced Engine in the Lessee, in "as-is, where-is" condition,
free and clear of all right, title and interest of the Lessor and the Indenture
Trustee, and any Lessor's Liens; (y) the Lessor shall, at the request and
expense of the Lessee, assign to the Lessee all claims it may have against any
other Person relating to an Event of Loss giving rise to such substitution and
shall exercise such rights as it has to cause such assignment to be free and
clear of the Lien of the Indenture and (z) the Lessee shall be entitled to
receive all insurance proceeds (other than those reserved to others under
Section 9(f) hereof) and proceeds in respect of any Event of Loss giving rise to
such replacement to the extent not previously applied to the purchase price of
the Replacement Engine as provided in Sections 9(e)(i) and 8(e)(ii).
Section 8. Loss, Destruction or Requisition.
(a) Event of Loss with Respect to the Airframe.
Upon the occurrence of an Event of Loss with respect to the
Airframe, the Lessee shall forthwith (and in any event within 15 days after such
occurrence) give the Lessor, the Owner Participant and the Indenture Trustee
notice of such Event of Loss. The Lessee shall, within 60 days after such
occurrence, give the Lessor, the Owner Participant and the Indenture Trustee
written notice of its election to perform one of the following options (it being
agreed that if the Lessee shall not have given the Lessor such notice of such
election, the Lessee shall be deemed to have elected to perform the option
identified in the following clause (ii)):
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(i) subject to the satisfaction of the conditions
contained in Section 8(d), on a date not more than 180 days
after the occurrence of the Event of Loss (or, if earlier, the
last day of the Term), convey or cause to be conveyed to the
Lessor, and to be leased by the Lessee hereunder in
replacement of the Airframe and Engines with respect to which
the Event of Loss occurred, a Replacement Airframe (together
with the same number of Replacement Engines as the number of
Engines, if any, which were subject to such Event of Loss),
such Replacement Airframe and Replacement Engines to be free
and clear of all Liens except Permitted Liens and to have a
remaining useful life, estimated residual value, value and
utility at least equal to the Airframe and Engines, if any, so
replaced (assuming such Airframe and Engines were in the
condition and repair required by the terms hereof) and to be
an airframe that is the same model and same or later vintage
as the Airframe to be replaced thereby, or an improved model;
provided that, if the Lessee shall not perform its obligation
to effect such replacement under this clause (i) during the
180-day period of time provided herein, it shall give the
Lessor, the Owner Participant and the Indenture Trustee notice
to such effect upon or before the expiration of such period of
time and shall promptly pay on the first Termination Date next
following the thirtieth (30th) day after the date of such
notice to the Lessor, in immediately available funds, the
amount specified in clause (ii) below; or
(ii) pay or cause to be paid to the Lessor in
immediately available funds, on a date specified at least 30
days in advance by the Lessee, which date shall be a
Termination Date not more than 180 days after the occurrence
of the Event of Loss, an amount equal to (A) the arrears
portion, if any, of Basic Rent payable on such Termination
Date, together with all unpaid Basic Rent, if any, payable
before such payment date plus (B) all unpaid Supplemental Rent
(other than Termination Value) due on or before such payment
date, plus (C) the Termination Value for the Aircraft
determined as of the date of payment or, if such date of
payment is beyond the end of the Term, the Termination Value
as of the last Termination Date of the Term plus (D) all
reasonable out-of-pocket expenses (including reasonable
attorneys' fees) incurred by the Lessor or the Owner
Participant in connection with such Event of Loss plus (E) if
the date of such payment is beyond the end of the Term,
interest on the amount of such payment, at a rate per annum
equal to the TV Rate identified on Exhibit B, for the period
from and including the last day of the Term to but excluding
such date of payment.
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(b) Effect of Replacement.
Should the Lessee have provided a Replacement Aircraft as provided
for in Section 8(a)(i), (i) this Lease shall continue with respect to such
Replacement Aircraft as though no Event of Loss had occurred; (ii) the Lessor
shall, at the expense of Lessee, convey "as-is, where-is", without recourse or
warranty except for a warranty against Lessor's Liens, to the Lessee all right,
title and interest of the Lessor, in and to the Airframe and the Engine or
Engines, if any, installed on the Airframe upon the occurrence of the Event of
Loss by executing and delivering to the Lessee such bills of sale and other
documents and instruments as the Lessee may reasonably request to evidence such
conveyance and shall exercise such rights as it has to cause such Airframe and
Engines and the Purchase Agreement and Assignment with respect to such Airframe
and Engines to be released from the Lien of the Indenture; (iii) the Lessor
shall, at the request and expense of Lessee, assign to the Lessee all claims it
may have against any other Person arising from the Event of Loss (except with
respect to insurance obtained in accordance with Section 9(f)) and (iv) the
Lessee shall be entitled to receive all insurance proceeds (other than those
reserved to others under Section 9(f)) and proceeds from any award in respect of
condemnation, confiscation, seizure or requisition, including any investment
interest thereon, to the extent not previously applied to the purchase price of
the Replacement Aircraft as provided in Sections 9(e)(iii) and 8(e)(i).
(c) Effect of Termination Value Payment.
In the event of a payment in full of the Termination Value for the
Aircraft and other Rent payable as provided in Section 8(a)(ii), (i) this Lease
and the obligations of the Lessee to pay Rent (except for Supplemental Rent
obligations which survive pursuant to Section 3(c) and Articles 6 and 7 of the
Participation Agreement or the Tax Indemnity Agreement or which have accrued but
have not otherwise been paid as of the date of such payment) shall terminate and
the Term shall end, (ii) any remaining insurance proceeds (other than those
reserved to others under Section 9(f)), including any investment interest
thereon, shall be promptly paid over to the Lessee; and (iii) the Lessor, at the
expense of Lessee, shall convey, "as-is, where-is" without recourse or warranty,
except for a warranty against Lessor's Liens attributable to Lessor and Owner
Participant, to the Lessee all right, title and interest of the Lessor in and to
the Airframe and Engines and shall execute and deliver to the Lessee such bills
of sale and other documents and instruments as the Lessee may reasonably request
to evidence such conveyance and shall exercise such rights as it has to cause to
be released from the Lien of the Indenture, the Airframe and the Engines and the
Purchase Agreement and Assignment with respect to such Airframe and Engines, all
claims for damage to such Airframe and Engines, if any, against third persons
arising from the Event of Loss and any interest of the Lessor in engines (which
are not Engines) installed on the Airframe.
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(d) Conditions to Airframe Replacement.
The Lessee's right to substitute a Replacement Aircraft as provided
in Section 8(a)(i) shall be subject to the fulfillment, at the Lessee's sole
cost and expense, in addition to the conditions contained in such Section
8(a)(i), of the following conditions precedent:
(i) On the date when the Replacement Aircraft is
delivered to the Lessor (such date being referred to in this
Section 8(d) as the "Replacement Closing Date"), no Specified
Default shall have occurred and be continuing and the Lessor,
the Owner Participant and the Indenture Trustee shall have
received an Officer's Certificate so certifying;
(ii) On the Replacement Closing Date the following
documents shall have been duly authorized, executed and
delivered by the respective party or parties thereto and shall
be in full force and effect, and an executed counterpart of
each thereof (or, in the case of the FAA Bills of Sale (or a
comparable document, if any, of another Aeronautical
Authority, if applicable) referred to below, a photocopy
thereof) shall have been delivered to the Lessor, the Owner
Participant and the Indenture Trustee:
(A) a Lease Supplement covering the Replacement Aircraft,
which shall have been duly filed for recordation with the FAA;
(B) so long as the Indenture shall not have been discharged
and satisfied, an Indenture Supplement covering the Replacement
Aircraft, which shall have been duly filed for recordation with the
FAA;
(C) an FAA Bill of Sale (or a comparable document, if any, of
another Aeronautical Authority, if applicable) covering the
Replacement Aircraft, executed by the owner thereof in favor of the
Lessor, and dated the Replacement Closing Date;
(D) a full warranty (as to title) bill of sale, in form and
substance satisfactory to the Indenture Trustee, the Owner
Participant and the Lessor, covering the Replacement Aircraft,
executed by the owner thereof in favor of the Lessor, dated the
Replacement Closing Date and guaranteed by the Lessee;
(E) as long as the Indenture is in effect, such documents as
may be required under Section 9.08 of the Indenture;
(F) (1) so long as the Indenture shall not have been
discharged, such Uniform Commercial Code financing statements (or
any similar
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statements or other documents required to be filed or delivered
pursuant to the laws of the jurisdiction in which the Replacement
Aircraft may be registered in accordance with Section 5(e)) covering
the security interests created by the Indenture, and (2) such
"precautionary" Uniform Commercial Code financing statements as are
deemed necessary or desirable by counsel for the Owner Participant
or the Indenture Trustee to protect the ownership interests of the
Owner Trustee and the security interests of the Indenture Trustee in
the Replacement Aircraft; and
(G) an Officer's Certificate of the Lessee certifying that (i)
the Replacement Aircraft is a Canadair Regional Jet Series 200 ER
aircraft of a more advanced model, is in as good operating condition
as, and has a value, remaining useful life, estimated residual value
and utility at least equal to, the Aircraft it replaces, assuming
such Aircraft had been maintained in the condition required
hereunder and (ii) in the event the Event of Loss occurs after the
fifth anniversary of the Delivery Date, the Replacement Airframe
shall have no more than 105% of the total hours of operation, as
compared to the Airframe it replaces;
(iii) On or before the Replacement Closing Date, the
Lessor, the Owner Participant and the Indenture Trustee
(acting directly or by authorization to their respective
special counsel) shall have received such documents and
evidence with respect to the Lessee, the Lessor, the Owner
Participant, the owner of such Replacement Aircraft or the
Indenture Trustee, as the Lessor, the Owner Participant or the
Indenture Trustee or their respective special counsel may
reasonably request in order to establish the consummation of
the transactions contemplated by Section 8(a)(i) and this
Section 8(d), the taking of all necessary corporate action in
connection therewith and compliance with the conditions set
forth in this Section 8(d), in each case in form and substance
reasonably satisfactory to the Lessor, the Owner Participant
and the Indenture Trustee;
(iv) The Lessor, the Owner Participant and the Indenture
Trustee (acting directly or by authorization to their
respective special counsel) shall each have received
satisfactory evidence as to the compliance with Section 9
hereof with respect to the Replacement Aircraft;
(v) On the Replacement Closing Date, (A) the Lessor
shall receive good title to the Replacement Aircraft free and
clear of Liens (other than Permitted Liens), (B) the
Replacement Aircraft shall have been duly certified by the
Aeronautical Authority as to type and airworthiness in
accordance with the terms of this Lease, and (C) application
for registration of the Replacement Aircraft in
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accordance with Section 5(e) shall have been duly made with
the Aeronautical Authority;
(vi) The Owner Participant shall have received an
appraisal reasonably satisfactory to it with respect to the
Replacement Aircraft;
(vii) The Lessor, the Owner Participant and the
Indenture Trustee shall have received (acting directly or by
authorization to its special counsel) (A) an opinion,
satisfactory in form and substance to the Lessor, the Owner
Participant and the Indenture Trustee, of counsel to the
Lessee (which may be the Lessee's General Counsel) to the
effect that (x) the bill of sale referred to in clause (ii)(D)
above constitutes an effective instrument for the conveyance
of title to the Replacement Airframe and Replacement Engines,
if any, to the Lessor, (y) all documents executed and
delivered by the Lessee pursuant to this Section 8(d) have
been duly authorized, executed and delivered by the Lessee and
constitute legal, valid and binding obligations of, and are
enforceable against, the Lessee in accordance with their
respective terms, and (z) the Lessor and the Indenture Trustee
(as assignee of Lessor under the Indenture), are entitled to
the benefits of Section 1110 with respect to such Replacement
Aircraft to the same extent as with respect to the replaced
Aircraft immediately preceding such replacement; and (B) an
opinion of qualified FAA counsel (or counsel in such
jurisdiction outside of the United States where the Aircraft
may be registered in accordance with Section 5(e)), as to, in
the case of FAA counsel, the due recordation of the Lease
Supplement, the Indenture Supplement and all other documents
or instruments the recordation of which is necessary to
perfect and protect the rights of the Lessor and the Indenture
Trustee in the Replacement Aircraft or, in the case of counsel
in another jurisdiction, the taking of all action necessary in
such jurisdiction for such purposes;
(viii) the Lessor and the Indenture Trustee (as assignee
of Lessor under the Indenture), shall be entitled to the
benefits of Section 1110 with respect to such Replacement
Aircraft to the same extent as with respect to the replaced
Aircraft immediately preceding such replacement; and
(ix) Either (1) the Owner Participant shall have
received an opinion of independent tax counsel (selected by
the Owner Participant and reasonably acceptable to the
Lessee), reasonably satisfactory to the Owner Participant, to
the effect that there shall be no risk of adverse tax
consequences resulting from such
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replacement (and the Owner Participant shall use its best
efforts to cause a timely opinion to be delivered) or (2) the
Lessee shall have provided, or caused to be provided, an
indemnity in respect of any adverse tax consequences in form
and substance satisfactory to the Owner Participant.
Lessee shall reimburse the Lessor and the Owner Participant for all
reasonable out-of-pocket costs (including reasonable attorneys' fees) incurred
by them in connection with any substitution of a Replacement Aircraft pursuant
to this Section 8.
(e) Non-Insurance Payments Received on Account of an Event of Loss.
As between the Lessor and the Lessee, any payments on account of an
Event of Loss (other than insurance proceeds or other payments the application
of which is provided for in this Section 8 or elsewhere in this Lease, as the
case may be, or payments in respect of damage to the business or property of the
Lessee) with respect to the Aircraft, an Engine or any Part received at any time
by the Lessor or by the Lessee from any governmental authority or other Person
will be applied as follows:
(i) if such payments are received with respect to an
Event of Loss as to the Aircraft, and the Airframe or the
Airframe and the Engines or engines installed thereon are
being replaced by the Lessee pursuant to Section 8(a)(i), such
payments shall be paid over to, or retained by, the Lessee,
provided that if the Lessee has not completed such
replacement, such payments shall be paid over to, or retained
by, the Lessor as security, and upon completion of, or in
connection with a closing for, such replacement, be paid over
to or retained by the Lessee;
(ii) if such payments are received with respect to an
Event of Loss to an Engine that has been or is being replaced
by the Lessee pursuant to the terms hereof, such payments
shall be paid over to, or retained by, the Lessee, provided
that if the Lessee has not completed such replacement, such
payments shall be paid over to, or retained by, the Lessor as
security, and upon completion of, or in connection with a
closing for, such replacement, be paid over to or retained by
the Lessee; and
(iii) if such payments are received with respect to an
Event of Loss as to the Aircraft, and if the Airframe or the
Airframe and the Engines or engines installed thereon have not
been and will not be replaced as contemplated by Section 8(a),
(x) so much of such payments as shall not exceed the
Termination Value required to be paid by the Lessee pursuant
to Section 8(a) hereof shall be applied in reduction of the
Lessee's obligation to
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pay such Termination Value and other amounts, to the extent
not already paid by the Lessee, and, after the Termination
Value and all amounts required to be paid to the Lessor
pursuant to Section 8(a)(ii) above shall be paid in full,
shall be applied to reimburse the Lessee for such Termination
Value up to the full amount thereof, and (y) the balance, if
any, of such payment remaining thereafter shall be applied to
reimburse the Lessee, the Owner Participant and the Lessor for
their reasonable costs (including attorney's fees), if any, of
procuring such payments, and (z) the balance remaining, if
any, shall then be distributed between the Lessor and the
Lessee as their interests may appear.
(f) Requisition for Use.
In the event of a requisition for use by any government during the
Term of the Airframe and the Engines, if any, or engines installed on the
Airframe (including the Government pursuant to the CRAF Program), the Lessee
shall promptly notify the Lessor, the Owner Participant and the Indenture
Trustee of such requisition and, if the same does not constitute an Event of
Loss, all of the Lessee's obligations under this Lease shall continue to the
same extent as if such requisition had not occurred except to the extent that
the performance or observance of any obligation by the Lessee shall have been
prevented or delayed by such requisition, provided that the Lessee's obligations
for the payment of money and under Section 9 (except, in the case of Section 9,
while an assumption of liability by the government of the United States of the
scope referred to in Section 5(c) is in effect) and Section 12 shall not be
reduced, delayed or affected by such requisition. Any payments received by the
Lessor or the Lessee from such government with respect to the use of such
Airframe or Engines during the Term shall be paid over to, or retained by, the
Lessee and any payments received by the Lessor or Lessee from such government
with respect to the use of the Airframe or Engines after the Term shall be paid
over to, or retained by, Lessor. In the event of an Event of Loss of an Engine
resulting from the requisition for use by a government of such Engine (but not
the Airframe), the Lessee will replace such Engine hereunder by complying with
the terms of Section 7(e) and any payments received by the Lessor or the Lessee
from such government with respect to such requisition shall be paid over to, or
retained by, the Lessee.
(g) Certain Payments to be Held As Security.
Any amount referred to in this Section 8 or Section 9 hereof which
is payable to the Lessee shall not be paid to the Lessee, or, if it has been
previously paid directly to the Lessee, shall not be retained by the Lessee, if
at the time of such payment a Specified Default shall have occurred and be
continuing, but shall be paid to and held by the Lessor as security for the
obligations of the Lessee under this Lease, unless and until applied by Lessor
to Lessee's obligations and at such time as there shall not be continuing any
such Specified Default, such amount and any gain realized as a result of
Permitted Investments required to be made pursuant to Section 15 or
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Section 5.08 of the Indenture shall to the extent not so applied be paid over to
the Lessee.
Section 9. Insurance.
(a) Public Liability and Property Damage Insurance.
Subject to the rights of the Lessee under Section 9(d), the Lessee
shall, without expense to the Lessor, maintain or cause to be maintained in
effect at all times during the Term with insurers of nationally recognized
responsibility public liability insurance (including, without limitation,
passenger legal liability, property damage and product liability coverage but
excluding manufacturer's product liability coverage) with respect to the
Aircraft in an amount not less than the Lessee may carry from time to time on
other similar aircraft in its fleet (whether owned or leased) but not less than
the Minimum Liability Amount; provided that an agreement of the Government for
the benefit of the Additional Insureds to insure against or indemnify for
substantially the same risks to at least the same amount shall satisfy the
requirements of this Section 9(a), provided that on or prior to the date of such
agreement, the Lessee shall provide an Officer's Certificate of the Lessee
certifying that any such insurance or indemnity provides protection no less
favorable than insurance coverage that would comply with this Section 9. Such
insurance shall be of the type usually carried by the Lessee with respect to
similar aircraft and engines, and covering risks of the kind customarily insured
against by the Lessee.
During any period that the Aircraft is grounded and not in operation
for any reason, the Lessee may modify the insurance required by this Section
9(a) to reduce the amounts of public liability and property damage insurance and
(ii) to modify the scope of the risks covered and the type of insurance, in both
circumstances to conform to such insurance customary in the United States
airlines industry for regional air carriers similarly situated with the Lessee
in respect of similar aircraft which are grounded, not in operation, and stored
or hangared, except that the amounts of coverage and scope of risk covered and
the type of insurance shall be the same as from time to time applicable to
aircraft owned or leased by Lessee on the ground, not in operation, and stored
or hangared.
(b) Insurance Against Loss or Damage to the Aircraft and Engines.
Subject to the rights of the Lessee under Section 9(d), the Lessee
shall, without expense to the Lessor, the Indenture Trustee or the Participants,
maintain or cause to be maintained in effect at all times during the Term with
insurers of nationally recognized responsibility (i) all risk, agreed value,
ground and flight hull insurance, which may, except as provided below, exclude
war risks and allied perils, covering the Aircraft for an amount not less than
the Termination Value from time to time; provided that, neither the Lessee nor
any Permitted Sublessee shall be required to maintain all- risk flight aircraft
hull insurance with respect to any period in which the Aircraft is grounded for
any reason and properly stored or hangared. Such insurance shall not
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provide insurers with a right to replace the Airframe or any Engine with another
airframe or Engine. Such hull insurance or other personal property insurance of
the Lessee (or a Permitted Sublessee) shall cover Engines or engines and Parts
temporarily removed from the Airframe, pending replacement by installation of
the same or similar Engines, engines or Parts on the Airframe but such insurance
need not cover an Engine while attached to an airframe not owned, leased or
operated by the Lessee or a Permitted Sublessee. Such insurance shall be of the
type usually carried by the Lessee with respect to similar aircraft and engines,
and covering risks of the kind customarily insured against by the Lessee. If and
to the extent that the Lessee or a sublessee operates the Aircraft (A) on routes
where it maintains war risk, hijacking or allied perils insurance in effect with
respect to other similar owned or leased aircraft in its fleet, (B) on routes
(other than routes within the United States, Canada, Mexico, Bermuda and islands
other than Cuba in the Caribbean Basin) where the custom in the industry is to
carry war risk insurance or (C) in any area of recognized hostilities, the
Lessee or such sublessee shall maintain or cause to be maintained such insurance
in effect with respect to the Aircraft in the lesser of an amount at least equal
to Termination Value or the amount of such insurance customarily carried by
corporations engaged in the same or similar business similarly situated with the
Lessee and owning or operating similar aircraft and engines on such routes or
similar routes, provided that if the requirement to maintain war risk insurance
arises under clause (A) of this sentence, such insurance shall be maintained in
an amount not less than that maintained by the Lessee or such sublessee on
similar aircraft in its fleet. An agreement by the Government to insure against
or indemnify for substantially the same risks to at least the same amount will
satisfy any of the requirements of this Section 9(b).
(c) Additional Insureds; Loss Payment.
The Lessee shall cause all policies of insurance carried in
accordance with this Section 9 to name the Additional Insureds as their
respective interests may appear as additional insureds. Such policies shall
provide with respect to such Additional Insureds that (i) none of their
respective interests in such policies shall be invalidated by any act or
omission or breach of warranty or condition contained in such policies by the
Lessee or, in the case of any particular Additional Insured, any other
Additional Insured; (ii) no cancellation or lapse of coverage for nonpayment of
premium or otherwise, and no substantial change of coverage which adversely
affects the interests of any such Additional Insured, shall be effective as to
such Additional Insured until 30 days (or such lesser period as may be
applicable in the case of any war risk coverage) after receipt by such
Additional Insured of written notice from the insurers of such cancellation,
lapse or change; (iii) they shall have no liability for premiums, commissions,
calls, assessments or advances with respect to such policies; (iv) such policies
will be primary without any right of contribution from any other insurance
carried by such Additional Insureds; (v) the insurers waive any rights of
set-off, counterclaim, deduction or subrogation against such Additional
Insureds; (vi) shall apply worldwide and have no territorial restrictions or
limitations (except, in the case of war, hijacking or related perils insurance,
as otherwise permitted hereunder); and (vii) shall contain a 50/50% Clause per
Lloyd's Aviation Underwriter's Association
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Standard Policy Form AVS 103. Each liability policy shall provide that all the
provisions thereof, except the limits of liability, shall operate in the same
manner as if there were a separate policy covering each insured and provide that
the exercise by the insurer of rights of subrogation derived from rights
retained by the Lessee will not delay payment of any claim that would otherwise
be payable but for such rights of subrogation. Each hull policy shall name the
Indenture Trustee as loss payee as long as the Indenture shall remain in effect
and thereafter shall name the Lessor as loss payee; provided that, so long as
the insurers shall not have received written notice that an Event of Default has
occurred and is continuing, if insurance proceeds in the aggregate equal
$2,000,000 or less, then such proceeds shall be payable to the Lessee and,
notwithstanding the foregoing, any amounts up to Termination Value (i) of any
proceeds which in the aggregate exceed $2,000,000, (ii) of any proceeds in
respect of a total loss or an Event of Loss or (iii) if the insurers shall have
received written notice that an Event of Default has occurred and is continuing,
any proceeds with respect to any single loss, shall be payable to such loss
payee.
(d) Deductibles and Self-Insurance.
The Lessee may from time to time self-insure, by way of deductible
or premium adjustment provisions in insurance policies or otherwise, the risks
required to be insured against pursuant to this Section 9 in such amounts as are
then self-insured with respect to similar owned or leased aircraft in the
Lessee's fleet but in no case shall such self-insurance in the aggregate exceed,
on a per occurrence or on fleetwide basis, an amount equal to 5% of the Lessee's
tangible net worth, calculated as at the end of the Lessee's immediately
preceding fiscal year (but in no event to exceed $15,000,000). A deductible per
occurrence that is not in excess of the prevailing standard market deductible
for similar aircraft shall be permitted, for each aircraft in the Lessee's
fleet, in addition to such self-insurance.
(e) Application of Hull Insurance Proceeds.
Subject to Section 8(g), as between the Lessor and the Lessee, any
payments received under policies of hull or other property insurance required to
be maintained by the Lessee pursuant to Section 9(b), shall be applied as
follows:
(i) if such payments are received with respect to loss
or damage (including an Event of Loss with respect to an
Engine) not constituting an Event of Loss with respect to the
Airframe, payments in the aggregate of $2,000,000 or less
shall be paid over to or retained by the Lessee and, subject
to Section 9(c), any payments which in the aggregate are
greater than $2,000,000 shall be paid over to or retained by
the Lessor for payment to the Lessee only upon performance of
its repair or replacement obligation;
(ii) if such payments are received with respect to an
Event of Loss with respect to the Airframe and the Airframe is
not
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being replaced by the Lessee pursuant to Section 8(a)(i), so
much of such payments as shall not exceed the Termination
Value and other amounts required to be paid by the Lessee
pursuant to Section 8(a)(ii) shall be applied in reduction of
the Lessee's obligation to pay such amounts if not already
paid by the Lessee, and to reimburse the Lessee if such
amounts shall have been paid, and the balance, if any, of such
payments shall be promptly paid over to or retained by the
Lessee; and
(iii) if such payments are received with respect to the
Airframe or the Airframe and Engines or engines installed
thereon and the Airframe is being replaced by the Lessee
pursuant to Section 8(a)(i), such payments shall be paid over
to, or retained by the Lessee, provided that if the Lessee has
not completed such replacement and the performance of all
other obligations under Section 8(d), such payments shall be
paid over to, or retained by, the Lessor as security, and upon
completion of, or in connection with a closing for, such
replacement, be paid over to or retained by the Lessee.
(f) Insurance for Own Account.
Nothing in this Section 9 shall prohibit the Lessor, the Owner
Participant, the Lessee or any Additional Insured from obtaining insurance with
respect to the Aircraft for its own account (including, without limitation, in
the case of the Lessee, hull insurance under the same policies maintained
pursuant to this Section 9 in amounts in excess of those required to be
maintained pursuant to this Section 9) and any proceeds payable thereunder shall
be payable as provided in the insurance policy relating thereto, provided that
no such insurance may be obtained which would limit or otherwise adversely
affect the availability coverage or payment of any insurance required to be
obtained or maintained pursuant to this Section 9, it being understood that all
salvage rights to the Airframe or the Engines shall remain with the Lessee's
insurers at all times.
(g) Reports, etc.
Lessee will furnish to the Lessor, the Owner Participant and the
Indenture Trustee (A) on or prior to the Delivery Date, insurance certificates
describing in reasonable detail the insurance maintained by Lessee as required
pursuant to this Section 9, (B) prior to the cancellation, lapse or expiration
of the insurance policies required pursuant to this Section 9, evidence of
renewal of such insurance policies, and (C) on or prior to the Delivery Date and
on or before the renewal dates of the insurance policies carried by the Lessee
pursuant to this Section 9, a report signed by a firm of aircraft insurance
brokers, not affiliated with the Lessee, appointed by the Lessee and reasonably
satisfactory to the Lessor, stating the opinion of such firm that all premiums
in connection with the insurance then due have been paid and the insurance then
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carried and maintained on the Aircraft complies with the terms hereof and, in
the case of renewal insurance, that such renewal insurance will on and after the
effective date thereof so comply with the terms hereof, provided that all
information contained in such report shall be held confidential by the Lessor
and the Indenture Trustee, and shall not be furnished or disclosed by them to
anyone except bona fide prospective transferees of the Owner Participant and
their respective agents (provided that they shall agree for the benefit of the
Lessee to hold all such information similarly confidential) or as may be
required by Applicable Law. The Lessee will instruct such firm to give prompt
written advice to the Lessor, the Owner Participant and the Indenture Trustee of
any default in the payment of any premium and of any other act or omission on
the part of the Lessee of which it has knowledge and which would in such firm's
opinion invalidate or render unenforceable, in whole or in any material part,
any insurance on the Aircraft. The Lessee will also instruct such firm to advise
the Lessor, the Owner Participant and the Indenture Trustee in writing at least
30 days prior to the termination or cancellation of, or material adverse change
in, such insurance carried and maintained on the Aircraft pursuant to this
Section 9 (or such lesser period as may be applicable in the case of war risk
coverage).
(h) Right to Pay Premiums.
The Additional Insureds shall have the rights but not the
obligations of an additional named insured. None of Lessor, Owner Participant,
Indenture Trustee and the other Additional Insureds shall have any obligation to
pay any premium, commission, assessment or call due on any such insurance
(including reinsurance). Notwithstanding the foregoing, in the event of
cancellation of any insurance due to the nonpayment of premiums, each of Lessor,
Owner Participant, Indenture Trustee and the other Additional Insureds shall
have the option, in its sole discretion, to pay any such premium in respect of
the Aircraft that is due in respect of the coverage pursuant to this Lease and
to maintain such coverage, as Lessor, Owner Participant, Indenture Trustee or
the other Additional Insureds may require, until the scheduled expiry date of
such insurance and, in such event, Lessee shall, upon demand, reimburse Lessor,
Owner Participant, Indenture Trustee and the other Additional Insureds for
amounts so paid by them.
Section 10. Liens.
The Lessee shall not during the Term directly or indirectly create,
incur, assume or suffer to exist any Lien on or with respect to the Aircraft,
Airframe, any Engine or any Part or title thereto or any interest therein or in
this Lease except (a) the respective rights of the Lessor and the Lessee as
provided herein, the Lien of the Indenture and the rights of the parties to the
other Operative Agreements; (b) the rights of others under agreements or
arrangements to the extent expressly permitted in Sections 5(b) and 7(c); (c)
Liens for Taxes either not yet due or being contested in good faith by
appropriate proceedings so long as such proceedings do not involve any non-de
minimis risk of the sale, forfeiture or loss of the Aircraft, Airframe or an
Engine or the interest of any Participant therein or any risk of criminal
liability or any
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material risk of civil penalty against Lessor or any Participant; (d) Liens of
suppliers, mechanics, workers, repairers, employees, airport operators, air
traffic control authorities or other like Liens arising in the ordinary course
of business and for amounts the payment of which is either not yet delinquent or
is being contested in good faith (and for the payment of which adequate reserves
have been provided) by appropriate proceedings, so long as such proceedings do
not involve a non-de minimis risk of the sale, forfeiture or loss of the
Airframe or an Engine or the interest of any Participant therein or any risk of
criminal liability or any material risk of civil penalty against Lessor or any
Participant; (e) Liens arising out of judgments or awards against the Lessee so
long as there shall be in effect with respect to which a stay of execution; (f)
Lessor's Liens, Trust Company Liens and Indenture Trustee's Liens; (g) salvage
and similar rights of insurers under policies of insurance maintained with
respect to the Aircraft and (h) Liens with respect to which the Lessee (or any
sublessee) has provided a bond or other security adequate in the good faith
opinion of the Lessor and the Owner Participant. Liens described in clauses (a)
through (h) above are referred to herein as "Permitted Liens." The Lessee shall
promptly, at its own expense, take such action as may be necessary to duly
discharge (by bonding or otherwise) any Lien other than a Permitted Lien arising
at any time during the Term;
Section 11. Recordation and Further Assurances.
(a) Recordation of Lease.
The Lessee shall cause this Lease, any Lease Supplements, and any
and all additional instruments which shall be executed pursuant to the terms
hereof to be kept, filed and recorded and to be re-executed, refiled and
re-recorded at all times during the Term with the FAA or other Aeronautical
Authority to the extent required to perfect and preserve the Lessor's interest
in the Aircraft.
(b) Further Assurances.
The Lessee and the Lessor will each promptly and duly execute and
deliver to the other such further documents and assurances and take such further
action as the other may from time to time reasonably request in order to more
effectively carry out the intent and purpose of this Lease and to establish and
protect the rights and remedies created or intended to be created in favor of
the Lessor and the Lessee hereunder, including, without limitation, if requested
by the Lessor or the Lessee, the execution and delivery of supplements or
amendments hereto, in recordable form, subjecting any replacement or substituted
aircraft or engine to this Lease and the recording or filing of counterparts
hereof, or of financing statements with respect hereto.
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(c) Markings.
If permitted by Applicable Law, on or reasonably promptly after the
Delivery Date, Lessee will cause to be affixed to, and maintained in, the
cockpit of the Airframe, in a clearly visible location (it being understood that
the location of such placard, as identified to the Owner Participant prior to
the Delivery Date, shall be deemed to be in compliance with this requirement), a
placard of a reasonable size and shape bearing the legend, in English, set forth
below:
Leased from
First Union Trust Company, National Association,
not in its individual capacity
but solely as Owner Trustee, Owner and Lessor
and Mortgaged to
The First National Bank of Maryland,
not in its individual capacity
but solely as Indenture Trustee
Such placard may be removed temporarily, if necessary, in the course of
maintenance of the Airframe. If such placard is damaged or becomes illegible,
Lessee shall promptly replace it with a placard complying with the requirements
of this Section 11(c).
Section 12. Return of Aircraft and Records.
(a) Return of Aircraft.
Upon the termination of this Lease at the expiration of the Term or
upon the earlier termination of this Lease pursuant to the terms hereof, unless
the Lessee shall purchase the Aircraft or there shall have been an Event of Loss
with respect to the Aircraft, the Lessee, at its own expense, shall, except as
otherwise expressly provided herein, return the Airframe by delivering the same
to the Lessor in the continental United States of America at a location on the
Lessee's domestic route system chosen by the Lessee and reasonably acceptable to
the Lessor, fully equipped with two Engines or other General Electric CF34-3B1
Series 200 engines (or engines of a comparable or an improved model and suitable
for installation and use on the Airframe and owned by the Lessee) duly installed
thereon.
(b) Return of Other Engines.
In the event any engine not owned by the Lessor shall be returned
with the Airframe, such engine shall satisfy the requirements for a Replacement
Engine, shall be free and clear of all Liens other than Lessor's Liens and shall
have a value,
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remaining useful life, utility and condition at least as great as the Engine
replaced (assuming such Engine was maintained in accordance with the terms
thereof) and the Lessee shall, at its own expense and concurrently with such
return, furnish the Lessor with (i) a full warranty bill of sale guaranteed by
Lessee, in form and substance reasonably satisfactory to the Lessor and the
Owner Participant, (ii) an Officer's Certificate as described in Section
7(e)(i)(F), and (iii) an opinion of counsel to the Lessee as described in
Section 7(e)(ii), with respect to each such engine and shall take such other
action as required by Section 7(e) to cause such engine to be a Replacement
Engine or as the Lessor may reasonably request in order that such engine shall
be duly and properly titled in the Lessor free and clear of all Liens other than
Lessor's Liens. Upon passage of title such engine shall be deemed to be an
Engine for all purposes hereof and thereupon the Lessor will transfer to the
Lessee, without recourse or warranty except a warranty against Lessor's Liens,
all right, title and interest of the Lessor or any Affiliate in and to an Engine
not installed on the Airframe at the time of the return thereof and, if the
Indenture has not been discharged, shall exercise such rights as it has to cause
such Engine to be released from the Lien of the Indenture.
(c) Fuel; Records.
Upon the return of the Aircraft, (i) the Lessor shall have no
obligation with respect to the amount of fuel or oil contained in the Airframe
and (ii) the Lessee shall deliver to the Lessor all logs, manuals, certificates
and inspection, modification and overhaul records which are required to be
maintained with respect thereto under applicable rules and regulations of the
FAA and Department of Transportation.
(d) Condition of Aircraft.
The Aircraft when returned to the Lessor shall be in the operating
condition required by Exhibit F hereto.
(e) Failure to Return. If Lessee shall, for any reason whatsoever,
fail to return the Aircraft and the documents referred to in Section 12(c)(ii)
at the time and place and in the condition specified herein, all obligations of
Lessee under this Lease shall continue in effect with respect to the Aircraft
until the Aircraft is so returned to Lessor and Lessee shall pay to Lessor an
amount equal to the average daily Basic Rent payable by Lessee during the Term
for each day after the end of the Term to but excluding the day of such return;
provided, however, that this Section 12(e) shall not be construed as permitting
Lessee to fail to meet its obligations to return the Aircraft or the documents
referred to in Section 12(c)(ii) in accordance with the requirements hereof or
constitute, or be deemed to constitute, a waiver of any Event of Default
resulting from Lessee's failure to return the Aircraft or such documents or
otherwise; and provided, further, that Lessee shall not be responsible for
Lessor's failure to accept return of the Aircraft and the documents referred to
in Section 12(c)(ii) in accordance with the requirements hereof in a timely
manner or for any rent with respect to periods after Lessee has tendered the
Aircraft and the documents referred to in Section 12(c)(ii) for return in
accordance with this Lease, provided however that if Lessor's inspection
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of the Aircraft and the documents referred to in Section 12(c)(ii), which
inspection shall be conducted in good faith and timely manner, reveals any
discrepancy from the condition required by the provisions of this Section 12,
Lessee shall continue to pay rent in accordance with this Section 12(e) until
the Aircraft and the documents referred to in Section 12(c)(ii) are returned to
the Lessor in accordance with this Lease. Any rent owed to Lessor pursuant to
this Section 12(e) shall be payable upon acceptance of the Aircraft and the
documents referred to in Section 12(c)(ii) by Lessor.
(f) Storage and Related Matters.
If Lessor gives written notice to Lessee not less than 60 days nor
more than 180 days prior to the end of the Term requesting storage of the
Aircraft upon its return hereunder, Lessee will provide Lessor, or cause Lessor
to be provided, with outdoor parking facilities for the Aircraft for a period up
to 60 days, commencing on the date of such return, at such storage facility in
the 48 contiguous states of the United States as Lessee may select. Lessee
shall, at Lessor's written request, maintain insurance (if available) for the
Aircraft during such storage period, provided that Lessor shall reimburse Lessee
for Lessee's out-of-pocket cost of providing such insurance. Such storage shall
be at Lessor's risk, and Lessor shall pay all applicable storage fees, except
that Lessee shall pay the parking fees for the initial 60 day storage period;
provided that Lessee's obligation to provide parking shall be subject to Lessee
and Lessor entering into an agreement prior to the commencement of the storage
period with the storage facility providing, among other things, that Lessee
shall pay only the parking fees for the initial storage period of up to 60 days
and that Lessor shall bear all maintenance charges and other costs incurred
relating to such storage.
Section 13. Renewal Option and Purchase Options.
(a) Renewal Terms.
Subject to the final sentence of this Section 13(a), upon expiration
of the Basic Term, the Lessee shall have the right to extend this Lease for
successive periods of one or two years each (each a "Fixed Renewal Term"), but
for not more than an aggregate of three years. Upon expiration of the Basic Term
or at the end of any Fixed Renewal Term, the Lessee shall have the right to
extend this Lease for any number of successive periods of one year each (each a
"Fair Market Value Renewal Term"; each Fixed Renewal Term and each Fair Market
Value Renewal Term, being hereinafter sometimes called a ("Renewal Term")
provided that the aggregate term of all Renewal Terms shall not exceed six
years. A Fixed Renewal Term will commence at the end of the Basic Term or the
preceding Fixed Renewal Term, as the case may be and a Fair Market Value Renewal
Term will commence at the end of the Basic Term or the preceding Renewal Term,
as the case may be. Such right to extend this Lease shall be exercised upon
notice to the Lessor, specifying the nature and duration of the Renewal Term,
not less than 210 days nor more than 365 days before the expiration of the Basic
Term or the preceding Renewal Term, as the case may be. Such notice shall be
irrevocable except that in the event the Lessee gives such notice to the Lessor
240 or
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more days before the end of the Basic Term or the Renewal Term then in effect,
as the case may be, the Lessee may revoke its election to extend this Lease
within 15 days following the determination of the Fair Market Rental Value of
the Aircraft but in no event later than 210 days prior to the end of the Basic
Term or the preceding Renewal Term, as the case may be. If the Lessee requests a
determination of Fair Market Rental Value at least 240 days before the
expiration of the Basic Term or a Renewal Term, as the case may be, the Lessor
and the Lessee shall comply in a timely manner with their respective obligations
under the definition of "Fair Market Rental Value" to allow any appraisal of
Fair Market Rental Value to be completed in sufficient time to permit the Lessee
to exercise the revocation right provided above. If no Specified Default shall
have occurred and be continuing on the date of such notice or on the date of the
commencement of any Renewal Term, then this Lease shall be extended for the
additional period of such Renewal Term as specified in such notice on the same
conditions as provided for herein. The Basic Rent payable per annum during any
Fixed Renewal Term shall be the lesser of (i) the then Fair Market Rental Value
for the Aircraft and (ii) Renewal Rental Rate identified on Exhibit B. The
rental payable per annum during any Fair Market Value Renewal Term shall be the
then Fair Market Rental Value for the Aircraft. Such rental during each Renewal
Term shall be payable semi-annually in arrears. The Termination Value of the
Aircraft during each Renewal Term shall be the Fair Market Sales Value for the
Aircraft at the beginning of such Renewal Term declining on a straight line
basis to the projected Fair Market Sales Value for the Aircraft at the end of
such Renewal Term, but in both cases determined prior to the commencement of
such Renewal Term. Lessee's right to renew this Lease at the end of the Basic
Term is subject to the condition precedent that the Owner Participant shall have
agreed with Lessee not to demand payment of the Payment Amount (as defined in
the Residual Agreement) pursuant to Section 4(a) of the Residual Agreement
within the period specified therein (unless an Event of Default shall thereafter
occur and be continuing).
(b) Lessee's Purchase Options.
(i) Rights to Purchase.
The Lessee shall have the right upon notice as provided herein to
purchase the Aircraft (A) on the EBO Date for a price equal to the EBO Amount;
(B) upon the termination of the Basic Term a price equal to the then Fair Market
Sales Value of the Aircraft; or (C) at the end of any Renewal Term for a price
equal to the then Fair Market Sales Value of the Aircraft in each case as long
as no Event of Default of the type referred to in Section 16(f), (g) or (h)
hereof shall have occurred and be continuing on the date of purchase. Upon the
payment by the Lessee of the purchase price for the Aircraft and the Basic Rent,
if any, payable in arrears on the date of purchase, together with all unpaid
Basic Rent, if any, payable before such date and all Supplemental Rent then due
and payable hereunder (including any Supplemental Rent payable in respect of
Make-Whole Premium), the Term shall end and the obligations of the Lessee to pay
Rent hereunder (except for Supplemental Rent obligations surviving pursuant to
Section 3(c), Articles 6 and 7 of the Participation Agreement or the Tax
Indemnity
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Agreement or which have otherwise accrued but not been paid as of the date of
such payment) shall cease, and the Lessor shall convey to the Lessee all right,
title and interest of the Lessor in and to the Aircraft on an "as-is, where is"
basis, without recourse or warranty except a warranty against Lessor's Liens.
(ii) Option to Assume Equipment Notes.
In the event the Lessee elects to purchase the Aircraft pursuant to
clause (A) of Section 13(b)(i), the Lessee may, at its election, assume the
payment obligations of the Lessor with respect to such Equipment Notes as
contemplated by Section 5.10 of the Participation Agreement, in which case the
purchase price to be paid by the Lessee shall be reduced by an amount equal to
the principal of the Equipment Notes so assumed by the Lessee.
(iii) Notice of Exercise of Option.
The Lessee's right to purchase provided for in clause (B) or (C) of
Section 13(b)(i) shall be exercised upon written notice to the Lessor not less
than 180 days nor more than 365 days before the applicable date of purchase
provided in such clause (B) or (C) as the case may be. Such notice shall be
irrevocable, except that where the purchase price is or may be measured by the
Fair Market Sales Value of the Aircraft the Lessee may revoke its exercise of an
option to purchase the Aircraft within 15 days following the determination of
such Fair Market Sales Value, but in no event later than 180 days prior to the
applicable date of purchase provided in such clause (B) or (C), as the case may
be. The Lessee's right to purchase provided for in clause (A) of Section
13(b)(i) shall be exercised upon written notice to the Lessor not less than 90
days nor more than 365 days before the EBO Date and shall be irrevocable when
given.
Section 14. Voluntary Termination for Obsolescence.
(a) Termination by Sale of Aircraft.
So long as no Specified Default shall have occurred and be
continuing, the Lessee shall have the right at its option five years or more
after commencement of the Basic Term on at least 180 days', but not more than
365 days, prior written notice (which notice shall be irrevocable, except as
provided below) to the Lessor and the Indenture Trustee, specifying a proposed
date of termination which shall be a Termination Date, to terminate this Lease
if the chief financial officer of the Lessee shall have certified in writing to
the Lessor that the Aircraft shall have become obsolete or shall be surplus to
the Lessee's equipment requirements. Subject to the Lessor's preemptive election
under Section 14(c), during the period following the giving of such notice of
termination until the Termination Date, the Lessee, as agent for the Lessor,
shall endeavor to sell the Aircraft "as is", without any warranty by the Lessor
or the Lessee except as to the Lessor's title, on behalf of the Lessor. If
Lessee receives any bid, it shall at least 10 Business Days prior to the
proposed day of sale, certify to Lessor
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in writing the amount and terms of such bid, such proposed date of sale and the
name and address of the potential buyer (which shall not be Lessee or any
Affiliate or any Person with whom Lessee or any Affiliate has any arrangement or
understanding for the future purchase, lease, operation or use of the Aircraft).
Lessor may also solicit bids directly or through agents other than Lessee. So
long as the Lessor has not exercised its preemptive election under Section
14(c), the Lessee may, by notice to the Lessor and the Indenture Trustee,
withdraw its notice of termination at any time on or before the date 10 days
prior to the proposed Termination Date (unless such withdrawal is due to the
cancellation of the proposed purchase of the Aircraft by the potential buyer in
which event such notice may be given at any time on or prior to the proposed
Termination Date), and thereupon this Lease shall continue in full force and
effect. Withdrawal of notice of termination shall not exhaust the Lessee's right
to give a further notice of termination as provided herein; provided that Lessee
shall not be entitled to give more than two such notices (excluding one notice
of termination which has been withdrawn due to the cancellation of the proposed
purchase of the Aircraft by the potential buyer). Unless the Lessee shall
withdraw its notice of termination as stated above or the Lessor shall have made
a preemptive election to take possession of the Aircraft in accordance with
Section 14(c), on the Termination Date, or such other date of sale as shall be
consented to in writing by the Lessor and the Lessee, which date shall
thereafter be deemed the Termination Date, the Lessee shall, upon payment in
full of the amounts described in Section 14(b), deliver the Airframe and Engines
or engines installed thereon to the party which shall have prior to such date
submitted the highest bona fide cash bid to close such sale and purchase of the
same, in the same manner as if delivery were being made to the Lessor pursuant
to Section 12, and shall duly transfer to such party title to any engines which
are not Engines delivered with the Airframe in accordance with the terms of
Section 12. The Lessor shall, without recourse or warranty (except a warranty as
to the absence of Lessor's Liens), simultaneously therewith sell and convey
title to the Airframe and the Engines or engines conveyed to the Lessor as
provided in Section 12 for cash to such party and exercise such rights as it has
to cause the Aircraft to be released from the Lien of the Indenture. Upon the
sale of the Airframe and the Engines or engines conveyed to the Lessor as
provided in Section 12 pursuant to this Section 14 and receipt by the Lessor of
all amounts referred to in Section 14(b), the Lessor will transfer to the
Lessee, without recourse or warranty (except a warranty as to the absence of
Lessor's Liens), all right, title and interest of the Lessor in and to any
Engines constituting part of the Aircraft but which were not delivered to the
purchaser with the Airframe. The Lessee shall pay all out of pocket expenses of
the Lessor, Owner Participant and Indenture Trustee in connection with any
termination or proposed termination of this Lease except that Lessee shall not
be responsible for such expenses of the Lessor or the Owner Participant in the
event the Lessor exercises its preemptive election under Section 14(c) and
thereafter fails to perform its obligations under such Section.
(b) Payments Due Upon Sale of Aircraft.
The total selling price realized at any sale of the Airframe and
Engines or engines installed thereon in accordance with this Section 14 shall be
retained by the
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Lessor and, in addition, on the Termination Date, the Lessee shall pay to the
Lessor or, in the case of Supplemental Rent, to the Persons entitled thereto, in
immediately available funds, an amount equal to the sum of (A) the excess, if
any, of (x) the Termination Value as of the Termination Date, over (y) the net
proceeds of the sale of the Aircraft, plus (B) all unpaid Supplemental Rent due
on or before the Termination Date (including Make-Whole Premium), plus (C) the
arrears portion, if any, of Basic Rent payable on such Termination Date,
together with all unpaid Basic Rent, if any, payable before the Termination
Date, plus (D) the reasonable fees and expenses of the Participants, the
Indenture Trustee and Lessor in connection therewith, plus (E) any sales,
transfer or similar Taxes incurred on such sale.
(c) Preemptive Election by Lessor.
Notwithstanding the foregoing provisions of this Section 14, the
Lessor may, not later than 90 days prior to the proposed Termination Date,
notify the Lessee of its preemptive election to take possession of the Aircraft,
which notice shall be accompanied by an irrevocable undertaking by the Lessor to
pay to the Indenture Trustee the amount required to pay in full (after giving
effect to any installment of Basic Rent due and payable on such date) the
aggregate unpaid principal amount of the outstanding Equipment Notes, together
with all accrued interest thereon and Make Whole Premium, if any (without
releasing Lessee from its obligations under clause (B) of Section 14(b) in
respect of the payment of such amount). Upon payment by the Lessor of such
amount to the Indenture Trustee, and payment of any Basic Rent due on such date,
the Lessee shall have no obligation to pay Termination Value. On the Termination
Date, if the Lessor shall have paid such amount to the Indenture Trustee, the
Lessee shall deliver the Airframe and Engines or engines installed thereon to
the Lessor in accordance with Section 12 and shall pay all unpaid Basic Rent, if
any, payable before the Termination Date, together with all accrued Basic Rent
(on a per diem basis), if any, which would otherwise have been paid in arrears
on the next following Basic Rent Payment Date, all unpaid Supplemental Rent due
on or before or after the Termination Date (including Make-Whole Premium), and
the Lessor shall transfer to the Lessee title to any Engines constituting part
of the Airframes but which were not then installed on the Aircraft as provided
in Section 12(b). If the Lessor, having given notice of a preemptive election,
shall fail to perform any of its obligations pursuant to this Section 14(c) and
as a result thereof this Lease shall not be terminated on a proposed Termination
Date, the Lessee may at its option at any time thereafter submit a new
termination notice but the Lessor may only be entitled to exercise on one
additional occasion its preemptive election to retain the Aircraft upon a
subsequent termination pursuant to this Section 14.
(d) Termination of Lease.
Upon delivery by the Lessee of the Airframe and Engines or engines
installed thereon and payment by the Lessee of all amounts payable by the Lessee
under either Section 14(b) or 14(c), as the case may be, the obligations of the
Lessee to pay Rent (except for Supplemental Rent obligations surviving pursuant
to the second
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sentence of Section 3(c) and Articles 6 and 7 of the Participation Agreement or
the Tax Indemnity Agreement or which have otherwise accrued but not paid as of
the Termination Date) shall cease and the Term shall end.
(e) Effect of No Sale or Preemptive Delivery to Lessor.
If on the Termination Date no sale of the Aircraft shall have
occurred and the Lessee has not delivered the Aircraft to the Lessor pursuant to
Section 14(c), the Lessee's notice given pursuant to Section 14(a) shall be
deemed to be withdrawn as of such date and this Lease shall continue in full
force and effect, without prejudice, however, to any claims the Lessee may have
against any Person under the Participation Agreement or otherwise if a failure
to deliver the Aircraft to the Lessor pursuant to Section 14(c) shall have been
due to a failure of the Lessor to make the payment by the Lessor provided for in
such Section.
(f) No Duty on Part of Lessor.
Lessor shall be under no duty to solicit bids, to inquire into the
efforts of Lessee to obtain bids or otherwise to take any action in connection
with any such sale other than to cooperate with such efforts as Lessee may
reasonably request and to make the transfers described in the last two sentences
of Section 14(a).
Section 15. Investment of Security Funds.
Any monies paid to or retained by the Lessor which are required to
be paid to the Lessee or applied for the benefit of the Lessee (including,
without limitation, amounts payable to the Lessee under Sections 8 and 9), but
which the Lessor is entitled to hold under the terms hereof pending the
occurrence of some event or the performance of some act (including, without
limitation, the remedying of an Event of Default), shall, until paid to the
Lessee or applied as provided herein, be invested by the Lessor (or, if the
Indenture shall not have been discharged, the Indenture Trustee) from time to
time at the direction, risk and expense of the Lessee in Permitted Investments,
subject, in the case of investments by the Indenture Trustee to the terms of
Section 5.08 of the Indenture. There shall be promptly remitted to the Lessee
any gain (including interest received) realized as the result of any such
investment (net of any fees, commissions and other expenses, if any, incurred in
connection with such investment) unless a Specified Default shall have occurred
and be continuing, in which case such gains shall be held or applied in
accordance with the preceding sentence. The Lessee will promptly pay to the
Indenture Trustee or the Lessor, as the case may be, on demand, the amount of
any loss realized as the result of any such investment (together with any fees,
commissions and other expenses, if any, incurred in connection with such
investment).
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Section 16. Events of Default.
The following events shall constitute Events of Default and each
such Event of Default shall be deemed to exist and continue so long as, but only
so long as, it shall not have been remedied:
(a) The Lessee shall fail to make any payment of (i) Basic Rent,
Termination Value or a payment required by clause (iii) of the second
sentence of Section 3(c) when due and such failure shall continue for a
period of 10 days or (ii) Supplemental Rent (other than Termination Value
or the payment required by clause (iii) of the second sentence of Section
3(c)) within 30 days after receipt by the Lessee of a written demand
therefor from the Lessor or the Indenture Trustee, provided, that in the
case of Supplemental Rent which constitutes an Excepted Payment, such
demand shall only be effective for purposes of this paragraph (a) if sent
by the Owner Participant or the Lessor and such failure shall not become
an Event of Default until the Owner Participant shall have notified the
Indenture Trustee that it has elected to treat such failure as an Event of
Default;
(b) The Lessee shall fail to procure and maintain insurance required
pursuant to Section 9 or such insurance shall be cancelled or lapse;
provided that such lapse or cancellation shall not constitute an Event of
Default until the earlier of 30 days after receipt by the Lessor or the
Indenture Trustee of notice of such lapse or cancellation or the date that
the lapse or cancellation is effective as to the Lessor, the Owner
Participant or the Indenture Trustee;
(c) The Lessee shall operate the Aircraft after having received
notice that the public liability insurance required by Section 9(a) has
lapsed or has been cancelled;
(d) The Lessee shall fail to perform or observe any other covenant
or condition to be performed or observed by it hereunder or under any
other Operative Agreement (other than the Tax Indemnity Agreement), and
such failure shall continue unremedied for a period of 30 days after
delivery of notice of such failure from the Lessor or the Indenture
Trustee to the Lessee, unless such failure is curable and the Lessee
shall, after the delivery of such notice, be diligently proceeding to
correct such failure and shall in fact correct such failure 180 days after
delivery of such notice;
(e) Any representation or warranty made by the Lessee herein or in
any Operative Agreement or in any certificate required to be delivered by
the Lessee pursuant thereto (other than the Tax Indemnity Agreement) shall
prove to have been incorrect in any material respect when made and shall
remain material at the time in question and shall not be remedied within
30 days after notice thereof has been given to the Lessee by the Lessor or
the Indenture Trustee, unless such incorrectness is curable and Lessee
shall, after delivery of
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such notice, be diligently proceeding to correct such failure and shall in
fact correct such failure 180 days after the delivery of such notice;
(f) The Lessee shall consent to the appointment of or taking
possession by a receiver, assignee, custodian, sequestrator, trustee or
liquidator (or other similar official) of itself or of a substantial part
of its property, or the Lessee shall admit in writing its inability to pay
its debts generally as they come due (as provided in 11 U.S.C. ss.
303(h)(1)), or shall make a general assignment for the benefit of its
creditors, or the Lessee shall file a voluntary petition in bankruptcy or
a voluntary petition or answer seeking liquidation, reorganization or
other relief with respect to itself or its debts under the Federal
bankruptcy laws, as now or hereafter constituted or any other applicable
Federal or State bankruptcy, insolvency or other similar law or shall
consent to the entry of an order for relief in an involuntary case under
any such law or the Lessee shall file an answer admitting the material
allegations of a petition filed against the Lessee in any such proceeding,
or otherwise seek relief under the provisions of any now existing or
future Federal or State bankruptcy, insolvency or other similar law
providing for the reorganization or winding-up of corporations, or
providing for an agreement, composition, extension or adjustment with its
creditors;
(g) An order, judgment or decree shall be entered in any proceedings
by any court of competent jurisdiction appointing, without the consent of
the Lessee, a receiver, trustee or liquidator of the Lessee or of any
substantial part of its property, or any substantial part of the property
of the Lessee shall be sequestered, and any such order, judgment of decree
of appointment or sequestration shall remain in force undismissed,
unstayed or unvacated for a period of 90 days after the date of entry
thereof; or
(h) A petition against the Lessee in a proceeding under the Federal
bankruptcy laws or other insolvency laws as now or hereafter in effect
shall be filed and shall not be withdrawn or dismissed within 90 days
thereafter, or, under the provisions of any law providing for
reorganization or winding-up of corporations which may apply to the
Lessee, any court of competent jurisdiction shall assume jurisdiction,
custody or control of the Lessee or of any substantial part of its
property and such jurisdiction, custody or control shall remain in force
unrelinquished, unstayed or unterminated for a period of 90 days;
provided that, notwithstanding anything to the contrary contained in this Lease,
any failure of the Lessee to perform or observe any covenant, condition, or
agreement herein shall not constitute an Event of Default under clause (d) above
if such failure is caused solely by reason of an event referred to in the
definition of "Event of Loss" so long as the Lessee is continuing to comply with
the applicable terms of Section 8.
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Section 17. Remedies.
Upon the occurrence of any Event of Default and at any time
thereafter so long as the same shall be continuing, the Lessor may, at its
option, declare this Lease to be in default by a notice to the Lessee (provided
that this Lease shall be deemed to have been declared in default without the
necessity of such notice upon the occurrence of any Event of Default described
in paragraph (f), (g) or (h) of Section 16 hereof); and at any time thereafter
so long as the Lessee shall not have remedied all outstanding Events of Default,
the Lessor may do, and the Lessee shall comply with, one or more of the
following with respect to the Airframe and all or any part of the Engines, as
the 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; provided that during any period the Aircraft is subject to the Civil
Reserve Air Fleet Program in accordance with the provisions of Section 5(b) and
in the possession of the United States government or an instrumentality or
agency thereof, the Lessor shall not, on account of any Event of Default, be
entitled to do any of the following in such manner as to limit the Lessee's
control under this Lease (or any sublessee's control under any sublease
permitted by the terms of this Lease) of any Airframe or any Engines, unless at
least 60 days' (or such lesser period, if any, as may then be applicable under
the Military Airlift Command Program of the United States Government) prior
notice of default hereunder shall have been given by the Lessor by registered or
certified mail to the Lessee (or any sublessee) with a copy addressed to the
Contracting Office Representative for the Military Airlift Command of the United
States Air Force under any contract with Lessee (or any sublessee) relating to
the Aircraft:
(a) Cause the Lessee, upon the written demand of the Lessor and at
the Lessee's expense to, and the Lessee shall, promptly return the
Airframe and all or such part of the Engines as the Lessor may demand to
the Lessor in the manner and condition required by, and otherwise in
accordance with all of the provisions of, Section 12 as if the Airframe
and such Engines were being returned at the end of the Term; or the
Lessor, at its option, may cause public officials acting pursuant to
judicial order obtained in summary proceedings or otherwise to enter upon
the premises where the Airframe or any or all Engines are located or
reasonably believed to be located and take immediate possession of and
remove such Airframe or Engines, and the Lessee shall comply therewith,
all without liability to the Lessor for or by reason of such entry or
taking possession, whether for the restoration of damage to property
caused by such taking or otherwise; and the Lessee shall promptly execute
and deliver to the Lessor such instruments of title or other documents as
the Lessor may deem necessary or advisable to enable the Lessor or its
agent to obtain possession of the Airframe or the Engines, provided that
if the Lessee shall for any reason fail to execute and deliver such
instruments and documents after such request, the Lessor shall be
entitled, in a proceeding to which the Lessee shall be a necessary party,
to a judgment for specific performance, conferring the right to immediate
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<PAGE>
possession upon the Lessor and requiring the Lessee to execute and deliver
such instruments and documents to the Lessor;
(b) Sell or otherwise dispose of all or any part of the Aircraft, at
public or private sale, as the Lessor may determine, or hold, use,
operate, lease to others or keep idle all or any part of the Aircraft,
Airframe or any Engine as the Lessor, in its sole discretion, may
determine, in any such case free and clear of any rights of the Lessee
except as hereinafter set forth in this Section 17 and without any duty to
account to the Lessee with respect to such action or inaction or for any
proceeds with respect thereto except to the extent required by paragraph
(d) below in the event the Lessor elects to exercise its rights under said
paragraph in lieu of its rights under paragraph (c) below;
(c) Whether or not the Lessor shall have exercised, or shall
thereafter at any time exercise, any of its rights under paragraph (a) or
paragraph (b) above with respect to the Aircraft, the Lessor, by written
notice to the Lessee specifying a payment date (which shall be a
Termination Date) not earlier than 10 days from the date of such notice,
may require the Lessee to pay to the Lessor, and the Lessee shall pay to
the Lessor, on the payment date specified in such notice, as liquidated
damages for loss of a bargain and not as a penalty, any installment of
Basic Rent due on or before such payment date plus an amount equal to the
excess, if any, of (i) Termination Value for the Aircraft, determined as
of such payment date over (ii) the Fair Market Sales Value for the
Aircraft, computed as of the payment date specified pursuant to this
paragraph (c), together with interest, to the extent permitted by
Applicable Law, at the Past Due Rate on the amount of such excess, if any,
from such payment date specified pursuant to this paragraph (c), to the
date of actual payment of such amount provided that, in any such instance
in which the Lessor is unable to repossess the Aircraft due to
circumstances not relating to or caused by any Lessee Person and the Fair
Market Sales Value thereof is deemed to be zero, upon receipt of any such
payment under this clause (c) and all other amounts due hereunder, the
Lessor shall convey, as-is, where-is, without recourse or warranty, other
than a warranty against Lessor's Liens, to the Lessee all right, title and
interest of the Lessor in and to the Airframe and Engines, and execute and
deliver to the Lessee such bills of sale and other documents and
instruments as the Lessee may reasonably request to evidence such
conveyance;
(d) In the event the Lessor, pursuant to paragraph (b) above, shall
have sold the Aircraft upon reasonable notice to the Lessee, the Lessor in
lieu of exercising its rights under paragraph (c) above with respect to
the Aircraft, may, if it shall so elect, require the Lessee to pay the
Lessor, and the Lessee shall pay to the Lessor, on the date of such sale,
as liquidated damages for loss of a bargain and not as a penalty (in lieu
of the Basic Rent due after the date on which such sale occurs but in
addition to any installment of Basic Rent due on or up to the date on
which such sale occurs), the amount of any deficiency of the net proceeds
of such sale below the Termination Value of the Aircraft,
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<PAGE>
determined as of the Termination Date immediately preceeding the date of
such sale, together with interest, to the extent permitted by Applicable
Law, at the Past Due Rate on the amount of such deficiency from such
Termination Date the date of actual payment; and
(e) Rescind, cancel or terminate this Lease or exercise any other
right or remedy which may be available under Applicable Law or proceed by
appropriate court action to enforce the terms hereof or to recover damages
for the breach hereof.
In addition, the Lessee shall be liable for any unpaid Supplemental Rent due
hereunder before or after any termination hereof, including all reasonable costs
and expenses including attorney's fees and disbursements incurred by the Lessor
or the Owner Participant by reason of the occurrence of any Event of Default or
the exercise of the Lessor's remedies with respect thereto including without
limitation all costs and expenses incurred in connection with the return of the
Airframe or any Engine in accordance with, and in the condition required by, the
terms of Section 12 or any appraisal of the Aircraft required for purposes of
this Section 17. At any sale of the Aircraft, the Airframe or any Engine, or
portion thereof pursuant to this Section 17, the Lessor or the Owner Participant
may bid for and purchase such property. Except as otherwise expressly provided
above, no remedy referred to in this Section 17 is intended to be exclusive (but
the liquidation of damages provided in this Section 17 shall be exclusive to the
extent permitted by Applicable Law), but each shall be cumulative and in
addition to any other remedy referred to above or otherwise available to the
Lessor for the Event of Default at law or in equity; and the exercise or
beginning of exercise by the Lessor of any one or more of such remedies shall
not preclude the simultaneous or later exercise by the Lessor of any or all such
other remedies. No express or implied waiver by the Lessor of any Event of
Default hereunder shall in any way be, or be construed to be, a waiver of any
future or subsequent Event of Default.
Section 18. Lessor's Right to Perform for the Lessee.
If the Lessee fails to make any payment of Rent required to be made
by it hereunder or fails to perform or comply with any of its agreements
contained herein the Lessor may, upon prior notice to the Lessee, itself make
such payment or perform or comply with such agreement, and the amount of such
payment and the amount of the reasonable expenses of the Lessor incurred in
connection with such payment or the performance of or compliance with such
agreement, as the case may be, together with interest thereon at the Past Due
Rate, shall be deemed Supplemental Rent, payable by the Lessee upon demand;
provided that no such payment or performance by the Lessor shall be deemed to
cure any Default or Event of Default under this Lease or relieve the Lessee of
any of its obligations hereunder; provided further that nothing in this Section
18 shall be deemed to permit the Lessor to exercise any control over the
operation or maintenance of the Aircraft or any part thereof while it is being
utilized in the air transportation services of the Lessee or any Permitted
Sublessee without the consent of the Lessee; provided further that the
provisions of this Section 18 shall not affect
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<PAGE>
Lessor's right to exercise its remedies under Section 17 upon the occurrence and
continuance of an Event of Default.
Section 19. Bankruptcy.
It is the intention of the parties that the Lessor (and the
Indenture Trustee as assignee of the Lessor under the Indenture) shall be
entitled to the benefits of 11 U.S.C. ss. 1110 with respect to the right to
repossess the Airframe, Engines and Parts as provided herein, and in any
circumstances where more than one construction of the terms and conditions of
this Lease is possible, a construction which would preserve such benefits shall
control over any construction which would not preserve such benefits or would
render them doubtful. To the extent consistent with the provisions of 11 U.S.C.
ss. 1110 or any analogous section of the Federal bankruptcy laws, as amended
from time to time, it is hereby expressly agreed and provided that,
notwithstanding any other provisions of the Federal bankruptcy laws, as amended
from time to time, any right of the Lessor to take possession of the Aircraft in
compliance with the provisions of this Lease shall not be affected by the
provisions of 11 U.S.C. ss. 362 or 363, as amended from time to time, or any
analogous provisions of any superseding statute or any power of the bankruptcy
court to enjoin such taking of possession.
Section 20. Assignment: Benefit and Binding Effect.
(a) Assignment by the Lessee.
The Lessee may not, without the prior written consent of the Lessor
and the Owner Participant, assign any of its rights hereunder except as
otherwise expressly provided herein.
(b) Assignment by the Lessor.
The Lessor's interest in this Lease has been assigned as security to
the Indenture Trustee pursuant to the Indenture for the benefit of the holders
from time to time of the Equipment Notes, and the Lessee acknowledges due notice
of, and consents to, such security assignment. The Lessor may not, without the
prior consent of the Lessee, otherwise assign any of its rights under or
interest in this Lease except to a successor Owner Trustee or additional trustee
referred to in Section 9.01 of the Participation Agreement and Section 9.01 of
the Trust Agreement or as otherwise expressly provided herein.
(c) Benefit and Binding Effect.
The terms and provisions of this Lease shall be binding upon and,
subject to the limitations on assignment of rights hereunder, inure to the
benefit of the Lessor and the Lessee and their respective successors and
permitted assigns. Nothing herein
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shall be construed as creating rights in any other Person except, to the extent
provided herein, the Owner Participant.
(d) Sublessee's Performance and Rights.
Any obligation imposed on the Lessee in this Lease shall require
only that the Lessee perform or cause to be performed such obligation, even if
stated herein as a direct obligation, and the performance of any such obligation
by any sublessee or transferee of the Airframe or any Engine or Part permitted
by the terms hereof under a sublease or transfer agreement then in effect shall
constitute performance by the Lessee and to the extent of such performance
discharge such obligation by the Lessee.
Section 21. Owner Trustee's Limitation on Liability.
Trust Company is entering into this Lease solely as Owner Trustee
under the Trust Agreement and not in its individual capacity and neither Trust
Company nor any entity acting as successor Owner Trustee or additional Owner
Trustee under the Trust Agreement shall be personally liable for, or for any
loss in respect of, any of the statements, representations, warranties,
agreements or obligations stated to be those of the Lessor hereunder, as to
which all interested parties shall look solely to the Trust Estate, except to
the extent expressly provided otherwise in the other Operative Agreement,
provided, however, that nothing in this Section 21 shall be construed to limit
in scope or substance the liability of Trust Company or any entity acting as
successor Owner Trustee or additional Owner Trustee under the Trust Agreement in
its individual capacity for the consequences of its own willful misconduct or
gross negligence or (in receiving, handling or remitting funds) its simple
negligence, or the inaccuracy or breach of its representations, warranties or
covenants made in such capacity in any other Operative Agreement.
Section 22. Certain Agreements of Lessee.
The Lessee will take, or cause to be taken, at the Lessee's cost and
expense, such action with respect to the recording, filing, re-recording and
re-filing of this Lease, each Lease Supplement, the Trust Agreement, the
Indenture, each Indenture Supplement and any financing statements or other
instruments as are necessary or requested by the Owner Participant or the
Indenture Trustee and appropriate, to maintain, so long as the Indenture or this
Lease is in effect, the perfection of the security interest created by the
Indenture and any security interest that may be claimed to have been created by
this Lease and the ownership interest of the Owner Trustee in the Aircraft, and
will furnish to the Owner Trustee, the Indenture Trustee and the Owner
Participant timely notice of the necessity of such action, together with such
instruments, in execution form, and such other information as may be required to
enable them to take such action.
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Section 23. Miscellaneous.
(a) Notices.
Except as otherwise specifically provided herein, all notices,
requests, approvals or consents required or permitted by the terms hereof shall
be in writing (it being understood that the specification of a writing in
certain instances and not in others does not imply an intention that a writing
is not required as to the latter). Any notice shall be effective when received.
Any notice shall either be mailed, certified or registered mail, return receipt
requested with proper first class postage prepaid, or sent in the form of a
telecopy, provided that there is receipt of such notice the next Business Day
from an overnight courier service, or by overnight delivery service or delivered
by hand. Any notice shall be directed to the Lessee, the Lessor, the Indenture
Trustee or any other party to the Participation Agreement to the respective
addresses set forth in Section 12.01 to the Participation Agreement or to such
other address or telecopy number as any such party may designate pursuant to
Section 12.01 of the Participation Agreement.
(b) Counterparts.
This Lease may be executed by the parties hereto in separate
counterparts, each of which when so executed and delivered shall, subject to the
next sentence and the legends appearing on the cover and signature page hereof,
be an original, but all such counterparts shall together constitute but one and
the same instrument. TO THE EXTENT, IF ANY, THAT THIS LEASE CONSTITUTES CHATTEL
PAPER (AS THE 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 CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE INDENTURE TRUSTEE ON
THE SIGNATURE PAGE THEREOF.
(c) Amendments.
Neither this Lease nor any of the terms hereof may be terminated,
amended, supplemented, waived or modified orally, but only by an instrument in
writing signed by the Lessor and the Lessee provided, however, that unless and
until the Indenture has been discharged, except as otherwise provided in the
Indenture, no termination, amendment, supplement, waiver or modification of, or
waiver by or consent of the Lessor in respect of, any of the provisions of this
Lease shall be effective unless the Indenture Trustee shall have joined in such
amendment, modification, waiver or consent or shall have given its prior consent
thereto.
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<PAGE>
(d) Agreement to Lease.
It is the intent of the parties to this Lease that for all purposes
(including, without limitation, U.S. Federal income tax purposes) this Lease
will be a true lease, and that this Lease conveys to the Lessee no right, title
or interest in the Aircraft except as a lessee.
(e) Governing Law.
(i) THIS LEASE SHALL IN ALL RESPECTS BE GOVERNED BY THE LAW OF
THE STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS LEASE HAS BEEN DELIVERED IN THE STATE OF NEW YORK.
(ii) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY
HERETO IRREVOCABLY AGREES, ACCEPTS AND SUBMITS ITSELF TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK IN THE CITY AND COUNTY OF
NEW YORK AND OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, IN
CONNECTION WITH ANY LEGAL ACTION, SUIT OR PROCEEDING WITH RESPECT TO ANY MATTER
RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS LEASE.
(iii) EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS AND AGREES
THAT THE SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES AND DOCUMENTS OF
ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING MAY BE
MADE BY MAILING COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
AT THE ADDRESS SET FORTH PURSUANT TO SECTION 12.01 OF THE PARTICIPATION
AGREEMENT. EACH PARTY HERETO AGREES THAT SERVICE UPON IT, OR ANY OF ITS AGENTS,
IN EACH CASE IN ACCORDANCE WITH THIS SECTION 23(e)(iii), SHALL CONSTITUTE VALID
AND EFFECTIVE PERSONAL SERVICE UPON SUCH PARTY, AND EACH PARTY HERETO HEREBY
AGREES THAT THE FAILURE OF ANY OF ITS AGENTS TO GIVE ANY NOTICE OF SUCH SERVICE
TO ANY SUCH PARTY SHALL NOT IMPAIR OR AFFECT IN ANY WAY THE VALIDITY OF SUCH
SERVICE ON SUCH PARTY OR ANY JUDGMENT RENDERED IN ANY ACTION OR PROCEEDING BASED
THEREON.
(iv) EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE
EXTENT PERMITTED BY APPLICABLE LAW, AND AGREES NOT TO ASSERT, BY WAY OF MOTION,
AS A DEFENSE, OR OTHERWISE, IN ANY LEGAL ACTION OR PROCEEDING BROUGHT HEREUNDER
IN ANY OF THE ABOVE-NAMED COURTS, THAT SUCH ACTION OR PROCEEDING IS BROUGHT IN
AN INCONVENIENT FORUM, THAT VENUE FOR THE ACTION
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<PAGE>
OR PROCEEDING IS IMPROPER OR THAT THIS LEASE OR ANY OTHER OPERATIVE AGREEMENT
MAY NOT BE ENFORCED IN OR BY SUCH COURTS.
(v) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY
HERETO HEREBY WAIVES ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION IN ANY COURT IN ANY JURISDICTION BASED UPON OR ARISING OUT OF OR
RELATING TO THIS LEASE.
(f) Severability.
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, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.
(g) Survival.
The representations, warranties, indemnities and covenants set forth
herein shall survive the delivery of the Aircraft, the transfer of any interest
of Owner Participant in this Lease, the other Operative Agreements, the Trust
Estate and the Trust Agreement and the transfer of any interest by any Holder of
its Equipment Notes.
(h) Article 2A.
The Lessor and the Lessee agree that this Lease is a "finance lease"
for purposes of Article 2A of, and as defined in Section 2-A-103 of the Uniform
Commercial Code. The Lessee agrees that no right or remedy granted solely by
reason of Article 2A of the Uniform Commercial Code shall be available to the
Lessee as against the Lessor unless expressly provided in this Lease.
* * *
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<PAGE>
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Lease to be duly executed by their authorized officers as of the day and year
first above written.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
not in its individual
capacity, but solely
as Owner Trustee
By:____________________________
Name:
Title:
MIDWAY AIRLINES CORPORATION
By:____________________________
Name:
Title:
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<PAGE>
THE LESSOR HAS ASSIGNED THIS LEASE AGREEMENT TO THE INDENTURE TRUSTEE AS
SECURITY. TO THE EXTENT, IF ANY, THAT THIS 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 LEASE AGREEMENT MAY
BE CREATED THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART HEREOF OTHER
THAN THE ORIGINAL COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE
INDENTURE TRUSTEE IMMEDIATELY FOLLOWING THIS LEGEND.
Receipt of this original counterpart of the foregoing Lease Agreement is
hereby acknowledged on this _____ day of ______________, 1998.
THE FIRST NATIONAL BANK OF MARYLAND, as
Indenture Trustee
By: _______________________________
Name:
Title:
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<PAGE>
Exhibit A
to Lease
LEASE SUPPLEMENT NO. 1 [N575ML]
THIS LEASE SUPPLEMENT NO. 1 [N575ML] dated September _____, 1998,
between FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, not in its individual
capacity, but solely as Owner Trustee, except as otherwise provided herein, the
Lessor, and MIDWAY AIRLINES CORPORATION, a Delaware corporation, the Lessee;
W I T N E S S E T H :
WHEREAS, the Lessor and the Lessee have heretofore entered into that
certain Lease Agreement [N575ML], dated as of September 10, 1998 (the "Lease",
the terms defined therein being herein used with the same meaning), which Lease
provides, among other things, for the execution and delivery of Lease
Supplements in substantially the form hereof for the purpose of leasing a
specific Aircraft under the Lease when delivered by the Lessor to the Lessee in
accordance with the terms thereof;
WHEREAS, the Lease, a counterpart of which is attached hereto and
made a part hereof, relates to the Aircraft and Engines described in Schedule I
hereto 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, and pursuant to Section 2 of the Lease, the Lessor and
the Lessee hereby agree as follows:
1. The Lessor hereby delivers and leases to the Lessee, and the
Lessee hereby accepts and leases from the Lessor, under the Lease as herein
supplemented, the Aircraft, described in Schedule I hereto.
2. The Delivery Date is the date of this Lease Supplement set forth
in the opening paragraph hereof.
3. The Basic Term shall commence on the Delivery Date and continue
through March 30, 2015 (the "Expiration Date"), unless terminated earlier as
provided in the Lease.
4. Lessee hereby confirms to Lessor that Lessee has duly and
irrevocably accepted the Aircraft under and for all purposes hereof, of the
Lease and of the other Lessee Documents.
<PAGE>
5. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
6. This Lease Supplement may be executed by the parties hereto in
separate counterparts and all such counterparts shall together constitute but
one and the same instrument. 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 or the Lease may be created through the transfer or possession
of any counterpart other than the original counterpart of each thereof
containing the receipt therefor executed by the Indenture Trustee on the
signature page of each thereof.
7. THIS LEASE SUPPLEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK
AND SHALL IN ALL RESPECTS BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Lease Supplement to be duly executed by their authorized officers as of the day
and year first above written.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
not in its individual
capacity, but solely as
Owner Trustee
By:_____________________________
Name:
Title:
MIDWAY AIRLINES CORPORATION
By:_____________________________
Name:
Title:
<PAGE>
THE LESSOR HAS ASSIGNED THIS LEASE SUPPLEMENT TO THE INDENTURE
TRUSTEE AS SECURITY. 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 THROUGH THE TRANSFER OR POSSESSION OF ANY
COUNTERPART HEREOF OTHER THAN THE ORIGINAL COUNTERPART CONTAINING THE RECEIPT
THEREFOR EXECUTED BY THE INDENTURE TRUSTEE IMMEDIATELY FOLLOWING THIS LEGEND.
Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this _____ day of September, 1998.
THE FIRST NATIONAL BANK OF
MARYLAND, as Indenture Trustee
By:______________________________
Name:
Title:
<PAGE>
SCHEDULE I
TO EXHIBIT A
DESCRIPTION OF AIRFRAME AND ENGINES
AIRFRAME
Manufacturer's FAA Registration Manufacturer's
Manufacturer Model No. Serial No.
- - ------------ -------------- ---------------- --------------
Bombardier Inc. CL-600-2B19 N575ML 7256
ENGINES
Manufacturer's Manufacturer's
Manufacturer Model Serial Nos.
- - ------------ -------------- --------------
General Electric Company CF34-3B1 GE-E-872364
GE-E-872365
Each Engine is of 750 or more "rated take-off horsepower" or the
equivalent of such horsepower.
<PAGE>
Exhibit B
Certain Economic Information
"EBO Amount" shall mean $*.
"EBO Date" shall mean January 2, 2013.
"Lessor's Cost" shall mean $*.
"Minimum Liability Amount" shall mean $200,000,000.
"Transaction Costs" shall mean *% of Lessor's Cost.
"Seller" shall mean Bombardier Capital Inc..
"Estimated Value" shall mean *% of Lessor's Cost.
"Compounded Discounted Rate" shall mean 15% per annum.
"TV Rate" shall mean a rate equal to the rate per annum announced from time to
time by Citibank, N.A. as its prime rate plus two percent (2%) per annum.
"Renewal Rental Rate" shall mean $* per annum.
- - ----------
* Confidential treatment requested for omitted information. Omitted
information has been filed separately with the Commission.
<PAGE>
Exhibit C
Basic Rent
----------
Basic Rent Payment Date Amount
- - ----------------------- ------
Confidential treatment requested for omitted information. Omitted information
has been filed separately with the Commission.
<PAGE>
Exhibit D
Termination Values
------------------
Termination Date Termination Value
- - ---------------- -----------------
Confidential treatment requested for omitted information. Omitted information
has been filed separately with the Commission.
<PAGE>
Exhibit E
Lists of Countries - Permitted for Re-Registration and Subleasing
Australia Italy
Austria Japan
Belgium Luxembourg
Canada Netherlands
Denmark New Zealand
Finland Norway
France Spain
Germany Sweden
Greece Switzerland
Iceland United Kingdom
Ireland
<PAGE>
Exhibit F
RETURN CONDITIONS
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
A. General Conditions Upon Return. Unless purchased by Lessee pursuant to
Section 13 of the Lease, at the time of return of the Airframe upon the
termination of the Lease at the end of the Basic Term or any Renewal Term or
pursuant to Section 14(c) or 17 of the Lease: (i) the Aircraft shall be
registered with the FAA in the name of the Lessor (except for a failure caused
by the Lessor being ineligible to be the registered owner of an aircraft
registered with the FAA), (ii) the Aircraft shall have and be in compliance with
a currently valid standard certificate of airworthiness issued by the FAA and be
in compliance with Part 121 of the FAA Regulations (or successor regulations),
(iii) the Aircraft shall be free and clear of all Liens (other than Lessor's
Liens) and rights of persons not party to any Operative Agreement under pooling,
interchange, overhaul, repair or similar agreements or arrangements, (iv) the
Aircraft shall be in as good operating condition as when originally delivered to
Lessee, ordinary wear and tear excepted, and be fully equipped with two Engines
or other engines meeting the requirements of Replacement Engines, (v) the
Aircraft shall have all Lessee's and any Permitted Sublessee's exterior markings
removed or painted over and the areas where such markings were removed or
painted over refurbished as necessary to blend with adjacent areas, (vi) the
Aircraft shall be in regular U.S. passenger configuration and with the same
number of seats as when delivered and the interior of the Aircraft shall be
clean in accordance with Lessee's customary standard for a "between flights"
cleaning, (vii) the Aircraft will be in compliance with the maintenance
provisions of the Lease, and (viii) the Aircraft shall have no outstanding
airworthiness directives issued by the FAA requiring terminating action by the
date of return. In the event the FAA shall issue any directive which would
require improvements to the Aircraft in order for the airworthiness certificate
of the Aircraft to be maintained in good standing, Lessee shall not apply for an
extension of the date of compliance with the directive as to the Aircraft to a
date after the date of return of the Aircraft pursuant to Section 12 of the
Lease, unless it shall previously or concurrently have applied for such an
extension with respect to all Canadair Regional Jet Series 200 ER aircraft in
its fleet affected by such directive.
B. Hours of Operation. Unless purchased by Lessee pursuant to Section 13
of the Lease, at the time of return of the Airframe upon the termination of the
Lease at the end of the Basic Term or any Renewal Term or pursuant to Section
14(c) or 17 of the Lease: (i) in the event that the Lessee (or any Permitted
Sublessee then in possession of the Aircraft) shall not then be using a
continuous maintenance program with respect to the Airframe, Lessee agrees that
during the period of operation of the Aircraft immediately prior to such return
(A) Lessee or such Permitted Sublessee, as the case may be, shall have been
using block inspection program with respect to the Airframe which shall have
been approved by all necessary governmental approvals of
<PAGE>
the country under the laws of which the Aircraft shall then have been registered
and (B) the Airframe shall have remaining until the next scheduled block
inspection at least 25% of the allowable hours or cycles (whichever shall be
applicable) between block inspections permitted under the block inspection
program then used by the Lessee or such Permitted Sublessee, and (ii) in the
event that Lessee (or any Permitted Sublessee then in possession of the
Aircraft) during the period of operation of the Aircraft immediately prior to
such return shall not have been using an on-condition maintenance program with
respect to any Engine or engine installed on the Airframe, Lessee agrees that
the number of hours or cycles of operation (whichever shall be applicable under
the maintenance program then in use with respect to such Engine or engine) on
each such Engine or engine remaining until the next scheduled life limited part
replacement shall be at least 25% of the hours or cycles (whichever shall be
applicable) between life limited part replacement allowed under the maintenance
program then in use with respect to such Engine or engine which shall have been
approved by all necessary governmental approvals of the country under the laws
of which the Aircraft shall have then been registered.
If clause (i)(B) of the first sentence of the preceding paragraph
shall be applicable but the Airframe does not meet the conditions specified in
said clause (i)(B), Lessee shall pay or cause to be paid to Lessor a Dollar
amount computed by multiplying (I) the cost of performing the airframe block
inspection of the type referred to in such clause (i)(B) at a rate then charged
by an outside maintenance provider to Lessee for performing such work (where
such rate would also be available to Lessor) by (II) a fraction of which (x) the
numerator shall be the excess of (A) 25% of the hours of operation allowable for
the Airframe between block inspections under the block inspection program then
in use with respect to the Airframe over (B) the number of hours of operation
remaining on the Airframe to the next such block inspection and (y) the
denominator shall be the number of hours of operation allowable between such
block inspections in accordance with such block inspection program.
If clause (ii) of the first sentence of the second preceding
paragraph shall be applicable but any Engine or engine does not meet the
conditions specified in said clause (ii), Lessee shall pay or cause to be paid
to Lessor, with respect to any such Engine or engine, a Dollar amount computed
by multiplying (aa) the cost of performing the scheduled life limited part
replacement under the maintenance program then used by Lessee or any Permitted
Sublessee for an engine of the same model as such Engine at a rate then charged
by an outside maintenance provider to Lessee or such Permitted Sublessee for
performing such work (where such rate would also be available to Lessor) by (cc)
a fraction of which (x) the numerator shall be the excess of 25% of the hours or
cycles of operation (whichever is applicable) between life limited part
replacement allowable for an engine under the maintenance program then in use
with respect to such Engine or engine over the actual average number of hours or
cycles of operation on such Engine or engine remaining until the next such
scheduled life limited part replacement and (y) the denominator shall be the
number of hours or cycles allowable between such scheduled life limited part
replacement.
<PAGE>
SCHEDULE I
TO EXHIBIT A
DESCRIPTION OF AIRFRAME AND ENGINES
<PAGE>
Exhibit B
Certain Economic Information
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
<PAGE>
Exhibit C
Basic Rent
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
<PAGE>
Exhibit D
Termination Values
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
<PAGE>
Exhibit F
RETURN CONDITIONS
The portion of this Exhibit appearing below this text is intentionally deleted
from the FAA filing counterpart as the parties hereto deem it to contain
confidential information.
Note to Exhibit 10.7
The following Lease Supplement is substantially identical in all
material respects to three additional Lease Supplements except as follows:
<TABLE>
<CAPTION>
- - -------------------------------------------------------------------------------------------
Lease
Aircraft Termination
Owner Participant Date (Tail No.) Date
- - -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NCC Charlie Company* September 10, 1998* N575ML* March 30, 2015*
- - -------------------------------------------------------------------------------------------
NCC Charlie Company September 10, 1998 N576ML March 30, 2015
- - -------------------------------------------------------------------------------------------
General Electric Capital Corporation November 10, 1998 N577ML May 12, 2015
- - -------------------------------------------------------------------------------------------
</TABLE>
- - ----------
* Filed document
<PAGE>
LEASE SUPPLEMENT NO. 1 [N576ML]
THIS LEASE SUPPLEMENT NO. 1 [N576ML] dated September 30, 1998,
between FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, not in its individual
capacity, but solely as Owner Trustee, except as otherwise provided herein, the
Lessor, and MIDWAY AIRLINES CORPORATION, a Delaware corporation, the Lessee;
W I T N E S S E T H :
WHEREAS, the Lessor and the Lessee have heretofore entered into that
certain Lease Agreement [N576ML], dated as of September 10, 1998 (the "Lease",
the terms defined therein being herein used with the same meaning), which Lease
provides, among other things, for the execution and delivery of Lease
Supplements in substantially the form hereof for the purpose of leasing a
specific Aircraft under the Lease when delivered by the Lessor to the Lessee in
accordance with the terms thereof;
WHEREAS, the Lease, a counterpart of which is attached hereto and
made a part hereof, relates to the Aircraft and Engines described in Schedule I
hereto 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, and pursuant to Section 2 of the Lease, the Lessor and
the Lessee hereby agree as follows:
1. The Lessor hereby delivers and leases to the Lessee, and the
Lessee hereby accepts and leases from the Lessor, under the Lease as herein
supplemented, the Aircraft, described in Schedule I hereto.
2. The Delivery Date is the date of this Lease Supplement set forth
in the opening paragraph hereof.
3. The Basic Term shall commence on the Delivery Date and continue
through March 30, 2015 (the "Expiration Date"), unless terminated earlier as
provided in the Lease.
4. Lessee hereby confirms to Lessor that Lessee has duly and
irrevocably accepted the Aircraft under and for all purposes hereof, of the
Lease and of the other Lessee Documents.
<PAGE>
5. All of the terms and provisions of the Lease are hereby
incorporated by reference in this Lease Supplement to the same extent as if
fully set forth herein.
6. This Lease Supplement may be executed by the parties hereto in
separate counterparts and all such counterparts shall together constitute but
one and the same instrument. 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 or the Lease may be created through the transfer or possession
of any counterpart other than the original counterpart of each thereof
containing the receipt therefor executed by the Indenture Trustee on the
signature page of each thereof.
7. THIS LEASE SUPPLEMENT HAS BEEN DELIVERED IN THE STATE OF NEW YORK
AND SHALL IN ALL RESPECTS BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK,
INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE.
* * *
<PAGE>
SCHEDULE I
DESCRIPTION OF AIRFRAME AND ENGINES
AIRFRAME
Manufacturer's FAA Registration Manufacturer's
Manufacturer Model No. Serial No.
- - ------------ -------------- ---------------- --------------
Bombardier Inc. CL-600-2B19 N576ML 7257
ENGINES
Manufacturer's Manufacturer's
Manufacturer Model Serial Nos.
- - ------------ -------------- --------------
General Electric Company CF34-3B1 GE-E-872371
GE-E-872373
Each Engine is of 750 or more "rated take-off horsepower" or the
equivalent of such horsepower.
<PAGE>
IN WITNESS WHEREOF, the Lessor and the Lessee have each caused this
Lease Supplement to be duly executed by their authorized officers as of the day
and year first above written.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION
not in its individual
capacity, but solely as
Owner Trustee
By:_____________________________
Name:
Title:
MIDWAY AIRLINES CORPORATION
By:_____________________________
Name:
Title:
Note to Exhibit 10.8
The following Purchase Agreement Assignment is substantially
identical in all material respects to three additional Purchase Agreement
Assignments except as follows:
- - --------------------------------------------------------------------------------
Owner Participant Date Aircraft (Tail No.)
- - --------------------------------------------------------------------------------
NCC Charlie Company* September 10, 1998* N575ML*
- - --------------------------------------------------------------------------------
NCC Charlie Company September 10, 1998 N576ML
- - --------------------------------------------------------------------------------
General Electric Capital Corporation November 10, 1998 N577ML
- - --------------------------------------------------------------------------------
- - ----------
* Filed document
<PAGE>
PURCHASE AGREEMENT ASSIGNMENT [N576ML], dated as of September 10,
1998, between MIDWAY AIRLINES CORPORATION, a Delaware corporation (herein called
the "Assignor") and FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, a national
banking association, not in its individual capacity but solely as Owner Trustee
(herein called the "Assignee").
W I T N E S S E T H :
WHEREAS, the Assignor and Manufacturer are parties to the Purchase
Agreement, providing, among other things, for the manufacture by the
Manufacturer and the sale by the Manufacturer to the Assignor of certain
aircraft, engines and related equipment, including the Aircraft; and
WHEREAS, the Assignee wishes to acquire the Aircraft from Bombardier
Capital Inc. (the "Seller") and the Assignor, on the terms and conditions
hereinafter set forth, wishes to assign to the Assignee certain of the
Assignor's rights and interests under the Purchase Agreement and the Assignee is
willing to accept such assignment, as hereinafter set forth; and
WHEREAS, the Assignee intends to lease to the Assignor, and the
Assignor intends to lease from the Assignee, the Aircraft pursuant to the lease
agreement dated as of September 10, 1998 as the same may be amended, modified or
supplemented, between the Assignee, as lessor, and the Assignor, as lessee,
providing for the lease of the Aircraft (the "Lease").
NOW, THEREFORE, in consideration of mutual covenants and agreements
herein contained and for other valuable consideration, receipt of which is
hereby acknowledged by the Assignor, the parties hereto agree as follows:
1. For all purposes of this Assignment, except as otherwise
expressly provided or unless the context otherwise requires, all terms used
herein in capitalized form and not otherwise defined herein, shall have the
meanings set forth in Appendix A to the Lease.
2. Subject to the terms and conditions of this Assignment, Assignor
does hereby sell, assign and convey to Assignee, its successors and permitted
assigns all of Assignor's rights in and to the Purchase Agreement as and to the
extent that the same relate to the Aircraft and the purchase and operation
thereof (except to the extent reserved below), including, without limitation,
all warranty and indemnity provisions in the Purchase Agreement with respect to
the Aircraft and all claims thereunder in respect of the Aircraft, and any and
all rights of the Assignor to compel performance of the terms of the Purchase
Agreement in respect of the Aircraft, reserving to Assignor, however, (i) all
the Assignor's rights and interests in and to the Purchase Agreement to the
extent that each relates to aircraft other than the Aircraft
<PAGE>
and the purchase and operation of such aircraft and to the extent that each
relates to any other matters not directly pertaining to the Aircraft, (ii) so
long as the Aircraft shall be subject to the Lease and no Event of Default shall
have occurred and be continuing and the Assignee or the Indenture Trustee (as
assignee of the Assignee) has not commenced the exercise remedies set forth in
Section 17 of the Lease, all rights of the Assignor to obtain services,
training, product support, promotional support, publications or demonstrations
and test flights pursuant to the Purchase Agreement, and (iii) with respect to
the Aircraft, all of Assignor's rights with respect to payments made by Assignor
pursuant to the Purchase Agreement (including without limitation any
post-delivery adjustments to the purchase price or amounts credited or to be
credited by the Manufacturer to Assignor other than those arising from events
which would have the effect of decreasing the Fair Market Sales Value of the
Aircraft at the end of the Term). The foregoing assignment is subject to the
conditions that (i) concurrently with its execution, Assignee shall lease the
Aircraft to Assignor under the Lease and (ii) the written consent of the
Manufacturer to such assignment be provided in the form attached hereto.
Unless an Event of Default shall have occurred and be continuing and
the Assignee or the Indenture Trustee (as assignee of the Assignee) shall have
commenced the exercise of remedies set forth in Section 17 of the Lease, and
subject to the provisions hereof, the Assignee shall and it does hereby
authorize the Assignor during the Term as Lessee under the Lease, to the
exclusion of the Assignee, to exercise in the Assignor's name, all rights and
powers of the "Buyer" under the Purchase Agreement and any warranty with respect
to the Aircraft made by the Manufacturer or any subcontractor or supplier, and
any other claims against the Manufacturer or any such subcontractor or supplier
with respect to the Aircraft, except that the Assignor may not enter into any
change, order or other amendment, modification or supplement to the Purchase
Agreement insofar as it relates to the Aircraft without the written consent of
the Assignee if such change, order, amendment, modification or supplement would
result in any recision, cancellation or termination of the Purchase Agreement in
respect to the Aircraft or otherwise materially adversely affect Assignee's
rights assigned hereunder. Any recovery or benefit resulting from enforcement of
any warranty, indemnity or claim shall be applied to remedy any defect in
respect of the Aircraft (or to reimburse the Assignor for its remedying of any
such defect) and the balance to be paid to the Assignor or the Assignee, as
their interests may appear. Assignee hereby accepts the foregoing assignment
subject to the terms hereof.
3. It is expressly agreed that, anything herein contained to the
contrary notwithstanding: (a) the Assignor shall at all times remain liable to
the Manufacturer under the Purchase Agreement to perform all the duties and
obligations of the "Buyer" thereunder to the same extent as if this Assignment
had not been executed; (b) the exercise by the Assignee of any of the rights
assigned hereunder shall not release the Assignor from any of its duties or
obligations to the Manufacturer under the Purchase Agreement except to the
extent that such exercise by the Assignee shall constitute performance of such
duties and obligations; and (c) except as provided
-2-
<PAGE>
herein, the Assignee, the Indenture Trustee, the Loan Participant, the Owner
Participant, the Pass-Through Trustee, the Subordination Agent, the Holders or
the Trust Company shall not have any obligation or liability under the Purchase
Agreement by reason of, or arising out of, this Assignment or be obligated to
perform any of the obligations or duties of the Assignor under the Purchase
Agreement or to make any payment or to make any inquiry as to the sufficiency of
any payment received by it or to present or file any claim or to take any other
action to collect or enforce any claim for any payment assignment hereunder.
Without in any way releasing the Assignor from any of its duties or
obligations under the Purchase Agreement, the Assignee confirms for the benefit
of the Manufacturer that, insofar as the provisions of the Purchase Agreement
relate to the Aircraft, in exercising any rights under the Purchase Agreement,
or in making any claim with respect to the Aircraft or other things (including
data, documents, training and services) delivered or to be delivered pursuant to
the Purchase Agreement, the terms and conditions of the Purchase Agreement shall
apply to, and be binding upon, the Assignee to the same extent as the Assignor.
Nothing contained herein shall subject the Manufacturer to any
liability to which it would not otherwise be subject under the Purchase
Agreement or modify in any respect the contract rights of the Manufacturer under
the Purchase Agreement.
At any time after an Event of Default shall have occurred and be
continuing and the Assignee shall have commenced the exercise of remedies set
forth in Section 17 of the Lease, the Assignee or the Indenture Trustee (as
assignee of the Assignee) and its successors and permitted assigns shall, to the
exclusion of the Assignor, be entitled to assert and enforce all rights and
claims of the "Buyer" under the Purchase Agreement assigned hereunder (including
the right to receive payments), and the Assignor agrees to cooperate with the
Assignee in asserting such rights and claims, and the Assignor does hereby
constitute, effective at any time after an Event of Default shall have occurred
and be continuing and the Assignee or the Indenture Trustee (as assignee of the
Assignee) shall have commenced the exercise of remedies set forth in Section 17
of the Lease, the Assignee, its successors and assigns, the Assignor's true and
lawful attorney, irrevocably, with full power (in the name of the Assignor or
otherwise) to ask, require, demand, receive, compound and give acquittance for
any and all monies and claims for monies due or to become due under, or arising
out of, the Purchase Agreement in respect of the Aircraft, to the extent that
the same have been expressly assigned by this Assignment and for such period as
the Assignee may exercise rights with respect thereto under this Assignment, to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or take any action or institute (or, if previously commenced,
assume control of) any proceedings and to obtain any recovery in connection
therewith that the Assignee may deem to be necessary or advisable with respect
to such monies and claims for monies.
-3-
<PAGE>
For all purposes of this Assignment, the Manufacturer shall not be
deemed to have knowledge of and need not recognize nor take any action with
respect to the occurrence of any Event of Default, the declaration of an Event
of Default, or the exercise of remedies set forth in Section 17 of the Lease by
the Assignee, the discontinuance of any Event of Default or the Aircraft's
becoming no longer subject to the Lease or the Assignor's no longer being
entitled to possession of the Aircraft unless and until the Manufacturer shall
have received from the Assignee written notice thereof and the Manufacturer may
act with acquittance and conclusively rely upon any such notice.
4. The Assignor agrees that at any time and from time to time, upon
the written request of the Assignee, the Assignor, at its own cost and expense,
will promptly and duly execute and deliver any and all such further instruments
and documents and take such further action as the Assignee may reasonably
request in order to obtain the full benefits of this Assignment and of the
rights and powers herein granted.
5. The Assignor does hereby represent and warrant that the Purchase
Agreement is in full force and effect as to the Assignor and is enforceable
against the Assignor in accordance with its terms. The Assignor further
represents and warrants that it has, with the authorized execution of the
Consent and Agreement, received all necessary consents to the assignment and
transfer contemplated herein.
6. The Assignor does hereby represent and warrant that it has not
assigned or pledged, and hereby covenants that it will not assign or pledge, so
long as this Assignment shall remain in effect, the whole or any part of the
rights hereby assigned or any of its rights with respect to the Aircraft under
the Purchase Agreement not assigned hereby, to anyone other than the Assignee.
The Assignor agrees that it will not enter into any agreement with the
Manufacturer that would materially and adversely affect the rights of the
parties under the Purchase Agreement insofar as it relates to the Aircraft or
waive any rights thereunder.
7. So long as the Aircraft is leased to the Assignor under the Lease
and unless the Event of Default shall have occurred and be continuing and the
Assignee or the Indenture Trustee (as assignee of the Assignee) shall have
commenced the exercise of remedies under Section 17 of the Lease, the Assignee
agrees that it will not enter into any agreement with the Manufacturer that
would amend, modify, rescind, cancel or terminate the Purchase Agreement insofar
as it relates to the Aircraft or waive any rights of Assignor thereunder without
the prior written consent of the Assignor.
8. This Assignment is executed by the Assignor and the Assignee
concurrently with the execution and delivery of the Lease.
-4-
<PAGE>
9. This Assignment shall be binding upon and shall inure to the
benefit of the Assignor, the Assignee and their respective successors and
permitted assigns.
10. Neither this Assignment nor any of the terms hereof may be
terminated, amended, supplemented, waived or modified orally, but only by an
instrument in writing signed by the parties hereto and consented to by the
Manufacturer.
11. This Assignment 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.
12. This Assignment shall in all respects be governed by, and
construed in accordance with, the laws of the State of New York, including all
matters of construction, validity and performance. This Assignment is being
delivered in the State of New York.
13. Except as otherwise expressly provided herein, notice hereunder
may be given, and shall be deemed to have been given, as provided in Section
12.01 of the Participation Agreement.
14. First Union Trust Company, National Association is entering into
this Assignment solely as Owner Trustee under the Trust Agreement and not in its
individual capacity and neither First Union Trust Company, National Association
nor any entity acting as successor Owner Trustee or additional Owner Trustee
under the Trust Agreement shall be personally liable for, or for any loss in
respect of, any of the statements, representations, warranties, agreements or
obligations stated to be those of the Assignee hereunder, as to which all
interested parties shall look solely to the Trust Estate, except to the extent
expressly provided otherwise in the other Operative Agreements, provided
however, that nothing in this Section 12 shall be construed to limit in scope or
substance the liability of First Union Trust Company, National Association or
any entity acting as successor Owner Trustee or additional Owner Trustee under
the Trust Agreement in its individual capacity for the consequences of its own
willful misconduct or gross negligence or (in receiving, handling or remitting
funds) its simple negligence, or the inaccuracy or breach of its
representations, warranties or covenants made in such capacity in any other
Operative Agreements.
15. In the Indenture, First Union Trust Company, National
Association (the "Owner Trustee") has assigned and pledged with the Indenture
Trustee, as security for the Equipment Notes to be issued thereunder, all of the
Owner Trustee's right, title and interest in and to the Purchase Agreement under
this Assignment. The Assignor acknowledges and consents to such assignment.
* * *
-5-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Assignment
to be duly executed as of the day and year above written.
MIDWAY AIRLINES CORPORATION,
as Assignor
By:
-----------------------------------------
Title:
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, not in its individual capacity
but solely as Owner Trustee, as Assignee
By:
-----------------------------------------
Title:
-6-
<PAGE>
BOMBARDIER INC.
AIRCRAFT MANUFACTURER'S CONSENT AND AGREEMENT [N576ML]
The undersigned, Bombardier Inc. ("Manufacturer"), hereby
acknowledges notice of and consents to the terms of the foregoing Purchase
Agreement Assignment [N576ML] (the "Assignment") dated as of September 10, 1998,
between MIDWAY AIRLINES CORPORATION, a Delaware corporation (the "Assignor") and
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association,
not in its individual capacity but solely as Owner Trustee (the "Assignee"). The
capitalized terms used hereinafter being defined as such terms are defined in
the Assignment. The Manufacturer hereby confirms to Assignor and Assignee that
(i) the Assignee shall not be liable for any of the obligations or duties of the
Assignor under the Purchase Agreement, nor shall the Assignment give rise to any
duties or obligations whatsoever on the part of the Assignee owing to the
Manufacturer except for the Assignee's agreement in the Assignment to the effect
that in exercising any rights under the Purchase Agreement with respect to the
Aircraft, or in making any claim with respect to the Aircraft or other things
(including data, documents, training and services) delivered or to be delivered
pursuant to the Purchase Agreement, the terms and conditions of the Purchase
Agreement shall apply to and be binding upon the Assignee to the same extent as
the Assignor; (ii) the Manufacturer consents to sale of the Aircraft by the
Seller to the Assignee; (iii) the Manufacturer consents to the lease of the
Aircraft by the Assignee to the Assignor under the Lease; (iv) the Manufacturer
consents to the mortgage of, and grant of a security interest in, all of the
Owner Trustee's right, title and interest in and to the Aircraft and this
Assignment by the Owner Trustee pursuant to the Indenture; (v) pursuant to and
in accordance with the provisions of the Purchase Agreement, the Manufacturer
consents to the assignment of Assignor's interest in the Purchase Agreement as
it relates to the Aircraft to Assignee pursuant to the Assignment; (vi) all
representations, warranties, indemnities and agreements of Manufacturer under
the Purchase Agreement with respect to the Aircraft shall inure to the benefit
of Assignee to the same extent as if originally named the "Buyer" therein,
except as otherwise provided in the Assignment; and (vii) during the Term the
Manufacturer will continue to pay all amounts and provide all goods and services
to Assignor which it may be required to pay or provide in respect of the
Aircraft under the Purchase Agreement unless and until the Manufacturer shall
have then received written notice in the manner specified in Section 3 of the
Assignment from Assignee that an Event of Default has occurred and is continuing
and the Assignee or the Indenture Trustee (as assignee of the Assignee) has
commenced the exercise of remedies set forth in Section 17 of the Lease,
whereupon the Manufacturer will pay such amounts or provide such goods and
services directly to the Assignee unless and until the Manufacturer shall have
then received written notice in the manner specified in Section 3 of the
Assignment from Assignee that no such Event of Default is continuing and remains
unremedied, whereupon the Manufacturer will pay such amounts or provide such
goods and services to Assignor. Any notice to be delivered to the Manufacturer
as contemplated by the preceding sentence shall be addressed to the Manufacturer
as follows:
<PAGE>
Bombardier Aerospace
Regional Aircraft
123 Garratt Boulevard
Downsview Ontario M3K 1Y5
Attention: Director, Contracts Americas
The Manufacturer hereby represents and warrants that: (i) the
Manufacturer is a corporation duly organized and existing in good standing under
the laws of Canada; (ii) the making and performance of the Purchase Agreement
and this Consent and Agreement have been duly authorized by all necessary
corporate action on the part of the Manufacturer, do not require any stockholder
or other approval, and do not contravene the Manufacturer's Certificate of
Incorporation or By-Laws or any indenture, credit agreement or other contractual
agreement to which the Manufacturer is a party or by which it is bound, and the
making of the Purchase Agreement and this Consent and Agreement does not
contravene, and to the best of the Manufacturer's knowledge, the Manufacturer's
performance of the Purchase Agreement and this Consent and Agreement does not
contravene any law binding on the Manufacturer; and (iii) each of the Purchase
Agreement and this Consent and Agreement constitutes a legal, valid and binding
obligation of the Manufacturer enforceable against the Manufacturer in
accordance with its respective terms, except that the enforceability of each may
be (a) limited by applicable bankruptcy, reorganization, insolvency, moratorium
or other similar laws affecting the enforceability of creditors' rights
generally and (b) subject to the application of equitable principles and the
availability of equitable remedies.
The Manufacturer's consent to the Assignment is subject to and
conditional upon the agreement of Assignor and Assignee that nothing in the
assignment shall vary or modify the rights and obligations of the Manufacturer
under the Purchase Agreement and that all limitations or exclusions on liability
provisions under the Purchase Agreement for the benefit of the Manufacturer and
its Affiliates shall apply to Assignee and to the Assignor as if the Assignor
remained the Buyer under the Purchase Agreement.
* * *
-2-
<PAGE>
This Aircraft Manufacturer's Consent and Agreement shall be governed
by, and construed in accordance with, the law of the State of New York, U.S.A.
BOMBARDIER INC.
By:
------------------------------------
Name:
Title:
Dated as of September 10, 1998
-3-
Note to Exhibit 10.9
The following Engine Warranty Assignment is substantially identical
in all material respects to three additional Engine Warranty Assignments except
as follows:
- - --------------------------------------------------------------------------------
Owner Participant Date Aircraft (Tail No.)
- - --------------------------------------------------------------------------------
NCC Charlie Company* September 10, 1998* N575ML*
- - --------------------------------------------------------------------------------
NCC Charlie Company September 10, 1998 N576ML
- - --------------------------------------------------------------------------------
General Electric Capital Corporation November 10, 1998 N577ML
- - --------------------------------------------------------------------------------
- - ----------
* Filed document
<PAGE>
ENGINE WARRANTY ASSIGNMENT
[N576ML]
between
MIDWAY AIRLINES CORPORATION
and
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Owner Trustee
and
GENERAL ELECTRIC COMPANY
ENGINE MANUFACTURER'S CONSENT AND AGREEMENT
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THIS ENGINE WARRANTY ASSIGNMENT [N576ML] is made this 10th day of
September, 1998 between MIDWAY AIRLINES CORPORATION, a Delaware corporation (the
"Assignor") and FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, a national
banking association, not in its individual capacity but solely as Owner Trustee
(the "Assignee").
W I T N E S S E T H:
WHEREAS, the Assignor and General Electric Company (the "Engine
Manufacturer") are parties to the General Terms Agreement, providing, among
other things, for product support, including warranties for the support, of the
Engines covered thereby and related equipment given to the Assignor by the
Engine Manufacturer;
WHEREAS, the Assignee wishes to acquire certain rights and interests
in and to warranties relating to the Engines and the Assignor, on the terms and
conditions hereinafter set forth, is willing to assign to the Assignee such
rights and interests of the Assignor in and to such warranties, and the Assignee
is willing to accept such assignment, as hereinafter set forth; and
WHEREAS, the Engine Manufacturer is willing to execute and deliver
to the Assignee an Engine Manufacturer's Consent and Agreement (the "Engine
Manufacturer's Consent and Agreement") to the provisions hereof in substantially
the form of the Annex hereto.
IT IS HEREBY AGREED as follows:
In consideration of the mutual covenants herein contained and of the
Assignee's agreement in the Aircraft Purchase Agreement Assignment to pay the
purchase price for the Aircraft on the terms and conditions therein stated, the
parties hereto agree as follows:
1. Definitions
1.1. For all purposes of this Assignment, except as otherwise
expressly provided or unless the context otherwise requires, the following terms
shall have the following meanings:
"Aircraft" means One Canadair Regional Jet Aircraft Model
CL-600-2B19 bearing manufacturer's serial number 7257 including two General
Electric CF34-3B1 turbofan engines bearing manufacturer's serial numbers
GE-E-872371 and GE-E- 872373 respectively (collectively the "Engines"),
installed on such aircraft at the time of delivery.
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"Aircraft Purchase Agreement" means the Bombardier Regional Aircraft
Division Purchase Agreement No. PA-0393 dated September 17, 1997, as amended,
between the Assignor and the Manufacturer (including all exhibits thereto,
together with all letter agreements entered into that by their terms constitute
part of any such Aircraft Purchase Agreement) whereby, inter alia, the
Manufacturer has agreed to sell and the Assignor has agreed to purchase the
Aircraft.
"CF34 Warranty" means the CF34 Turbofan Engine Airline Operator
Warranty from the Engine Manufacturer, dated May 22, 1990, as contained in
Exhibit B of the General Terms Agreement.
"Engine Manufacturer" means General Electric Company, a New York
corporation, and its successors and assigns.
"Event of Default" has the meaning given to such term in Section 16
of the Lease.
"General Terms Agreement" means the General Terms Agreement No.
CF34-0897-065 entered into as of 25 May 1998 between the Engine Manufacturer and
the Assignor, including Article XIV (Limitation of Liability), but excluding any
and all letter agreements attached thereto.
"Lease" means the lease agreement [N576ML] dated as of September 10,
1998 as the same may be amended, modified or supplemented, between the Assignee,
as lessor, and the Assignor, as lessee, providing for the lease of the Aircraft.
"Manufacturer" means with respect to the Aircraft or Airframe,
Bombardier Inc., a Canadian corporation represented by its Bombardier Regional
Aircraft Division, and its successor and assigns.
"Purchase Agreement Assignment" means the Purchase Agreement
Assignment dated as of September 10, 1998, between the Assignor and Assignee as
the same may be amended, modified or supplemented from time to time, together
with the Consent and Agreement thereto executed by the Manufacturer.
"Warranties" means all warranties or assurances of any kind
whatsoever relating to the Engines and related equipment manufactured by the
Engine Manufacturer contained in the CF34 Warranty and as limited by the
applicable terms of the General Terms Agreement.
1.2. All other capitalized terms used and not otherwise defined
herein shall have the respective meanings set forth in Appendix A to the Lease
(including definitions incorporated therein by reference to another document).
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2. Assignment and Authorization of Assignor
2.1. The Assignor does hereby sell, assign, transfer and set over
unto the Assignee, its successors and permitted assigns, all of the Assignor's
rights and interests in and to the Warranties as and to the extent that the same
relate to the Engines and the operation thereof, except as and to the extent
expressly reserved below, including, without limitation, in such assignment, (a)
all claims for damages in respect of any Engine arising as a result of any
default by the Engine Manufacturer in respect of the Warranties under the CF34
Warranty and/or the General Terms Agreement, and (b) any and all rights of the
Assignor to compel performance of the terms of the CF34 Warranty and/or the
General Terms Agreement in respect of the Warranties; reserving exclusively to
the Assignor, however, (i) all of the Assignor's rights and interests in and to
the CF34 Warranty and/or the General Terms Agreement as and to the extent that
the same relate to engines other than the Engines and the purchase and operation
of such engines, (ii) any and all letter agreements, "concessions" and/or
"special guarantees" (as defined in the General Terms Agreement). The Assignee
hereby accepts such assignment.
2.2. Notwithstanding the foregoing, unless an Event of Default shall
have occurred and be continuing and the Assignee or the Indenture Trustee (as
assignee of the Assignee) shall have commenced the exercise of remedies set
forth in Section 17 of the Lease, the Assignee hereby authorizes the Assignor,
to exercise in the Assignor's name all rights in respect of the Warranties,
except that: the Assignor may not enter into any change order or other
amendment, modification or supplement to the CF34 Warranty and/or the General
Terms Agreement in respect of any Warranties without the prior written consent
or countersignature of the Assignee if such change, order, amendment,
modification or supplement would result in any rescission, cancellation or
termination of the CF34 Warranty and/or the General Terms Agreement (to the
extent it relates to any applicable Warranties) or otherwise materially
adversely affect Assignee's rights assigned hereunder.
2.3. For all purposes of this Assignment, the Engine Manufacturer
shall not be deemed to have knowledge of and need not recognize the occurrence,
the continuance or the discontinuance of any Event of Default under the Lease,
or the exercise of remedies set forth in Section 17 of the Lease by the Assignee
or the Indenture Trustee (as assignee of the Assignee), unless and until the
Engine Manufacturer shall have received from the Assignee written notice thereof
addressed to the Engine Manufacturer's Manager of Small Commercial Engine
Contracts, G.E. Aircraft Engines, 1000 Western Avenue, Lynn, Massachusetts,
01910, U.S.A., and, in acting in acquittance with the CF34 Warranty, the General
Terms Agreement and this Assignment, the Engine Manufacturer may conclusively
rely on such notice. Until such time as notice shall have been given by the
Assignee to the Engine Manufacturer that an Event of Default has occurred and is
continuing and the Assignee or the Indenture Trustee (as assignee of the
Assignee) has commenced the exercise of remedies set forth in Section 17 of the
Lease, the Engine Manufacturer shall with respect to the Warranties deal solely
and exclusively with the Assignor. The Assignee shall promptly
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after all such Events of Default shall have been remedied, give written notice
of the same to the Engine Manufacturer's Manager of Small Commercial Engine
Contracts as provided above, with a copy to the Assignor at its address for
notices set forth in Section 23(a) of the Lease, and upon the Engine
Manufacturer's receipt of such notice, the Engine Manufacturer shall, in the
absence of a notice from the Assignee to the Engine Manufacturer that an Event
of Default has occurred and is continuing and the Assignee or the Indenture
Trustee (as assignee of the Assignee) has commenced the exercise of remedies set
forth in Section 17 of the Lease, resume the sole and exclusive dealings with
the Assignor authorized by this Clause 2 and by the Engine Manufacturer's
Consent and Agreement.
2.4. The Assignment contained herein shall apply only to the Engines
(as installed on the Aircraft at the time of delivery) and shall not extend to
any replacement or substitute engine, unless and until the Engine Manufacturer
has received written notice thereof. The Engine Manufacturer shall not be deemed
to have knowledge of the replacement or substitution of an Engine due to a
Failure (as such term is defined in the CF34 Warranty, excluding normal wear,
tear and deterioration which can be restored by overhaul or repair), damage or
loss, until notified of such Failure, damage or loss. Notice shall be sent to:
Engine Manufacturer's Manager of Small Commercial Engine Contracts. Such notice
shall contain the serial number of the replaced or substituted Engine, the
serial number of the new engine and confirmation that such new engine shall be
subject to the terms and conditions of this Assignment.
3. Assignor's Continuing Obligations
3.1. It is expressly agreed that, anything herein contained to the
contrary notwithstanding: (a) on or prior to the Delivery Date for the Aircraft
under the Purchase Agreement Assignment, the Assignor will perform its
obligations with respect to the Engines to be performed by it on or before such
Delivery Date, (b) the Assignor shall at all times remain liable to the Engine
Manufacturer under the terms and conditions of the General Terms Agreement to
perform all duties and obligations of the Assignor thereunder to the same extent
as if this Assignment had not been executed, (c) the exercise by the Assignee of
any of the rights assigned hereunder shall not release the Assignor from any of
its duties or obligations to the Engine Manufacturer under the General Terms
Agreement, except to the extent that such exercise by the Assignee shall
constitute performance of such duties and obligations, (d) after the Delivery
Date for the Aircraft, the Assignor will exercise its rights and perform its
obligations under the General Terms Agreement in respect of the Engines to the
extent that such rights and obligations have not been assigned hereunder, and
(e) except as specifically provided in Clause 3.2 with respect to the Assignee,
the Assignee shall not have any obligation or liability under the General Terms
Agreement by reason of or arising out of this Assignment or be obligated to
perform any of the obligations or duties of the Assignor under the General Terms
Agreement or to make any payment or to make any inquiry as to the sufficiency of
any payment received by
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it or to present or file any claim or to take any other action to collect or
enforce any claim for any payment assigned hereunder.
3.2. Anything contained in this Assignment to the contrary
notwithstanding (but without in any way releasing the Assignor from any of its
duties or obligations under the General Terms Agreement), the Assignee confirms
expressly for the benefit of the Engine Manufacturer that, in exercising any
rights in and to the Warranties, or in making any claim with respect thereto,
the applicable terms and conditions of the General Terms Agreement, including
Article XIV (Limitation of Liability) and the Warranties shall apply to, and be
binding upon, the Assignee to the same extent as the Assignor. Nothing contained
herein shall in any way diminish or limit the provisions of the Assignor's
indemnities in the Lease and the Participation Agreement and in the Aircraft
Purchase Agreement with respect to any liability of the Assignee to the
Manufacturer in any way relating to or arising out of the Purchase Agreement
Assignment.
3.3. Nothing contained herein shall subject the Engine Manufacturer
to any obligation or liability to which it would not otherwise be subject under
the General Terms Agreement or modify in any respect the contract rights of the
Engine Manufacturer thereunder or subject the Engine Manufacturer to any
multiple or duplicative obligation or liability under the General Terms
Agreement or limit any rights of set-off the Engine Manufacturer may have
against the Assignor under applicable law. No further assignment of any
remaining Warranties, including but not limited to assignments for security
purposes, are permitted without the express prior written consent of the Engine
Manufacturer.
3.4. Effective at any time after an Event of Default shall have
occurred and be continuing and the Assignee or the Indenture Trustee (as
assignee of the Assignee) shall have commenced the exercise of remedies set
forth in Section 17 of the Lease, the Assignor does hereby constitute the
Assignee, its successors and permitted assigns, the Assignor's true and lawful
attorney, irrevocably, with full power (in the name of the Assignor or
otherwise) to ask, require, demand, receive, compound and give acquittance for
any and all monies and claims for monies due or to become due under, or arising
out of, the General Terms Agreement in respect of such Engine, but only to the
extent that the same have been expressly assigned by this Assignment and, for
such period as the Assignee may exercise rights with respect thereto under this
Assignment, to endorse any checks or other instruments or orders in connection
therewith and to file any claims or take any action or institute (or, if
previously commenced, assume control of) any proceedings and to obtain any
recovery in connection therewith that the Assignee may deem to be necessary or
advisable with respect to such monies and claims for monies.
3.5. So long as the Engine Manufacturer acts in good faith in
accordance with this Assignment, the Engine Manufacturer may rely conclusively
on any notice given by the Assignee hereunder without inquiring as to the
accuracy of, or the entitlement of the Assignee to give, such notice.
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4. Further Assurance
4.1. The Assignor agrees that at any time and from time to time,
upon the written request of the Assignee, the Assignor, at its own cost and
expense, will promptly and duly execute and deliver any and all such further
instruments and documents and take such further action as the Assignee may
reasonably request in order to obtain the full benefits of this Assignment and
of the rights and powers herein granted.
5. Representations, Warranties and Covenants
5.1. The Assignor does hereby represent and warrant that the General
Terms Agreement and the CF34 Warranty are in full force and effect as to the
Assignor and are enforceable against the Assignor in accordance with their
respective terms. The Assignor further represents and warrants that it has, with
the authorized execution of the Engine Manufacturer's Consent and Agreement,
received all necessary consents to the assignment and transfer contemplated
herein.
5.2. The Assignor does hereby represent and warrant that it has not
assigned or pledged, and hereby covenants that it will not assign or pledge, so
long as this Assignment shall remain in effect, the whole or any part of the
Warranties hereby assigned to anyone other than the Assignee.
5.3. The Assignee agrees that it will not enter into any agreement
with the Engine Manufacturer that would amend, modify, rescind, cancel or
terminate the General Terms Agreement and/or the CF34 Warranty in respect of the
Warranties or take other action to amend, modify, rescind, cancel or terminate
any of the Assignor's rights in respect of the Warranties, without the prior
written consent of the Assignor, except if the Engine Manufacturer shall have
been notified in writing by the Assignee that an Event of Default has occurred
and is continuing and the Assignee has commenced the exercise of remedies set
forth in Section 17 of the Lease.
5.4. Each of the Assignor, the Assignee and the Engine Manufacturer
agrees that neither this Assignment or the attached and incorporated Engine
Manufacturer's Consent and Agreement, nor any of the terms or provisions of this
Assignment or the Engine Manufacturer's Consent and Agreement, may be amended,
extended, modified, supplemented, terminated or waived orally. Any and all
amendments, extensions, modifications, supplements, terminations or waivers must
be presented to each of the other parties in writing, and be signed by the party
against whom the enforcement of such amendment, modification, supplement,
termination or waiver is sought to be charged.
6. Confidentiality
6.1. The Assignee agrees, that it will not, without the prior
written consent of the Engine Manufacturer, disclose, directly or indirectly, to
any third party
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any terms of the CF34 Warranty disclosed to it in writing by the Engine
Manufacturer; provided that (a) the Assignee may use, retain and disclose any
such information to its special counsel and public accountants and to bank
examiners and auditors, each of whom shall be obligated to not further disclose
such terms, (b) the Assignee may disclose any such information as required by
applicable laws or governmental regulations, provided that the Assignee shall
first, to the extent practicable, have given the Engine Manufacturer reasonable
opportunity, at the Engine Manufacturer's cost and expense, to obtain a
protective order or other reasonably satisfactory assurance of confidential
treatment for the information required to be disclosed, (c) to the extent that
the Assignee may have received a subpoena or other written demand under color of
legal right for such information, the Assignee may disclose such information,
but it shall first, as soon as practicable upon receipt of such demand and to
the extent permitted by applicable laws, furnish a copy thereof to the Assignor
and to the Engine Manufacturer, and the Assignee shall afford the Assignor and
the Engine Manufacturer reasonable opportunity, at the moving person's cost and
expense, to obtain a protective order or other reasonably satisfactory assurance
of confidential treatment for the information required to be disclosed, and (d)
the Assignee may disclose any such information to any potential purchaser of the
Aircraft and/or the Engine (subject to execution by such prospective purchaser
of a written confidentiality statement setting forth the same or substantially
similar terms as those referred to in this paragraph).
7. Miscellaneous
7.1. This Assignment 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.
7.2. This Assignment shall in all respects be governed by, and
construed in accordance with, the laws of the State of New York, including all
matters of construction, validity and performance. This Assignment is being
delivered in the State of New York.
7.3. First Union Trust Company, National Association is entering
into this Assignment solely as Owner Trustee under the Trust Agreement and not
in its individual capacity and neither First Union Trust Company, National
Association nor any entity acting as successor Owner Trustee or additional Owner
Trustee under the Trust Agreement shall be personally liable for, or for any
loss in respect of, any of the statements, representations, warranties,
agreements or obligations stated to be those of the Assignee hereunder, as to
which all interested parties shall look solely to the Trust Estate, except to
the extent expressly provided otherwise in the other Operative Agreements,
provided however, that nothing in this Section 7.3 shall be construed to limit
in scope or substance the liability of First Union Trust Company, National
Association or any entity acting as successor Owner Trustee or additional Owner
Trustee under the Trust Agreement in its individual capacity for the
consequences of its own willful misconduct or gross negligence or (in receiving,
handling or remitting
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funds) its simple negligence, or the inaccuracy or breach of its
representations, warranties or covenants made in such capacity in any other
Operative Agreements.
7.4. In the Indenture, dated as of September 10, 1998 between First
Union Trust Company, National Association (the "Owner Trustee") and The First
National Bank of Maryland (the "Indenture Trustee"), the Owner Trustee has
assigned and pledged with the Indenture Trustee, as security for the Equipment
Notes to be issued thereunder with respect to the Aircraft, all of the Owner
Trustee's right, title and interest in and to the Warranties under this
Assignment. The Assignor acknowledges and consents to such assignment.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this Engine
Warranty Assignment to be duly executed as of the day and year first above
written.
MIDWAY AIRLINES CORPORATION,
as Assignor
By:
----------------------------------
Name:
Title:
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Owner Trustee,
as Assignee
By:
----------------------------------
Name:
Title:
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ANNEX
GENERAL ELECTRIC COMPANY
ENGINE MANUFACTURER'S CONSENT AND AGREEMENT [N576ML]
The undersigned, GENERAL ELECTRIC COMPANY, a New York corporation
(the "Engine Manufacturer"), hereby acknowledges notice of and consents to all
of the terms of the Engine Warranty Assignment [N576ML] (herein called the
"Assignment", the defined terms therein being hereinafter used with the same
meaning), dated as of September 10, 1998, between MIDWAY AIRLINES CORPORATION, a
Delaware corporation, as Assignor and FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity but
solely as Owner Trustee, as Assignee, relating to the assignment by the Assignor
of, its rights and interests in the Warranties, and hereby confirms to the
Assignee that: (i) all the Warranties given by the Engine Manufacturer under the
CF34 Warranty and/or the General Terms Agreement with respect to the Engines
shall, subject to the terms and conditions thereof and of the Assignment inure
to the benefit of the Assignee to the same extent as if the Assignee had
originally been a party thereto except as provided by Clause 2 of the
Assignment; (ii) the Assignee shall not be liable for any of the obligations or
duties of the Assignor under the General Terms Agreement in respect of the
Engines, and the Assignment shall not give rise to any duties or obligations
whatsoever on the part of the Assignee owing to the Engine Manufacturer, except
for the Assignee's agreement in the Assignment with respect to the Engines to
the effect that, in exercising any right in and to the Warranties, or in making
any claim with respect thereto, the applicable terms and conditions of the
General Terms Agreement including Article XIV (Limitation of Liability) shall
apply to, and be binding upon, the Assignee to the same extent as the Assignor,
and with respect to such agreement the Engine Manufacturer agrees that, anything
contained in the General Terms Agreement or the Assignment to the contrary
notwithstanding, the Assignee shall have no liability to the Engine Manufacturer
for failure to comply with any of the terms of the General Terms Agreement with
respect to the Warranties while under the Lease to the Assignor so long as the
Assignee acts upon the written instructions of the Assignor (to which
instructions the undersigned understands that it shall have access on request);
provided, that no person other than the Engine Manufacturer or any assignee of
the Engine Manufacturer as permitted under the General Terms Agreement shall
have any rights against the Assignee with respect to the undertaking and
agreement set forth in this clause (ii); (iii) the Engine Manufacturer consents
to the execution of the Lease; (iv) the Engine Manufacturer consents to the
mortgage of, and grant of a security interest in, all of the Owner Trustee's
right, title and interest in and to the Warranties and this Assignment by the
Owner Trustee pursuant to the Indenture; (v) the Engine Manufacturer agrees that
the Assignment constitutes an agreement permitted by the General Terms Agreement
and pursuant to and in accordance with the provisions of the General Terms
Agreement, the Engine
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Manufacturer consents to the assignment of Assignor's interest in and to the
Warranties as and to the extent that the same relate to the Engines and the
operation thereof to Assignee pursuant to the Assignment; and (vi) the Engine
Manufacturer will continue to pay to this Assignor all payments which the Engine
Manufacturer may be required to make under the General Terms Agreement in
respect of the Warranties unless and until the Engine Manufacturer shall have
received written notice from the Assignee addressed to the Engine Manufacturer's
Manager of Small Commercial Engine Contracts, G.E. Aircraft Engines, 1000
Western Avenue, Lynn, Massachusetts, 01910, U.S.A., that an Event of Default has
occurred and is continuing and the Assignee has commenced the exercise of
remedies set forth in Section 17 of the Lease (which such notice shall be
conclusive proof thereof between the Engine Manufacturer and the Assignor),
whereupon the Engine Manufacturer will, until the Assignee shall have notified
the Engine Manufacturer in writing that no such Event of Default is continuing
and remains unremedied, make any and all payments and take all actions which it
may be required thereafter to make or take under CF34 Warranty and/or the
General Terms Agreement in respect of the Warranties and the right to receive
which has been assigned to the Assignee under the Assignment directly to the
Assignee at its address as from time to time notified to the Engine Manufacturer
in writing.
The Engine Manufacturer hereby represents and warrants (a) the
Engine Manufacturer is a corporation organized and existing in good standing
under the law of the State of New York, (b) the making and performance in
accordance with the respective terms of the General Terms Agreement, the CF34
Warranty and this Engine Manufacturer's Consent and Agreement have been duly
authorized by all necessary corporate action on the part of the Engine
Manufacturer, do not require any stockholder approval, contravene the Engine
Manufacturer's certificate of incorporation or by-laws or any indenture, credit
agreement or other contractual agreement to which the Engine Manufacturer is a
party or by which it is bound and do not, as to the making thereof, contravene
any law binding on the Engine Manufacturer, and, as to the best knowledge of the
Engine Manufacturer, do not, to the performance thereof, contravene any law
binding on the Engine Manufacturer, (c) to the best of the Engine Manufacturer's
knowledge, all applicable provisions of the General Terms Agreement and the CF34
Warranty have been compiled with to effect the assignment to the Assignee of the
Warranties contemplated by the Assignment, and (d) the General Terms Agreement
and the CF34 Warranty constituted, as of the date thereof and at all times
thereafter to and including the date of this Engine Manufacturer's Consent and
Agreement the legal, valid and binding obligations of the Engine Manufacturer
enforceable against the Engine Manufacturer in accordance with their respective
terms, and this Engine Manufacturer's Consent and Agreement is the legal, valid
and binding obligation of the Engine Manufacturer, enforceable against the
Engine Manufacturer in accordance with its terms subject to: (i) the limitations
of applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or similar laws affecting the rights of creditors generally, and (ii)
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law), which principles do not make
the remedies available at law or in equity with respect to the General Terms
Agreement or this Engine Manufacturer's Consent and Agreement
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inadequate for the practical realization of the benefits intended to be provided
thereby. Notwithstanding any provision to the contrary in this Engine
Manufacturer's Consent and Agreement or the Assignment, nothing contained in
this Engine Manufacturer's Consent and Agreement or the Assignment shall subject
the Engine Manufacturer to any obligation or liability to which it would not
otherwise be subject under the General Terms Agreement or modify in any respect
the Engine Manufacturer's contract rights thereunder or subject the Engine
Manufacturer to any multiple or duplicative obligation or liability under the
General Terms Agreement.
It is understood that the execution by the Engine Manufacturer, and
validity, of this Engine Manufacturer's Consent and Agreement is subject to the
condition that, upon the delivery of the Aircraft (including the Engines) by the
Assignor to the Assignee and the acceptance thereof by the Assignee pursuant to
the Purchase Agreement Assignment, the Assignee shall lease such Aircraft
(including the Engines) to the Assignor under the Lease.
* * *
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This Engine Manufacturer's Consent and Agreement shall be governed
by, and construed in accordance with, the law of the State of New York, U.S.A.
Dated as of September 10, 1998
GENERAL ELECTRIC COMPANY
By:
---------------------------------------
Name: Patricia A. Bowles
Title: Manager, Small Commercial Engine
Contracts (attorney-in-fact)
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Exhibit 10.10
GENERAL TERMS AGREEMENT
BETWEEN
GENERAL ELECTRIC COMPANY
AND
MIDWAY AIRLINES CORPORATION
AGREEMENT NO.
CF34-0897-065
1
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TABLE OF CONTENTS
ARTICLE I PRODUCTS 3
ARTICLE II ORDER PLACEMENT 3
ARTICLE III PRICES 4
ARTICLE IV DELIVERY 4
ARTICLE V VARIATION IN QUANTITY 5
ARTICLE VI PAYMENT 5
ARTICLE VII TAXES 5
ARTICLE VIII INSPECTION AND TEST 6
ARTICLE IX EXCUSABLE DELAY 6
ARTICLE X PATENTS 7
ARTICLE XI INFORMATION AND DATA 7
ARTICLE XII FAA CERTIFICATION REQUIREMENTS 8
ARTICLE XIII TERMINATION FOR INSOLVENCY 9
ARTICLE XIV LIMITATION OF LIABILITY 9
ARTICLE XV NOTICES 10
ARTICLE XVI GOVERNMENTAL AUTHORIZATION 10
ARTICLE XVII RESERVED 10
ARTICLE XVIII WARRANTY 10
ARTICLE XIX PRODUCT SUPPORT PLAN 11
ARTICLE XX SURVIVORSHIP 11
ARTICLE XXI MISCELLANEOUS 11
EXHIBIT A PRODUCT DEFINITION
EXHIBIT B WARRANTY AND SPECIAL ENGINE SERVICE POLICY
EXHIBIT C PAYMENT
EXHIBIT D SPECIAL GUARANTEES
EXHIBIT E PRODUCT SUPPORT SERVICES
EXHIBIT F ESCALATION
EXHIBIT G SPARES SUPPORT AND SPECIAL CONCESSIONS
ATTACHMENT 1 INITIAL PROVISIONING RECOMMENDATION
2
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THIS GENERAL TERMS AGREEMENT (hereinafter referred to as this "Agreement" or
"GTA") is entered into by and between General Electric Company (hereinafter
referred to as "GE" or "General Electric"), a corporation organized under the
law of the State of New York, U.S.A., acting through its GE Aircraft Engines
having offices in Lynn, Massachusetts, U.S.A., and Midway Airlines Corporation
(hereinafter referred to as "Airline" or "Midway Airlines"), a corporation
organized under the law of the State of Delaware, U.S.A., having offices in
Durham, North Carolina, U.S.A.
WITNESSETH
WHEREAS, Airline has acquired certain aircraft equipped with GE CF34-3B1
installed engines, and
WHEREAS, the parties hereto desire to enter into this Agreement for the support
of such engines and sale and support of spare engines, related equipment and
spare parts therefor.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
parties hereto agree as follows:
ARTICLE I - PRODUCTS
GE shall sell and Airline shall purchase, under the terms and subject to the
conditions hereafter set forth, the equipment identified as Products in the
attached Exhibit A, and hereinafter referred to as "Product(s)."
ARTICLE II - ORDER PLACEMENT
Except as otherwise agreed in writing by the parties hereto, the terms and
conditions of this GTA together with any special provisions set forth in GE's
proposal or spare parts price catalogs, together with any special provisions set
forth in GE's spare parts catalogs or GE's individual proposals for spare parts
to be ordered by Airline hereunder, shall be the only terms and conditions
applicable to the sale of GE's Products, as defined herein. Such terms and
conditions shall be in lieu of all terms and conditions contained in or
referenced by any purchase order submitted by Airline, except that the
identification of Products, price, quantity, delivery dates and shipping
instructions shall be as set forth in any purchase order accepted by GE
("Order"). Any additional provisions agreed to by the parties shall be set forth
as a special provision in Airline's purchase order or GE's acknowledgment.
A. GE may issue spare parts price catalogs ("Catalogs") periodically for
certain engine models. The following ordering procedures shall apply
unless otherwise stated in the Catalogs. Procurement of Products listed in
the Catalogs shall be initiated by Airline by issuing a purchase order at
the price listed. Within thirty
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(30) days after receipt of such purchase order, GE shall issue a written
acknowledgment and specify the delivery date(s).
B. Upon request by Airline, GE may issue a proposal for those Products which
are not listed in the Catalogs. All proposals of GE are subject to change
at any time prior to acceptance of an order and expire at the end of the
validity period stated in such proposals. If Airline decides to purchase
the Products proposed by GE, Airline shall issue a purchase order to GE.
Each purchase order issued by Airline shall list the Products to be
supplied thereunder, shall show the applicable prices and delivery dates
in accordance with GE's proposal, complete shipping and marking
instructions and shall be subject to written acknowledgment by GE.
C. GE's written acknowledgment of Airline's purchase order shall constitute
acceptance thereof.
D. Address, phone numbers and facsimile numbers to be used in issuing
Purchase Orders to GE for CF34-3B1 Engine Products are as follows:
GE Company
1000 Western Avenue
Lynn, MA 01910 USA
Attn: Customer Support Manager
Mail Drop: 34017
Tel: 781-594-7583
Fax: 781-594-4659
ARTICLE III - PRICES
A. The prices of Products shall be as quoted in GE's Catalogs or proposals
and as set forth in an Order. All prices are in U.S. Dollars and include
the cost of GE's usual factory tests, inspection, and commercial packing.
All transportation costs as well as costs resulting from any additional
factory testing and/or inspection and packing requirements of Airline
shall be paid by Airline.
B. The prices shall be subject to adjustment for escalation (if applicable)
as described in GE's Catalogs, proposal or Order. If applicable,
escalation shall be in accordance with the escalation methodology
described in Exhibit F, hereto.
ARTICLE IV - DELIVERY
A. GE shall deliver the Products in accordance with a mutually agreed upon
schedule as set forth in the Order. Partial and advance deliveries shall
be permitted.
B. Delivery dates are based upon (i) receipt by GE of all information
necessary to permit GE to proceed with the work immediately and without
interruption; and (ii)
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Airline's compliance with the applicable payment terms.
C. Delivery of all Products shall be: (i) Ex Works (Incoterms 1990), GE's
Factory, Lynn, Massachusetts, U.S.A., or point of manufacture, at GE's
option; or (ii) to storage (see Art. IV.D below). Title to and risk of
loss or damage shall pass to Airline upon delivery.
D. If for any reason Airline cannot accept delivery of Products on scheduled
delivery dates, GE may make delivery by placing such items in storage. In
such event, (i) all expenses incurred by GE for activities such as, but
not limited to, preparation for and placement into storage and handling,
storage, inspection, preservation and insurance, shall be paid by Airline
upon submission of GE's invoices; and (ii) GE shall assist and cooperate
with Airline in any reasonable manner with respect to the removal of any
such Product from storage.
ARTICLE V-VARIATION IN QUANTITY
With respect to any Product which has a unit selling price of $50 or less,
Airline agrees to accept delivery of quantities greater or less than the
quantity specified in an Order, provided that any such variation shall not
exceed five percent (5%) of the quantity originally specified. GE shall not be
required to give notice of any such variations other than in the applicable
shipping notice and invoice.
ARTICLE VI- PAYMENT
Airline shall pay GE with respect to Products purchased hereunder as set forth
in the attached Exhibit C.
ARTICLE VII - TAXES
A. The selling prices include and GE shall be responsible for the payment of
any imposts, duties, fees, taxes, or any charges whatsoever imposed or
levied by a taxing authority located in the United States in connection
with Products prior to or as a result of their sale and delivery other
than taxes from which exemptions may ordinarily be secured by means of
export. Unless GE arranges for export shipment, Airline agrees to furnish
without charge evidence of exportation or other evidence of tax or duty
exemption acceptable to the taxing or customs authorities when requested
by GE, failing which the amount of any U.S.A. taxes or duties imposed on
GE in connection with the transaction shall be promptly reimbursed in U.S.
Dollars to GE by Airline upon submission of GE's invoices therefor.
B. Any other taxes (including stamp and turnover or value-added taxes),
duties, fees, charges or assessments of any nature levied in connection
with this transaction, whether levied against Airline, against GE or
its employees or against any of GE's subcontractors or their employees,
shall be the responsibility of the
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Airline and shall be paid directly by Airline to the governmental
authority concerned. If GE or its subcontractors or the employees of
either, are required to pay any such levies and/or fines, penalties, or
assessments in the first instance, or as a result of Airline's failure to
comply with any applicable laws or regulation governing the payment of
such levies by Airline, the amount of any payments so made, plus the
expense of currency conversion, shall be promptly reimbursed in U.S.
Dollars by Airline upon submission of GE's invoices therefor.
ARTICLE VIII - INSPECTION AND TEST
A. All quality control exercised in the manufacture of the Products shall be
in accordance with GE's normal quality control policies, procedures and
practices. GE shall deliver the Products with evidence of inspection by
GE's quality control representative.
B. The Memorandum of Shipment signed by GE's quality control representative
shall constitute final acceptance of the Products and acknowledgment that
the Products comply with the applicable requirements of the Order.
However, notwithstanding such final acceptance, Airline shall have the
right to subsequently inspect such Products and require correction under
the Exhibit B Warranty. GE's obligations for failures of the Products to
conform to an Order's requirements discovered subsequent to final
acceptance shall be limited to those stated in Exhibit B, Warranty and
Exhibit D, Special Guarantees.
ARTICLE IX - EXCUSABLE DELAY
A. GE shall not be liable for any delays in delivery or failure to perform
due to: (i) causes beyond its reasonable control; (ii) acts of God, acts
or failure to act) of Airline or a civil or military authority,
governmental priorities, fires, strikes, floods, epidemics, war (declared
or undeclared), civil disorder, riot, delays in transportation; or (iii)
inability due to causes beyond its reasonable control to obtain on a
timely basis necessary labor, materials, fuels or components. In the event
of any such delay, the date of delivery shall be extended for a period
equal to the time lost by reason of the delay.
B. This Article IX shall not relieve GE from the obligation to use reasonable
efforts to avoid or remove such causes and continue performance with
reasonable speed whenever such causes are removed. GE shall promptly
notify Airline when such delays occur or impending delays are likely to
occur and shall continue to advise it of new shipping schedules and/or
changes thereto.
C. In the event an excusable delay continues for a period of six months or
more beyond the scheduled delivery date, Airline or GE may, upon thirty
(30) days written notice to the other, cancel the part of any Order so
delayed and GE shall return to Airline all payments relative to the
canceled part of the Order and Airline shall pay GE its reasonable
mutually agreeable cancellation charges.
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ARTICLE X - PATENTS
A. GE shall handle all claims and defend any suit or proceeding brought
against Airline insofar as based on a claim that without further
combination, any Product furnished under this Agreement constitutes an
infringement of any patent of the United States or of any patent of any
other country that is signatory to Article 27 of the Convention on
International Civil Aviation signed by the United States at Chicago on
December 7, 1944, in which Airline is authorized to operate. This
paragraph shall apply only to any Product manufactured to GE's design.
B. GE's liability hereunder is conditioned upon Airline promptly notifying GE
in writing and giving GE authority, information and assistance (at GE's
expense) for the defense of any suit or proceeding as may be reasonably
necessary. In case such Product is held in such suit or proceeding to
constitute infringement and the use of said Product is enjoined GE shall
expeditiously, at its own expense and at its option either (1) procure for
Airline the right to continue using said Product; (2) replace same with
satisfactory and non-infringing Product; or (3) modify same so it becomes
satisfactory and non-infringing. GE shall not be responsible to Airline
for incidental, consequential, indirect, special, exemplary or punitive
damages, including, but not limited to, costs, expenses, liabilities
and/or loss of profits resulting from loss of use contemplated by this
Article X.
The foregoing shall constitute the sole remedy of Airline and the sole
liability of GE for patent infringement.
ARTICLE XI - INFORMATION AND DATA
A. All information and data (including, but not limited to, designs,
drawings, blueprints, tracings, plans, models, layouts, specifications,
and memoranda) which may be furnished or made available to Airline
directly or indirectly as the result of this Agreement shall remain the
property of GE. This information, data and software is proprietary to GE
and shall neither be used by Airline nor furnished by Airline to any other
person, firm or corporation for the design or manufacture of any Product
nor permitted out of Airline's possession nor divulged to any other
person, firm or corporation, except as herein provided. Nothing in this
Agreement shall preclude Airline from using or furnishing to others
information and data necessary to effect any contract or arrangement under
which there is to be performed for Airline, by others, modification,
overhaul, or maintenance work on the Products, subject to the same
limitations set forth above and provided that before the information and
data is furnished to such others, they agree in writing to be bound by the
same limitations as set forth in this Article XI with respect to Airline.
The instrument by which Airline transfers any Product may permit the use
of such information and data by its transferee, subject to the same
limitation set forth above, and shall preserve to GE the right to enforce
such limitation.
7
<PAGE>
B. Nothing in this Agreement shall convey to Airline the right to reproduce
or cause the reproduction of any Product of a design identical or similar
to that of the Product purchased hereunder or give to Airline a license
under any patents or rights owned or controlled by GE.
C. GE shall not be obligated to supply any software hereunder. As between GE
and Airline, title to any software supplied hereunder shall belong to GE.
Prior to supplying any software under this contract, Airline agrees to
enter into license agreements protecting GE's rights and interests in such
software and to execute any license agreement which GE reasonably believes
to be necessary to protect the interests of GE. Where all or a portion of
any software supplied hereunder is owned by any third party, Airline
further agrees to execute any license agreement required by such third
party prior to receiving such software.
D. Breach of this Article XI by Airline shall not negate Airline's rights
under the Article XVII Warranty.
ARTICLE XII - FAA CERTIFICATION REQUIREMENTS
A. All Products, shall, at time of delivery:
1. Conform to a Type Certificate issued by the FAA.
2. Conform to applicable Engine regulations mandated by the FAA
to ensure safety, provided such regulations are issued prior
to the date of Airline's purchase order issued under this
Agreement for such Products .
B. If, subsequent to the date of acceptance of the purchase order for such
Products but prior to their delivery by GE to Airline, the FAA issues
changes in regulations mandating safety changes to Products sold under
this Agreement and such changes in regulations are promulgated after the
date of Airline purchase orders for such Products, then all costs
associated with any Product modifications necessitated thereby will be
shared equally by GE and Airline; provided however, that costs associated
with any modifications to the airframe required by such Product
modifications shall not be borne by GE.
C. Any delay occasioned by complying with such regulations set forth in
Paragraph XII.B above shall be deemed an Excusable Delay under Article IX
hereof, and, in addition, appropriate adjustments shall be made in the
specifications to reflect the effect of compliance with such regulations.
D. Repair and replacement of defective Products shall be handled under
Article XVIII, Warranty.
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ARTICLE XIII - TERMINATION FOR INSOLVENCY
A. Upon the commencement of any bankruptcy or reorganization proceeding by or
against either party hereto (the "Defaulting Party"), the other party
hereto may, upon written notice to the Defaulting Party, cease to perform
any and all of its obligations under this Agreement and the purchase
orders hereunder (including, without limitation, continuing work in
progress and making deliveries or progress payments or downpayments)
unless the Defaulting Party shall provide adequate assurance, in the
opinion of the other party hereto, that the Defaulting Party will continue
to perform all of its obligations under this Agreement and the purchase
orders hereunder in accordance with the terms hereof, and will promptly
compensate the other party hereto for any actual pecuniary loss resulting
from the Defaulting Party being unable to perform in full its obligations
hereunder and under the purchase orders. If the Defaulting Party or the
trustee thereof shall fail to promptly provide such adequate assurance,
upon notice to the Defaulting Party by the other party hereto, this
Agreement and all purchase orders hereunder shall be canceled.
B. Either party at its option may cancel this Agreement or any purchase order
hereunder with respect to any or all of the Products to be furnished
hereunder which are undelivered or not furnished on the effective date of
such cancellation by giving the other party written notice, as hereinafter
provided, at any time after a receiver of the other's assets is appointed
on account of insolvency, or the other makes a general assignment for the
benefit of its creditors and such appointment of a receiver shall remain
in force undismissed, unvacated or unstayed for a period of sixty days
thereafter. Such notice of cancellation shall be given thirty days prior
to the effective date of cancellation, except that, in the case of a
voluntary general assignment for the benefit of creditors, such notice
need not precede the effective date of cancellation.
ARTICLE XIV - LIMITATION OF LIABILITY
A. The liability of GE, including its subcontractors, suppliers or
co-producers, to GE arising out of, connected with, or resulting from the
design, manufacture, sale, delivery, repair, replacement, support,
operation, use or handling of the product (including engines installed as
original equipment on aircraft owned, leased or operated by Airline),
whether in contract, warranty, tort (including negligence and strict
liability) or otherwise, shall be as set forth in Exhibit B, Warranty, and
Exhibit D, Special Guarantees, and Article X, Patents, hereof. The
foregoing shall constitute the sole and exclusive remedy of Airline and
the sole and exclusive liability of GE. Airline hereby waives, releases,
and renounces all other rights, claims, and remedies against GE. In no
event shall GE be liable for any special, incidental, or consequential
damages. Except as stated in Article X, Patents, the warranties and
guarantees set forth in Exhibit B and D are exclusive and in lieu of all
other warrantees and/or guarantees, whether written, statutory, oral or
implied (including without limitation any warranties of merchantability or
fitness for particular purposes or any implied warranty arising from
course of dealing, course
9
<PAGE>
of performance or usage of trade).
B. In no event shall the liability of GE, however founded, exceed the price
allocable to the Product that initially gives rise to the claim.
C. If Airline furnishes or transfers any product to any third party
("Transferee") by contract, Airline shall obtain from any such Transferee
a provision affording GE the protection of this Article XIV. If Airline
fails to obtain such an agreement from Transferee, Airline shall indemnify
GE from all claims made by such Transferee.
ARTICLE XV - NOTICES
Any notices under this Agreement shall become effective upon receipt and shall
be in writing and be delivered or sent by mail or electronic transmission to the
respective parties at the following addresses, which may be changed by written
notice:
To: GE Company To: Midway Airlines Corporation
GE Aircraft Engines 300 W. Morgan St., 12th Fl.
1000 Western Avenue Durham, NC 27701
Lynn, MA 01910
Attention: Manager, Contracts Attention: Vice President-Maintenance
Mail Drop: 34005
Fax: (781) 594-4688 Fax: (919) 682-1690
Tel: (781) 594-5736 Tel: (919) 956-4903
ARTICLE XVI - GOVERNMENTAL AUTHORIZATION
A. Airline shall be responsible for the timely obtaining and maintaining of
any required export or import license or other required governmental
authorization. Airline and GE shall assist each other in every manner
reasonably possible in securing and complying with such authorizations as
may be required. Airline agrees to comply with all U.S. export control
laws and regulations and any amendments thereto.
B. GE shall not be liable if any governmental authorization is delayed,
denied, revoked, restricted, or not renewed.
ARTICLE XVII- RESERVED
ARTICLE XVIII- WARRANTY
GE's warranty shall be as stated in Exhibit B of this Agreement.
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ARTICLE XIX - PRODUCT SUPPORT SERVICES
The Product Support Plan for Airline's operation of Products, either purchased
by Airline from GE or installed on Airline's aircraft as original equipment, is
set forth in the attached Exhibit E.
ARTICLE XX - SURVIVORSHIP
The following clauses and exhibits shall survive the expiration or termination
of this Agreement:
Article VI - Payment
Article VII - Taxes
Article X - Patents
Article XI - Information and Data
Article XIV - Limitation of Liability
Exhibit B - Warranty
Exhibit C - Payment
Exhibit D - Special Guarantees
ARTICLE XXI- MISCELLANEOUS
A. This Agreement may not be assigned, in whole or in part, by either party
without the prior written consent of the other party, except that
Airline's consent shall not be required for the assignment by GE to a
subsidiary or affiliate of GE.
B. The rights herein granted and this Agreement are for the benefit of the
parties hereto and are not for the benefit of any third person, firm or
corporation, and nothing herein contained shall be construed to create any
rights in any third parties under, as the result of, or in connection with
this Agreement.
C. This Agreement shall be construed, interpreted and applied in accordance
with the law of the State of New York except that the conflict of laws
rules shall not be applied in order to apply the laws of another
jurisdiction. The 1980 United Nations Convention on Contracts for the
International Sale of Goods shall not apply.
D. This Agreement and all letter Agreements relating thereto contain the
entire and only agreement between the parties, and it supersedes all
pre-existing agreements between such parties, respecting the subject
matter hereof; and any representation, promise or condition in connection
therewith not incorporated herein shall not be binding upon either party.
No modification, renewal, extension, waiver, or termination of this
Agreement or any of the provisions herein contained shall be binding upon
the party against whom enforcement of such modification, renewal,
extension, waiver or termination (except as provided in Article XII
hereof) is sought, unless it is made in writing and signed on behalf of GE
and Airline by duly authorized executives.
E. This Agreement contains information specifically for Airline and GE and
nothing herein contained shall be divulged by Airline or GE to any third
person, firm or corporation, without the prior written consent of the
other party, which consent
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<PAGE>
shall not be unreasonably withheld, except that consent shall not be
required for disclosure to the respective professional advisors and
insurers of the parties who must likewise agree to be bound by this
confidentiality clause and consent shall not be required if disclosure is
required by law or to enforce this Agreement and except that Airline's
consent shall not be required for GE to divulge to its co-production
partners information from, or with respect to this Agreement, it being
understood that each such partner will also be bound by the provisions of
this Article XXI - E.
F. This Agreement shall remain in full force and effect until (1) Airline
ceases to operate at least one aircraft powered by Products set forth
herein, (2) less than five aircraft powered by such Products are in
commercial airline service worldwide, (3) this Agreement is terminated in
whole or in part under either the provisions of Excusable Delay or
Termination for Insolvency herein, or (4) by mutual consent of the
parties, whichever occurs first. Nothing in this Paragraph F shall affect:
(a) the rights and obligations and limitations set forth in this Agreement
as to Products ordered for delivery prior to termination of this
Agreement, or (b) the provisions of Article XX above.
G. The invalidity of any part of this Agreement shall not affect the validity
or enforceability of the remainder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and the year last below written.
Midway Airlines Corporation General Electric Company
By: By:
--------------------------- -----------------------------
Name: Name:
------------------------- ---------------------------
Title: Title:
------------------------ --------------------------
Date: Date:
------------------------- ---------------------------
12
EXHIBIT 10.11
CONCOURSE LAKESIDE
LEASE AGREEMENT
BY AND BETWEEN
CONCOURSE LAKESIDE I, LLC, AS LANDLORD
AND
MIDWAY AIRLINES CORPORATION, AS TENANT
June ______, 1998
<PAGE>
LEASE AGREEMENT
TABLE OF CONTENTS
ARTICLE I. Basic Lease Provisions
ARTICLE II.
Section 2.1 Premises
Section 2.2 Term
Section 2.3 Use
ARTICLE III.
Section 3.1 Rental Payments
Section 3.2 Additional Rent
Section 3.3 Security Deposit and Prepaid Rent
ARTICLE IV.
Section 4.1 Services
Section 4.2 Keys and Locks
Section 4.3 Graphics and Building Directory
ARTICLE V.
Section 5.1 Occupancy of Premises
Section 5.2 Entry for Repairs and Inspection
Section 5.3 Hazardous Materials
ARTICLE VI.
Section 6.1 Leasehold Improvements
Section 6.2 Repairs by Landlord
Section 6.3 Repairs by Tenant
Section 6.4 Liens
Section 6.5 Indemnification
ARTICLE VII.
Section 7.1 Condemnation
Section 7.2 Force Majeure
Section 7.3 Fire or Other Casualty
Section 7.4 Insurance
Section 7.5 Waiver of Subrogation Rights
<PAGE>
ARTICLE VIII.
Section 8.1 Default by Tenant
Section 8.2 Landlord's Remedies
Section 8.3 Limitation on Duty to Relet or Mitigate
Section 8.4 Reentry
Section 8.5 Rights of Landlord in Bankruptcy
Section 8.6 Waiver of Certain Rights
Section 8.7 NonWaiver
Section 8.8 Holding Over
Section 8.9 Abandonment of Personal Property
ARTICLE IX.
Section 9.1 Transfers
Section 9.2 Assignment by Landlord
Section 9.3 Limitation of Landlord's Liability
ARTICLE X.
Section 10.1 Subordination
Section 10.2 Estoppel Certificate or Three-Party Agreement
Section 10.3 Notices
ARTICLE XI.
Section 11.1 Intentionally Omitted
Section 11.2 Rights and Remedies Cumulative
Section 11.3 Legal Interpretation
Section 11.4 Tenant's Authority
Section 11.5 Brokers
Section 11.6 Consents by Landlord
Section 11.7 Joint and Several Liability
Section 11.8 Independent Covenants
Section 11.9 Attorneys' Fees and Other Expenses
Section 11.10 Recording
Section 11.11 Disclaimer; Waiver of Jury Trial
Section 11.12 No Access to Roof
Section 11.13 Parking
Section 11.14 No Accord or Satisfaction
Section 11.15 Acceptance
Section 11.16 Waiver of Counterclaim
Section 11.17 Time Is of the Essence
Section 11.18 Counterparts
Section 11.19 Covenant of Quite Enjoyment
Section 11.20 Regulatory Disclosure
EXHIBITS
Exhibit A - Land
Exhibit B - Floor Plan(s) of Premises
Exhibit C - Special Stipulations
Exhibit D - Commencement Date Agreement
Exhibit E - Work Letter Agreement
Exhibit F - Building Rules and Regulations
Exhibit G - Form of Subordination Non-Disturbance and Attornment Agreement
Exhibit H - Form of Memorandum of Lease
Exhibit I - Location of Generator
<PAGE>
LEASE AGREEMENT
THIS LEASE AGREEMENT (this "Lease") is made and entered into as of the
_________day of June, 1998, by and between CONCOURSE LAKESIDE I, LLC, a Delaware
limited liability company, ("Landlord"), whose address is c/o Brookdale
Investors Two, L.P., 3343 Peachtree Road, N.E., Suite 510, Atlanta, Georgia
30326 and MIDWAY AIRLINES CORPORATION, a Delaware corporation ("Tenant"), whose
address is 300 W. Morgan Street, 12th Floor, Durham, N.C. 27701. Subject to all
of the terms, provisions, covenants and conditions of this Lease, and in
consideration of the mutual covenants, obligations and agreements contained in
this Lease, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, Landlord and Tenant agree as
follows:
ARTICLE I.
BASIC LEASE PROVISIONS
Landlord, for and in consideration of the rents and all other charges and
payments hereunder and of the covenants, agreements, terms, provisions and
conditions to be kept and performed hereunder by Tenant, demises and leases to
Tenant, and Tenant hereby hires and takes from Landlord, the premises described
below, subject to all matters hereinafter set forth and upon and subject to the
covenants, agreements, terms, provisions and conditions of this Lease for the
term hereinafter stated. For purposes of this Lease, the following terms shall
have the meanings ascribed to them below:
Building shall mean the approximately 76,878 square foot structure situated upon
the Land (hereinafter defined) commonly known as Concourse Lakeside located at
2801 Slater Road, County of Wake, Morrisville, North Carolina 27560, as the same
currently exists or as it may from time to time hereafter be expanded or
modified.
Commencement Date shall mean the earlier of (i) December 1, 1998 and (ii) the
date that the Premises are substantially complete in accordance with Exhibit E
and Tenant takes occupancy and beneficially uses the Premises, subject, however,
to the terms of Section 2.2 below. The Commencement Date with respect to the
Early Occupancy Premises shall be as set forth in Exhibit C.
Expense Stop shall mean [REDACTED] per rentable square feet, which shall exclude
electricity for the Premises pursuant to Special Stipulation No. 2.
Land shall mean that certain tract of land situated in Wake County, North
Carolina and more particularly described on Exhibit A attached hereto and hereby
made a part hereof.
Lease Year shall mean each consecutive twelve (12) month period during the Term
commencing with the Commencement Date.
<PAGE>
Prepaid Rent shall mean the amount of [REDACTED] for the first month of the
Term. Prepaid Rent shall be paid by Tenant to Landlord upon execution of this
Lease.
Project shall mean the Building, together with the Land, the parking garage or
parking area serving the Building, if any, all other improvements situated on
the Land or directly benefiting the Building, and all additional facilities or
improvements directly benefiting the Building that may be constructed in
subsequent years. Landlord and Tenant acknowledge and agree that the Project
shall not, however, include Phase II (as that term is hereinafter defined).
Term shall mean 120 months.
ARTICLE II.
Section 2.1 Premises. The Premises demised by this Lease are deemed to be 39,731
square feet on the second (2nd) floor of the Building, together with the
nonexclusive use of the common areas of the Project made available by Landlord
from time to time to all tenants of the Project (collectively, the "Premises").
The Premises are outlined on Exhibit B attached hereto and hereby made a part
hereof. "Square feet" or "square foot" as used in this Lease includes the area
contained within the space occupied by Tenant together with a common area
percentage factor of Tenant's space proportionate to the total Building area, as
calculated using the Building Owners and Managers Association International
standard method for measuring useable floor area of office space in office
buildings, multiplied by a factor of 1.15. Tenant has beneficial use of some
areas within the Premises that would otherwise be designated common areas.
Unless otherwise specifically designated, all references to square footage or
square feet in this Lease are to rentable square footage or square feet.
Section 2.2 Term. The Term of this Lease shall begin on the Commencement Date
and shall continue in full force and effect for the Term of this Lease unless
extended or sooner terminated in accordance with the provisions of this Lease.
After the occurrence of the Commencement Date, Tenant and Landlord shall execute
a certificate in the form attached as Exhibit D stipulating and agreeing to the
Commencement Date. If the Commencement Date should be changed for any reason,
including a change pursuant to the terms of Exhibit E hereto, Landlord shall not
be liable or responsible for any claims, damages or liabilities in connection
therewith or by reason thereof. If Landlord is unable to deliver possession of
the Premises to Tenant as of the Commencement Date for any reason other than
pursuant to the terms of Exhibit E hereto, then the term Commencement Date shall
mean such subsequent date upon which Landlord is able to deliver possession of
the Premises to Tenant, and such failure to deliver possession of the Premises
on the earlier date shall not constitute a default by Landlord hereunder or
render Landlord liable for any loss or damage that may be incurred as a result
of such failure. [REDACTED]
Section 2.3 Use. The Premises are to be used only for general office purposes
and for no other business or purpose without the prior written consent of
Landlord. No act shall be done in
<PAGE>
or about the Premises that is unlawful or that will increase the existing rate
of insurance on the Building. In the event of a breach of this covenant, Tenant
shall immediately cease the performance of such unlawful act or such act that is
increasing or has increased the existing rate of insurance and shall pay to
Landlord any and all increases in insurance premiums resulting from such breach.
Tenant shall not commit or allow to be committed any waste upon the Premises, or
any public or private nuisance or other act or thing which disturbs the quiet
enjoyment of any other tenant in the Building. If any of Tenant's office
machines or equipment disturb any other tenant in the Building, then Tenant
shall provide adequate insulation, or take such other action as may be
reasonably necessary to eliminate the noise or disturbance at its sole cost and
expense. Tenant shall not, without Landlord's prior consent, install in or about
the Premises any equipment, machine, device, tank or vessel which is subject to
any federal, state or local permitting requirement. Tenant, at its expense,
shall comply with all laws, statutes, ordinances and governmental rules,
regulations or requirements governing the installation, operation and removal of
any such equipment, machine, device, tank or vessel. Tenant, at its expense,
shall comply with all laws, statutes, ordinances, governmental rules,
regulations or requirements, and the provisions of any recorded documents now
existing relating to its use, operation or occupancy of the Premises and shall
observe such reasonable rules and regulations generally applicable to all
tenants of the Building as may be adopted and made available to Tenant by
Landlord from time to time for the safety, care and cleanliness of the Premises
or the Building and for the preservation of good order therein. The current
rules and regulations for the Building are attached hereto as Exhibit F. If it
is determined that the interior, nonstructural portions of the Premises are in
unlawful noncompliance with the American with Disabilities Act of 1990, as the
same may be amended or modified from time to time (the "ADA") to at least the
minimum extent required under regulations then in effect and such noncompliance
did not exist on or prior to the Commencement Date, Tenant, as its sole
obligation, shall cause the interior, nonstructural portions of the Premises to
no longer be in such unlawful noncompliance. With regard to interior
nonstructural portions of the Premises which were in unlawful noncompliance with
the ADA to at least the minimum extent required under regulations in effect on
or prior to the Commencement Date, Landlord shall cause such areas to no longer
be in such noncompliance. With regard to the Building, common areas and the
remainder of the Premises, if the Building, common areas and/or the remainder of
the Premises are in unlawful noncompliance with the applicable requirements of
the ADA, then Landlord shall cause such areas to no longer be in such unlawful
noncompliance. The allocation of responsibility for ADA compliance between
Landlord and Tenant and the respective obligations of each shall supersede any
other provisions of this Lease that may contradict or otherwise differ from the
requirements of this paragraph.
Further, Tenant hereby agrees that Tenant's use and occupancy of the
Premises shall not exceed on a normal or reoccurring basis one (1) person per
166 rental square feet of space in the Premises at any time during the term of
this Lease.
ARTICLE III.
Section 3.1 Rental Payments.
<PAGE>
Base Rent. Commencing on the Commencement Date and continuing thereafter
throughout the Term, Tenant shall pay Base Rent of [REDACTED] per annum, which
is due and payable each Lease Year during the Term hereof in twelve (12) equal
installments on the first (1st ) day of each calendar month during the Term, and
Tenant shall make such installments to Landlord at Landlord's address specified
in this Lease (or such other address as may be designated by Landlord from time
to time) monthly in advance.
Base Rent shall be increased throughout the Term as follows:
Lease Year Base Rent prsf Base Rent Annually Base Rent Monthly
- - ---------- -------------- ------------------ -----------------
1 [REDACTED]
2
3
4
5
6
7
8
9
10
The foregoing Base Rent includes the Expense Stop. So long as Tenant is not then
in default under this Lease, in the event Tenant has paid Landlord any Prepaid
Rent such Prepaid Rent shall be applied to the first (1st ) monthly installment
of Base Rent due hereunder.
(b) Partial Month. If the Commencement Date is other than the first (1st ) day
of a calendar month or if this Lease expires or terminates on a day other than
the last day of a calendar month, then the installments of Base Rent for such
month or months shall be prorated based upon multiplying the applicable Base
Rent by a fraction, the numerator of which shall be the number of days of the
Term occurring during said commencement or termination month, as the case may
be, and the denominator of which shall be the number of days in such month.
(c) Payment; Late Charge; Past Due Rate. The Base Rent, the Additional Rent
(hereinafter defined), any Prepaid Rent and any and all other payments which
Tenant is obligated to make to Landlord under this Lease shall constitute and
are sometimes hereinafter collectively referred to as "Rent". Tenant shall pay
all Rent and other sums of money as shall become due from and payable by Tenant
to Landlord in lawful money of the United States of America at the times and in
the manner provided in this Lease, without demand, deduction, abatement, setoff,
counterclaim or prior notice, except as may be required by law. Tenant hereby
acknowledges that late payment to Landlord of Rent or other sums due hereunder
will cause Landlord to incur costs not contemplated by this Lease, the exact
amount of which will be extremely difficult to ascertain. If any Rent or other
sum due from Tenant is not received on or before its due date,
<PAGE>
then Tenant shall pay to Landlord immediately upon Landlord's demand therefor a
late charge in an amount equal to three percent (3%) of such overdue amount,
plus any attorneys' fees and costs incurred by Landlord by reason of Tenant's
failure to pay Rent and other charges when due hereunder. Notwithstanding the
foregoing, Tenant shall have one five (5) day grace period per calendar year
before such late charge is incurred by Tenant. Additionally, all Rent under this
Lease, following a default by Tenant hereunder with respect to the payment of
such Rent, shall bear interest from the date due until paid at the lesser of
eighteen percent (18%) or the maximum nonusurious rate of interest then
permitted by the applicable laws of the state in which the Building is located
or the United States of America, whichever shall permit the higher nonusurious
rate, such interest being in addition to and cumulative of any other rights and
remedies which Landlord may have with regard to the failure of Tenant to make
any such payments under this Lease.
Section 3.2 Additional Rent.
(a) Definitions:
(i) "Base Operating Expenses" means [REDACTED] square feet or
[REDACTED] per annum which are calculated by multiplying the Expense Stop by the
rentable area of the Premises. In the event that this Lease is modified to
increase or decrease the amount of rentable square feet in the Premises demised
hereby, the total amount of Base Operating Expenses shall be adjusted, as
appropriate, to reflect the new square footage of the Premises based upon the
Expense Stop, unless the amendment or other written agreement modifying this
Lease specifies otherwise.
(ii) "Operating Expenses" means all expenses, costs and
disbursements of every kind and nature relating to or incurred or paid in
connection with the management and operation of the Project, computed on an
accrual basis in accordance with generally accepted accounting principles
consistently applied, including but not limited to the following:
(A) wages and salaries of all persons engaged in the operation, maintenance,
security or access control of the Project, including all taxes, insurance and
benefits relating thereto (if such persons are not full time with respect to the
Building, such costs and expenses shall be equitably prorated between all
buildings served by such persons);
(B) the cost of all supplies, tools, equipment and materials used in the
operation and maintenance of the Project, including reasonable and customary
rental fees for the same, if such items are not purchased and amortized pursuant
to this Section 3.2 below;
(C) the cost of all utilities for the Project, including but not limited to the
cost of water and power, heating, lighting, air conditioning and ventilating
(excluding the costs of electricity to the Premises which is separately metered
and paid directly by Tenant and those costs billed to specific tenants) of the
Building and Project;
<PAGE>
(D) the cost of all maintenance and service agreements for the Project and the
equipment therein entered into on an arms-length basis by Landlord, including
but not limited to alarm service, security service, access control, landscaping,
window cleaning, pest control, elevator maintenance and janitorial service;
(E) the cost of repairs and general maintenance, excluding (y) repairs and
general maintenance paid by proceeds of insurance, by Tenant or by other third
parties, and (z) alterations attributable solely to tenants of the Building and
repairs or maintenance required to bring the Project into compliance with any
law, regulation or the like proposed or enacted prior to the Commencement Date;
(F) amortization (together with reasonable financing charges) of the cost of
capital investment items which are installed for the purpose of reducing
Operating Expenses, or complying with governmental requirements first proposed
after the Commencement Date and applicable to the Project over its useful life;
(G) the cost of all insurance relating to the Project, including, but not
limited to, the cost of property insurance, casualty, rental loss and liability
insurance applicable to the Project and Landlord's personal property used in
connection therewith and the cost of deductibles paid on claims made by Landlord
(not to exceed $25,000 per claim);
(H) Landlord's and/or Landlord's managing agent's accounting and audit costs and
attorneys' fees applicable to the operation of the Project;
(I) all property management fees for the Project (not to exceed four percent
(4%) of the gross rents of the Building); and
(J) All taxes, assessments and governmental charges, whether paid or incurred by
Landlord, whether federal, state, county or municipal and whether they are
imposed by taxing districts or authorities currently taxing the Project or by
others subsequently created or otherwise, and any other taxes and assessments,
assessed against or attributable to the Project or its operation, excluding,
however, federal and state taxes on income, death taxes, franchise taxes and any
taxes imposed or measured on or by the income of Landlord from the operation of
the Project or imposed in connection with any change of ownership of the Project
together with the reasonable cost (including attorneys, consultants and
appraisers) of any negotiation, contest or appeal pursued by Landlord in an
effort to reduce any such tax, assessment or charge ("Real Estate Taxes");
provided, however, that if at any time during the Term the present method of
taxation or assessment shall be so changed that the whole or any part of the
taxes, assessments, levies, impositions or charges now levied, assessed or
imposed on real estate and the improvements thereof shall be changed and as a
substitute therefor, or in lieu of or in addition thereto, taxes, assessments,
levies, impositions or charges shall be levied, assessed or imposed wholly or
partially as a capital levy or otherwise on the rents received from the Project
or the rents reserved herein or any part thereof, then such substitute or
additional taxes, assessments, levies, impositions or charges, to the extent so
levied, assessed or imposed, shall be deemed to be
<PAGE>
included within the Real Estate Taxes to the extent that such substitute or
additional tax would be payable if the Project were the only property of the
Landlord subject to such tax.
(iii) Notwithstanding anything to the contrary, Operating Expenses shall not
include the following:
a. Repairs or other work occasioned by fire, windstorm or other casualty of an
insurable nature or by the exercise of eminent domain for which Landlord
receives compensation or for which Landlord should have received compensation if
Landlord had carried reasonable and customary insurance with respect to the
Building and Project;
b. Leasing commissions, attorneys' fees, marketing supplies, brochures, costs
and disbursements and other expenses incurred in connection with negotiations or
disputes with tenants, other occupants, prospective tenants or occupants;
c. Renovating or otherwise improving or decorating, painting or redecorating
space for tenants or other occupants of the Building;
d. Landlord's costs of electricity and other services that are sold to tenants
and for which Landlord is entitled to be reimbursed by tenants as an additional
charge or rental over and above the basic rent payable under the lease with such
tenant;
e. Costs incurred by Landlord for alterations or improvements which are
considered capital improvements or replacements under generally accepted
accounting principles, except where such capital improvement or replacement
results in a net reduction in Landlord's Operating Expenses after the cost of
the improvement or replacement is amortized and charged to Tenant over the
useful life of the improvement or replacement or except as otherwise expressly
set forth herein including, without limitation, in subparagraph (ii)(F) above;
f. Depreciation and amortization except as provided above;
g. Costs associated with special services rendered to tenants (including Tenant)
for which a special charge is made;
h. Costs incurred due to violation by Landlord or any tenant of the terms and
conditions of any lease;
i. Interest on debt or amortization payments on any mortgage or mortgages, and
rental under any ground or underlying lease or leases.
j. Any costs, fines or penalties incurred due to violations by Landlord of any
governmental rule or authority;
<PAGE>
k. Wages, salaries, or other compensation paid to any executive employees above
the grade of building superintendent who perform services for the Building shall
be equitably apportioned among the buildings for which services are rendered;
l. Costs incurred in the removal of asbestos or other substances considered to
be detrimental to the health or the environment of occupants of the Building;
m. Costs associated with compliance of general building codes, which codes were
enacted prior to Tenant's occupancy, whether such work is performed before or
after the Commencement Date of this Lease;
Costs which are reimbursed to Landlord by insurance or any other third party;
o. Overhead and profit increment paid to subsidiaries or other affiliates of
Landlord for services on or to the Project, Building and/or Premises to the
extent only that the costs of such services exceed the market value of such
services rendered by persons or entities of similar skill, competence and
experience;
p. Advertising and promotional expenditures;
q. Costs incurred in connection with the sale, financing, refinancing,
mortgaging or sale of the Building or Project, including brokerage commissions,
attorneys' and accountants' fees, closing costs, title insurance premiums,
transfer taxes and interest charges;
r. Costs, fines, interest, penalties, legal fees or costs of litigation incurred
due to the late payments of taxes, utility bills and other costs incurred by
Landlord's failure to make such payments when due unless such failure is due to
Landlord's good faith and reasonable efforts in contesting the amount of such
payments;
s. The cost of operating any for-profit commercial concession which is operated
by Landlord in the Building including without limitation, any compensation paid
to clerks, attendants or other persons operating such for-profit commercial
concessions on behalf of Landlord;
t. Expenses incurred by Landlord in order to correct any existing (as of the
Commencement Date) violations of any law, ordinances, requirements, orders,
directives, rules and regulations of federal, state, county and city governments
and of all other governmental authorities having or claiming jurisdiction over
the Building, including without limitation the ADA, the Federal Occupational
Safety and Health Act of 1970 (as amended) and any of said laws, rules and
regulations relating to environmental, health or safety matters;
u. Title insurance, key man and other life insurance, long-term disability
insurance and health accident and sickness insurance, except only for group
plans providing reasonable benefits to persons of the grade of building manager
or general manager and below employed and engaged in operating and managing the
Building;
<PAGE>
v. All costs associated with the operation of the business of the ownership or
entity which constitutes "Landlord" (as distinguished from the costs of Building
operations) including, but not limited to, Landlord's or Landlord's managing
agent's general corporate overhead and general administrative expenses;
w. Costs incurred by Landlord in connection with the correction of defects in
design and original construction of the Building or Project;
x. Any fines, costs, penalties or interest resulting from the negligence or
willful misconduct of the Landlord or its agents, contractors, or employees;
Any costs, fees, dues, contributions or similar expenses for political or
charitable organizations;
z. Costs incurred (less costs of recovery) for any items to the extent covered
by a manufacturer's, materialman's, vendor's or contractor's warranty which are
paid by such manufacturer, materialman, vendor or contractor;
aa. Reserves not spent by Landlord by the end of the calendar year for
which Operating Costs are paid;
bb. Any above market rental, either actual or not, for the Landlord's or
Landlord's managing agent's leasing office; and
cc. Costs incurred by Landlord for the initial acquisition and
installation of fixtures, furniture, artwork, interior or exterior landscaping
and/or any other design feature which is of an aesthetic nature, whether or not
the same are considered capital improvements under generally accepted accounting
principles.
(iv) "Adjustment Period" means each calendar year occurring during the Term
beginning with calendar year 1998, which shall be the first Adjustment Period.
(v) "Tenant's Pro Rata Share" means the percentage calculated by dividing the
rentable area of the Premises (numerator) by the rentable area of the Building
(denominator), and expressing the fraction as a percentage.
(b) Gross-Up Adjustment. If the Building is less than 95% occupied during any
Adjustment Period, then Operating Expenses for such Adjustment Period shall be
"grossed up" by Landlord to that amount of Operating Expenses that, using
reasonable projections, would normally be expected to be incurred during the
Adjustment Period if the Building was ninety-five percent (95%) occupied during
the Adjustment Period, as determined under generally accepted accounting
principles consistently applied.
(c) Payment by Tenant. If Tenant's Pro Rata share of the Operating Expenses for
any Adjustment Period exceed the Base Operating Expenses (any such excess being
known collectively as the "Expense Increase"), then Tenant agrees to pay
Landlord as additional rent (the "Additional Rent") such Expense Increase.
Manner of Payment.
<PAGE>
(i) Landlord may give Tenant notice of Landlord's estimate of
amounts payable under this Section 3.2 for each Adjustment Period based upon
generally accepted accounting principles consistently applied. By the first day
of each month during the Adjustment Period, Tenant shall pay Landlord
one-twelfth (1/12th) of the estimated amount. If for any reason the estimate is
not given before the Adjustment Period begins, Tenant shall continue to pay on
the basis of the previous year's estimate, if any, until the month after the new
estimate is given.
(ii) Within one hundred twenty (120) days after each Adjustment
Period ends, or as soon thereafter as reasonably practical, Landlord shall give
Tenant a statement (the "Statement") showing the: (A) actual Operating Expenses
for the Adjustment Period; (B) Base Operating Expenses; (C) the Expense Increase
for the Adjustment Period; (D) the amount of Tenant's Pro Rata Share of the
Expense Increase; (E) the amount, if any, paid by Tenant during the Adjustment
Period towards the Expense Increase; and (F) the amount Tenant owes towards the
Expense Increase or the amount Landlord owes as a refund. Delay by Landlord in
providing to Tenant any Statement shall not relieve Tenant from the obligation
to pay any Expense Increase upon the rendering of such Statements.
(iii) If the Statement shows that the actual amount Tenant owes for
the Adjustment Period is less than any estimated Expense Increase paid by Tenant
during the Adjustment Period, Landlord shall return the difference (the
"Overpayment"). If the Statement shows that the actual amount Tenant owes is
more than any estimated Expense Increase paid by Tenant during the Adjustment
Period, Tenant shall pay the difference (the "Underpayment"). The Overpayment or
Underpayment shall be paid within thirty (30) days after the Statement is
delivered to Tenant.
(iv) During any Adjustment Period in which this Lease is not in
effect for a complete calendar year, unless it was ended due to Tenant's
default, Tenant's obligation for Additional Rent for those Adjustment Periods
shall be prorated by multiplying the Additional Rent for the Adjustment Period
by a fraction expressed as a percentage, the numerator of which is the number of
days of the Adjustment Period included in the Term and the denominator of which
is 365.
(e) Audit. Landlord shall use commercially reasonable efforts to deliver to
Tenant Landlord's estimate of Operating Expenses for the next subsequent
Adjustment Period showing in reasonable detail (in line item format consistent
with Landlord's form of Statement) such estimated Operating Expenses. Further,
upon written request by Tenant to Landlord and no more often than bi-annually,
during the term of this Lease, Landlord shall provide to Tenant a Statement of
Operating Expenses paid, accrued or incurred during the most recently ended
calendar quarter and for which Landlord has accounted for all such Operating
Expenses. Further, in the event that within one hundred eighty (180) days after
Tenants receipt of the Statement for the prior calendar year, Tenant reasonably
believes that certain of the Operating Expenses charged by Landlord include
costs that are not properly included within the term "Operating Expenses" or
that Landlord has erred in calculating same, Tenant shall have the following
audit right. Tenant shall exercise such audit right by providing Landlord with a
written notice of
<PAGE>
Tenant's exercise of such audit right within such 180 day period and a statement
enumerating reasonably detailed reasons for Tenant's objections to the Statement
issued by Landlord (the "Audit Notice"). Upon the receipt by Landlord of an
Audit Notice, Landlord shall instruct its property manager at the Building to
meet with a designated employee of Tenant and/or representative (the "Tenant
Representative") to discuss the objections set forth in the Audit Notice.
Landlord shall provide the Tenant Representative with reasonable access to
Landlord's books and records at the Building relating to Operating Expenses for
the calendar year in question in order to attempt to resolve the issues raised
by Tenant in the Audit Notice. If, within sixty (60) days after Landlord's
receipt of the Audit Notice, Landlord and Tenant are unable to resolve Tenant's
objections, then not later than fifteen (15) days after the expiration of such
sixty (60) day period Tenant shall notify Landlord if Tenant wishes to employ an
independent, reputable certified public accounting firm charging for its
services on an hourly rate (and not a contingent fee) basis ("Acceptable
Accountants") to inspect and audit Landlord's books and records for the Building
relating to the objections raised in Tenant's statement. Such audit shall be
limited to a determination of whether or not Landlord calculated the Operating
Expenses in accordance with the terms and conditions of this Lease and normal
and customary accounting methods used by owners of similar buildings in the area
for and calculating Tenant's Expense Increase. All costs and expenses of any
such audit shall be paid by Tenant. Any audit performed pursuant to the terms of
this section shall be conducted only by the Acceptable Accountants at the
offices of Landlord's property manager at the Building. Notwithstanding anything
contained herein to the contrary, Tenant shall be entitled to exercise its audit
right pursuant to this section only in strict accordance with the foregoing
procedures no more often than once per calendar year and each such audit shall
relate only to calendar year most recently ended. In the event that Tenant fails
to notify Landlord within the foregoing 180-day period that Tenant objects to
the Statement, then Tenant's right to audit such year's Statement shall be null
and void. Further, such audit shall be at Tenant's sole cost and expense, except
in the event that such audit reveals an overstatement of Operating Expenses in
excess of five percent (5%) of the actual total Operating Expenses for such
calendar year, then Landlord shall promptly reimburse Tenant for its reasonable
out-of-pocket expenses incurred in connection with such audit.
Section 3.3 Security Deposit and Prepaid Rent. As security for its full and
faithful performance of this Lease, Tenant shall pay Landlord a security deposit
of [REDACTED] upon execution of this Lease (the "Security Deposit"). If Tenant
defaults with respect to any covenant or condition of this Lease, including but
not limited to the payment of Rent or any other payment due under this Lease and
such default continues beyond any applicable cure period, Landlord may apply all
or any part of the Security Deposit to the payment of any sum in default or any
other sum which Landlord may be required to or deem necessary to spend or incur
by reason of Tenant's default. In such event, Tenant shall, upon demand, deposit
with Landlord the amount so applied to replenish the Security Deposit. Within
thirty (30) days of the expiration or sooner termination of this Lease, Landlord
will refund Tenant the Security Deposit less any amounts necessary to cure any
default of Tenant under this Lease.
[REDACTED]
<PAGE>
ARTICLE IV.
Section 4.1 Services.
(a) Services Provided. So long as no default by Tenant under this Lease has
occurred and is continuing beyond any applicable cure period, Landlord shall
furnish to Tenant while Tenant is occupying the Premises:
(i) Hot and cold domestic water in common use restrooms and toilets in locations
provided for general use and as reasonably deemed by Landlord to be in keeping
with the Project standards.
(ii) Heating and air conditioning in season from 7:30 a.m. to 6:00 p.m. on
Monday through Friday and 8:00 a.m. to 1:00 p.m. on Saturday, excluding the
hereinafter defined Holidays, subject to curtailment as required by governmental
laws, rules or regulations, in such amounts as are considered by Landlord to be
standard, but such service at times during weekdays other than the hours stated
above, and on Saturdays, Sundays and Holidays, shall be furnished only upon
request of Tenant [REDACTED].
(iii) Electric lighting service for all public areas and special service areas
of the Building in the manner and to the extent deemed by Landlord to be
standard including parking lot lighting from dusk until dawn.
(iv) Janitor service on a five (5) day week basis in a manner considered by
Landlord to be standard; provided, however, if Tenant's floor coverings or other
improvements require special care, Tenant shall pay the additional cleaning cost
attributable thereto.
(v) Access control for the Project comparable as to coverage, control and
responsiveness (but not necessarily as to means for accomplishing same) to other
similarly situated multi-tenant office buildings in the vicinity; provided,
however, Landlord shall have no responsibility to prevent, and shall not be
liable to Tenant for, any liability or loss to Tenant, its agents, employees and
visitors arising out of losses due to theft, burglary, or damage or injury to
persons or property caused by persons gaining access to the Premises, and Tenant
hereby releases Landlord from all liability for such losses, damage or injury.
(vi) Sufficient electrical capacity to operate (i) incandescent lights,
typewriters, calculating machines, photocopying machines and other machines of
similar low voltage electrical consumption (120/208 volts), provided that the
total rated electrical design load for said lighting and machines of low
electrical voltage shall not exceed two (2.00 watts per square foot of rentable
area; and (ii) lighting and equipment of high voltage electrical consumption
(277/480 volts), provided that the total rated electrical design load for said
lighting and equipment of high electrical voltage shall not exceed two (2.00)
watts per square foot of rentable area (each such rated electrical design load
to be hereinafter referred to as the "Building standard rated electrical design
load"). Tenant shall be allocated Tenant's pro rata share of the Building
standard circuits provided on the floor(s) Tenant occupies.
<PAGE>
Should Tenant's fully connected electrical design load exceed the Building
standard rated electrical design load for either low or high voltage electrical
consumption, or if Tenant's electrical design requires low voltage or high
voltage circuits in excess of Tenant's share of the Building standard circuits,
Landlord will (at Tenant's expense) install one (1) additional high voltage
panel and/or one (1) additional low voltage panel with associated
<PAGE>
transformer, space for which has been provided in the base building electrical
closets based on a maximum of two (2) such additional panels per floor for all
tenants on the floor (which additional panels and transformers shall be
hereinafter referred to as the "additional electrical equipment"). If the
additional electrical equipment is installed because Tenant's low or high
voltage rated electrical design load exceeds the applicable Building standard
rated electrical design load, then a meter shall also be added (at Tenant's
expense) to measure the electricity used through the additional electrical
equipment.
The design and installation of any additional electrical equipment (or related
meter) required by Tenant shall be subject to the prior approval of Landlord
(which approval shall not be unreasonably withheld). All out-of-pocket expenses
incurred by Landlord in connection with the review and approval of any
additional electrical equipment shall also be reimbursed to Landlord by Tenant.
Tenant shall also pay on demand the actual metered cost of electricity consumed
through the additional electrical equipment (if applicable).
If any of Tenant's electrical equipment requires conditioned air in excess of
Building standard air conditioning, the same shall be installed by Landlord (on
Tenant's behalf), and Tenant shall pay all design, installation, metering and
similar costs relating thereto.
(vii) All fluorescent bulb and ballast replacement for Building standard
lighting in all areas and all incandescent bulb replacement in public areas,
toilet and restroom areas and stairwells.
(viii) Nonexclusive operatorless passenger elevator service to the Premises
twenty-four (24) hours per day; provided, that Landlord may reasonably limit the
number of elevators in operation on weekdays after normal business hours and on
Saturdays, Sundays and Holidays.
(b) Cessation of Services. To the extent the services described in Section
4.1(a) of this Lease require electricity, gas and water supplied by public
utilities, Landlord's covenants thereunder shall only impose on Landlord the
obligation to use its best efforts to cause the applicable public utilities to
furnish the same. Failure by Landlord to furnish the services described in this
Section 4.1 to any extent, or any cessation thereof, shall not render Landlord
in default hereunder or liable in any respect for damages to either person or
property, or be construed as an eviction of Tenant, or work an abatement of
Rent, or relieve Tenant from fulfillment of any covenant or agreement hereof. In
addition to the foregoing, should any of the equipment or machinery break down,
cease to function properly for any cause, or be intentionally turned off for
testing or maintenance purposes, Tenant shall have no claim for abatement or
reduction of Rent or damages on account of an interruption in service occasioned
thereby or resulting therefrom; provided, however, Landlord agrees to use
diligent efforts to repair said equipment or machinery and to restore said
services.
[REDACTED]
(c) Holidays. The following dates shall collectively be known as "Holidays" and
individually known as a "Holiday": New Year's Day; Memorial Day; Independence
Day; Labor Day; Thanksgiving Day; Friday following Thanksgiving Day; Christmas
Day; and any other holiday
<PAGE>
recognized and taken by tenants occupying at least one-half (1/2) of the
rentable area of office space of the Building. If in the case of any Holiday, a
different day shall be observed than the respective day above described, then
that day which constitutes the day observed by national banks in the city or
proximate area in which the Building is located, on account of such Holiday,
shall constitute the Holiday under this Lease.
Section 4.2 Keys and Locks. Landlord shall initially furnish Tenant with a
reasonable number of keys for the standard corridor doors serving the Premises.
Additional keys will be furnished by Landlord upon an order signed by Tenant and
at Tenant's expense. All such keys shall remain the property of Landlord.
Without the prior written consent of Landlord, no additional locks shall be
allowed on any door of the Premises, and Tenant shall not make or permit to be
made any duplicate keys, except those furnished by Landlord. Upon termination or
expiration of this Lease or a termination of possession of the Premises by
Tenant, Tenant shall surrender to Landlord all keys to any locks on doors
entering or within the Premises.
Section 4.3 Graphics and Building Directory. Landlord shall provide and install,
at Landlord's sole cost and expense, all letters or numerals at the entrance to
the Premises, and a strip containing a listing of Tenant's name on the Building
directory board to be placed in the main lobby of the Building. All such letters
and numerals shall be in Building standard graphics. Landlord shall not be
liable for any inconvenience or damage occurring as a result of any error or
omission in any directory or graphics. No signs, numerals, letters or other
graphics shall be used or installed by Tenant on the exterior of, or which may
be visible from outside, the Premises, unless approved in writing by Landlord.
ARTICLE V.
Section 5.1 Occupancy of Premises. Tenant shall throughout the Term of this
Lease, at its own expense, maintain the Premises and all improvements thereon
and keep them free from waste, damage or nuisance, and shall deliver up the
Premises in a clean and sanitary condition at the expiration or termination of
this Lease or the termination of Tenant's right to occupy the Premises by
Tenant, in good repair and condition, reasonable wear and tear and casualty
excepted. In the event Tenant should neglect to maintain and/or return the
Premises in such manner, Landlord shall have the right, but not the obligation,
to cause repairs or corrections to be made, and any reasonable costs therefor
shall be payable by Tenant to Landlord within ten (10) days of written demand
therefor by Landlord along with supporting information. Upon the expiration or
termination of this Lease or the termination of Tenant's right to occupy the
Premises by Tenant, Landlord shall have the right to reenter and resume
possession of the Premises. No act or thing done by Landlord or any of
Landlord's agents (hereinafter defined) during the Term of the Lease shall be
deemed an acceptance of a surrender of the Premises, and no agreement to accept
a surrender of the Premises shall be valid unless the same be made in writing
and executed by Landlord. Tenant shall notify Landlord prior to vacating the
Premises and shall arrange to meet with Landlord for a joint inspection of the
Premises at a mutually convenient time. If Tenant fails to give such notice or
to arrange for such inspection, then Landlord's inspection of
<PAGE>
the Premises shall be deemed correct for the purpose of determining Tenant's
responsibility for repair and restoration of the Premises.
Section 5.2 Entry for Repairs and Inspection. Provided Landlord has notified
Tenant orally or in writing and the same does not unreasonably interfere with
the conduct of Tenant's business, Tenant shall permit Landlord and its agents to
enter the Premises at all reasonable times to inspect the same; to show the
Premises to prospective tenants (within twelve (12) months of the expiration of
the term of this Lease), or interested parties such as prospective lenders and
purchasers; to exercise its rights under this Lease; to clean, repair, alter or
improve the Premises or the Building; to discharge Tenant's obligations when
Tenant has failed to do so within the time required under this Lease; to post
notices of nonresponsibility and similar notices and "For Sale" signs at any
time and to place "For Lease" signs upon or adjacent to the Building or the
Premises at any time within twelve (12) months of the expiration of the term of
this Lease. Tenant shall permit Landlord and its agents to enter the Premises at
any time in the event of an emergency. When reasonably necessary, Landlord may
temporarily close entrances, doors, corridors, elevators or other facilities
without liability to Tenant by reason of such closure.
Section 5.3 Hazardous Materials
(a) As used in this Lease, the term "Hazardous Materials" shall mean and include
any substance that is or contains petroleum, asbestos, polychlorinated
biphenyls, lead, or any other substance, material or waste which is now or is
hereafter classified or considered to be hazardous or toxic under any federal,
state or local law, rule, regulation or ordinance relating to pollution or the
protection or regulation of human health, natural resources or the environment
or poses or threatens to pose a hazard to the health or safety of persons on the
Premises or any adjacent property (collectively "Environmental Laws").
(b) Tenant agrees that during its use and occupancy of the Premises it will not
cause Hazardous Materials to be present on or about the Premises except in a
manner and quantity necessary for the ordinary performance of Tenant's business
and that it will comply with all Environmental Laws relating to the use, storage
or disposal of any such Hazardous Materials.
(c) If Tenant's use of Hazardous Materials on or about the Premises results in a
release, discharge or disposal of Hazardous Materials on, in, at, under, or
emanating from, the Premises or the property in which the Premises are located,
Tenant agrees to investigate, clean up, remove or remediate such Hazardous
Materials in full compliance with (a) the requirements of (i) all Environmental
Laws and (ii) any governmental agency or authority responsible for the
enforcement of any Environmental Laws; and (b) any additional requirements of
Landlord that are reasonably necessary to protect the value of the Premises or
the property in which the Premises are located. Landlord shall also have the
right, but not the obligation, to take whatever action with respect to any such
Hazardous Materials that it deems reasonably necessary to protect the value of
the Premises or the property in which the Premises are located. All costs and
expenses paid or incurred by Landlord in the exercise of such right shall be
payable by Tenant upon demand.
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(d) Upon reasonable notice to Tenant, Landlord may inspect the Premises for the
purpose of determining whether there exists on the Premises any Hazardous
Materials or other condition or activity that is in violation of the
requirements of this Lease or of any Environmental Laws. The right granted to
Landlord herein to perform inspections shall not create a duty on Landlord's
part to inspect the Premises, or liability on the part of Landlord for Tenant's
use, storage or disposal of Hazardous Materials, it being understood that Tenant
shall be solely responsible for all liability in connection therewith.
(e) Tenant shall surrender the Premises to Landlord upon the expiration or
earlier termination of this Lease free of debris, waste or Hazardous Materials
placed on or about the Premises by Tenant or its agents, employees, contractors
or invitees.
(f) Tenant agrees to indemnify and hold harmless Landlord from and against any
and all claims, losses (including, without limitation, loss in value of the
Premises or the property in which the Premises are located), liabilities and
expenses (including reasonable attorney's fees) sustained by Landlord
attributable to (i) any Hazardous Materials placed on or about the Premises by
Tenant or its agents, employees, contractors or invitees or (ii) Tenant's breach
of any provision of this Section.
(g) The provisions of this Section shall survive the expiration or earlier
termination of this Lease.
ARTICLE VI.
Section 6.1 Leasehold Improvements.
(a) Acceptance of Premises. Upon Tenant's acceptance of delivery of the Premises
by Landlord, Tenant will be deemed to have made a complete inspection of the
Premises and shall be deemed to have accepted the Premises and the Project in
their "AS IS," "WHERE IS," and "WITH ALL FAULTS" condition on the Commencement
Date without recourse to Landlord, subject to any punchlist items, latent
defects and the terms of this Lease including those of Exhibit E attached hereto
and hereby made a part hereof. Except as expressly provided in this Lease
including Exhibit E attached hereto, Landlord shall have no obligation to
furnish, equip or improve the Premises or the Project. The taking of possession
of the Premises by Tenant shall be conclusive evidence against Tenant that (i)
Tenant accepts the Premises and the Project as being suitable for its intended
purpose and in a good and satisfactory condition, and (ii) waives any patent
defects in the Premises and its appurtenances; provided, however, the same shall
in no event relieve Landlord of its obligations under this Lease.
(b) Improvements and Alterations. Tenant shall not make or allow to be made
(except as otherwise provided in this Lease) any improvements, alterations or
physical additions (including fixtures) in or to the Premises or the Project,
without first obtaining the written consent of Landlord, including Landlord's
written approval of Tenant's contractor(s) and of the plans, working drawings
and specifications relating thereto. Approval by Landlord of any of Tenant's
<PAGE>
drawings and plans and specifications prepared in connection with any
alterations, improvements, modifications or additions to the Premises or the
Project shall not constitute a representation or warranty of Landlord as to the
adequacy or sufficiency of such drawings, plans and specifications, or
alterations, improvements, modifications or additions to which they relate, for
any use, purpose or conditions, but such approval shall merely be the consent of
Landlord as required hereunder. Except as otherwise expressly provided in
Exhibit E attached hereto, any and all furnishing, equipping and improving of or
other alteration and addition to the Premises shall be: (i) made at Tenant's
sole cost, risk and expense, and Tenant shall pay for Landlord's reasonable
out-of-pocket costs incurred in connection with and as a result of such
alterations or additions; (ii) performed in a prompt, good and workmanlike
manner with labor and materials of such quality as Landlord may reasonably
require; (iii) substantially constructed in accordance with all plans and
specifications approved in writing by Landlord prior to the commencement of any
such work; (iv) prosecuted diligently and continuously to completion so as to
minimize interference with the normal business operations of other tenants in
the Building, the performance of Landlord's obligations under this Lease or any
mortgage or ground lease covering or affecting all or any part of the Building
or the Land and any work being done by contractors engaged by Landlord with
respect to or in connection with the Building; and (v) performed by contractors
reasonably approved in writing by Landlord. Tenant shall have no (and hereby
waives all) rights to payment or compensation for any such item. Tenant shall
notify Landlord upon completion of such alterations, improvements, modifications
or additions and Landlord shall inspect same for workmanship and compliance with
the approved plans and specifications. Tenant and its contractors shall comply
with all reasonable requirements Landlord may impose on Tenant or its
contractors with respect to such work (including but not limited to, insurance,
indemnity and bonding requirements), and shall deliver to Landlord a complete
copy of the "as-built" or final plans and specifications for all alterations or
physical additions so made in or to the Premises within thirty (30) days of
completing the work. Tenant shall not place safes, vaults, filing cabinets or
systems, libraries or other heavy furniture or equipment within the Premises
without Landlord's prior written consent.
(c) Title to Alterations. All alterations, physical additions, modifications or
improvements in or to the Premises (including permanently attached or affixed
fixtures) shall, when made, become the property of Landlord and shall be
surrendered to Landlord upon termination or expiration of this Lease or
termination of Tenant's right to occupy the Premises, whether by lapse of time
or otherwise, without any payment, reimbursement or compensation therefor;
provided, however, that (i) Tenant shall retain title to and shall remove from
the Premises movable equipment or furniture owned by Tenant, (ii) Tenant repairs
any damage caused thereby, and (iii) Tenant returns the Premises to their
preexisting condition, normal wear and tear and damage due to casualty excepted.
Notwithstanding any of the foregoing to the contrary, Landlord may require
Tenant to remove all alterations, additions or improvements to the Premises that
are other than Building standard that are designated for removal by Landlord in
writing at the time that such alterations, additions or improvements are
approved by Landlord including, without limitation, any cabling or other
computer, satellite or telecommunications equipment or hardware, whether or not
such alterations, additions, or improvements are located in the Premises upon
the expiration or earlier termination of this Lease or the termination of
Tenant's right to possession of the Premises and restore the same to Building
Standard condition, reasonable wear and tear and
<PAGE>
casualty excepted. The rights conferred to Landlord under this Section 6.1(c)
shall be in addition to (and not in conflict with) any other rights conferred on
Landlord by this Lease, in equity or at law.
(d) Personal Property Taxes; Sales, Use and Excise Taxes. Tenant shall be
responsible for and shall pay ad valorem taxes and other taxes, assessments or
charges separately assessed or levied upon or applicable to Tenant's personal
property, the value of Tenant's leasehold improvements in the Premises in excess
of Building standard and the Generator and all license fees and other fees or
charges imposed on the business conducted by Tenant on the Premises before such
taxes, assessments, charges or fees become delinquent. Tenant shall also pay to
Landlord with all Rent due and owing under this Lease an amount equal to any
sales, rental, excise and use taxes levied, imposed or assessed by the State or
any political subdivision thereof or other taxing authority upon any amounts
classified as rent.
Section 6.2 Repairs by Landlord. All repairs, alterations or additions that
affect the Project's structural components or mechanical, electrical or plumbing
systems servicing the Building shall be made reasonably promptly by Landlord or
its contractors only, and, in the case of any damage to such components or
systems directly caused by Tenant or Tenant's agents, shall be paid for by
Tenant in an amount equal to Landlord's costs plus ten percent (10%) as an
overhead expense. Unless otherwise provided herein, Landlord shall not be
required to make any improvements to or repairs of any kind or character to the
leasehold improvements located in the Premises during the Term, except such
repairs as Landlord deems necessary for normal maintenance operations of the
Building.
Section 6.3 Repairs by Tenant. Subject to Section 6.2 of this Lease, and except
to the extent that work is performed by Landlord, its agents, employees or
contractors, Tenant shall be responsible, at its own cost and expense, for all
repair or replacement of any damage to the leasehold improvements in the
Premises, together with any damage to the Project or any part thereof caused by
Tenant or any of Tenant's agents to the extent that such damage was not covered
by Landlord's insurance and if so covered, to the extent of any deductible paid
by Landlord in connection therewith. Except insofar as Landlord is expressly
obligated under this Lease to maintain and repair the Building, in addition to
the maintenance and repair obligations of Tenant otherwise expressly set forth
in this Lease, Tenant is also obligated to perform, at Tenant's own cost and
expense and risk, all other maintenance and repairs necessary or appropriate to
cause the Premises to be maintained in good condition and suitable for Tenant's
intended commercial purpose.
Section 6.4 Liens. Tenant shall keep the Premises and the Building free from any
liens, including but not limited to liens filed against the Premises by any
governmental agency, authority or organization, arising out of any work
performed, materials ordered or obligations incurred by or on behalf of Tenant,
and Tenant hereby agrees to indemnify and hold Landlord, its agents, employees,
independent contractors, officers, directors, partners, and shareholders
harmless from any liability, cost or expense for such liens. Tenant shall cause
any such lien imposed to be released of record by payment or posting of the
proper bond acceptable to Landlord within ten (10) days after the earlier of
imposition of the lien or written request by
<PAGE>
Landlord. Tenant shall give Landlord written notice of Tenant's intention to
perform work on the Premises in excess of $5,000 for any one item or series of
similar or related items and which might result in any claim of lien, at least
ten (10) days prior to the commencement of such work to enable Landlord to post
and record a notice of nonresponsibility or other notice deemed proper before
commencement of any such work. If Tenant fails to remove any lien within the
prescribed ten (10) day period, then Landlord may do so at Tenant's expense and
Tenant's reimbursement to Landlord for such amount, including attorneys' fees
and costs, shall be deemed Additional Rent. Tenant shall have no power to do any
act or make any contract which may create or be the foundation for any lien,
mortgage or other encumbrance upon the reversion or other estate of Landlord, or
of any interest of Landlord in the Premises.
Section 6.5 Indemnification. Tenant shall defend, indemnify and hold harmless
Landlord, its agents, employees, officers, directors, partners and shareholders
("Landlord's Related Parties") from and against any and all third-party
liabilities, judgments, demands, causes of action, claims, losses, damages,
costs and expenses, including reasonable attorneys' fees and costs, proximately
or directly caused by the use, occupancy, conduct, operation, or management of
the Premises by, or the willful misconduct or negligence of, Tenant, its
officers, agents, servants and employees in or about the Building or Premises or
arising from any breach or default under this Lease by Tenant. This
indemnification shall survive termination or expiration of this Lease. This
provision shall not be construed to make Tenant responsible for loss, damage,
liability or expense resulting from injuries to third parties or damage to
property to the extent caused by the negligence or willful misconduct of
Landlord, or its officers, contractors, licensees, agents, employees, or
invitees.
ARTICLE VII.
Section 7.1 Condemnation. (a) Total Taking. In the event of a taking or damage
related to the exercise of the power of eminent domain, by any agency,
authority, public utility, person, corporation or entity empowered to condemn
property (including without limitation a voluntary conveyance by Landlord in
lieu of such taking or condemnation) (individually, a "Taking") of (i) the
entire Premises, (ii) so much of the Premises as to prevent or substantially
impair its use by Tenant during the Term of this Lease or (iii) portions of the
Building or Project required for reasonable access to, or reasonable use of, the
Premises (individually, a "Total Taking"), the rights of Tenant under this Lease
and the leasehold estate of Tenant in and to the Premises shall cease and
terminate as of the date upon which title to the property taken passes to and
vests in the condemnor or the effective date of any order for possession if
issued prior to the date title vests in the condemnor ("Date of Taking").
(b) Partial Taking. In the event of a Taking of only a part of the Premises or
of a part of the Project which does not constitute a Total Taking during the
Term of this Lease (individually, a "Partial Taking"), the rights of Tenant
under this Lease and the leasehold estate of Tenant in and to the portion of the
property taken shall cease and terminate as of the Date of Taking, and an
adjustment to the Rent shall be made based upon the reduced area of the
Premises.
<PAGE>
(c) Termination by Landlord. In the event of a Taking of the Building (other
than the Premises) such that, in Landlord's reasonable opinion, the Building
cannot be restored in a manner that makes its continued operation practically or
economically feasible, Landlord may terminate this Lease by giving notice to
Tenant within ninety (90) days after the date notice of such Taking is received
by Landlord.
(d) Rent Adjustment. If this Lease is terminated pursuant to this Section 7.1,
Landlord shall refund to Tenant any prepaid unaccrued Rent and any other sums
due and owing to Tenant (less any sums then due and owing Landlord by Tenant),
and Tenant shall pay to Landlord any remaining sums due and owing Landlord under
this Lease, each prorated as of the Date of Taking where applicable.
(e) Repair. If this Lease is not terminated as provided for in this Section 7.1,
then Landlord at its expense shall promptly repair and restore the Building,
Project and/or the Premises to approximately the same condition that existed at
the time Tenant entered into possession of the Premises, wear and tear excepted
(and Landlord shall have no obligation to repair or restore Tenant's
improvements to the Premises or Tenant's Property), except for the part taken,
so as to render the Building or Project as complete an architectural unit as
practical, but only to the extent of the condemnation award received by Landlord
for the damage.
(f) Awards and Damages. Landlord reserves all rights to damages and awards paid
because of any Partial or Total Taking of the Premises or the Project. Tenant
assigns to Landlord any right Tenant may have to the damages or award. Further,
Tenant shall not make claims against Landlord or the condemning authority for
damages. Notwithstanding, Tenant may claim and recover from the condemning
authority a separate award for Tenant's moving expenses, business dislocation
damages, Tenant's Property and any other award that would not reduce the award
payable to Landlord.
Section 7.2 Force Majeure. Neither Landlord nor Tenant shall be required to
perform any term, provision, agreement, condition or covenant in this Lease
(other than the obligations of Tenant to pay Rent as provided herein) so long as
such performance is delayed or prevented by "Force Majeure", which shall mean
acts of God, strikes, injunctions, lockouts, material or labor restrictions by
any governmental authority, civil riots, floods, fire, theft, public enemy,
insurrection, war, court order, requisition or order of governmental body or
authority, and any other cause not reasonably within the control of Landlord or
Tenant and which by the exercise of due diligence Landlord or Tenant is unable,
wholly or in part, to prevent or overcome. Neither Landlord nor any mortgagee
shall be liable or responsible to Tenant for any loss or damage to any property
or person occasioned by any Force Majeure, or for any damage or inconvenience
which may arise through repair or alteration of any part of the Project as a
result of any Force Majeure.
Section 7.3 Fire or Other Casualty Damage. (a) Damage. If any portion of the
Premises shall be destroyed or damaged by fire or any other casualty, Tenant
shall immediately give notice thereof to Landlord. If any portion of the
Premises or Project shall be destroyed or damaged by fire or any other casualty
then (i) at the option of Landlord, Landlord may restore and repair the
<PAGE>
portion of the Premises or Project damaged and, if the Premises are rendered
untenantable in whole or in part by reason of such casualty, Tenant shall be
entitled to an equitable abatement of the Rent hereunder (subject to the
limitation in Section 7.3(c) below) until such time as the damaged portion of
the Premises (exclusive of any of Tenant's Property or Tenant's improvements)
are repaired or restored by Landlord to the extent required hereby or (ii)
Landlord or Tenant may terminate this Lease whereupon all Rent accrued up to the
time of such termination and any other sums due and owing shall be paid by
Tenant to Landlord (less any sums then due and owing Tenant by Landlord) and any
remaining sums due and owing by Landlord to Tenant shall be paid to Tenant. In
no event shall Landlord have any obligation to repair or restore any such
material destruction or damage except as provided below. Notwithstanding the
foregoing, Landlord covenants and agrees to repair or restore any damage or
destruction costing less than $100,000 so long as insurance proceeds (less the
deductible) are available to Landlord for such repair or restoration or should
have been available to Landlord for repair or restoration if Landlord had
carried insurance as required by this Lease.
(b) Repair Landlord shall give Tenant written notice of its decisions, estimates
or elections under this Section 7.3 within sixty (60) days after any such damage
or destruction. If Landlord has elected to repair and restore the Premises or
other portion of the Project, this Lease shall continue in full force and
effect, and the repairs will be made within a reasonable time thereafter (not to
exceed two hundred forty (240) days), subject to the provisions of Section 7.2
of this Lease. Should the repairs not be completed within that period, both
Landlord and Tenant shall each have the option of terminating this Lease by
written letter of termination. If this Lease is terminated as herein permitted,
Landlord shall refund to Tenant any prepaid Rent (unaccrued as of the date of
damage or destruction) and any other sums due and owing by Landlord to Tenant
(less any sums then due and owing Landlord by Tenant) and any remaining sums due
and owing by Tenant to Landlord shall be paid to Landlord. If Landlord elects to
rebuild the Premises or other portion of the Project, Landlord shall only be
obligated to restore or rebuild the Premises or other portion of the Project to
approximately the same condition as existed at the time Tenant entered into
possession of the Premises, wear and tear excepted and not be required to
rebuild, repair or replace any part of Tenant's Property including Tenant's
leasehold improvements. Notwithstanding anything contained in this Lease to the
contrary, if Landlord shall elect to repair and restore the Premises or other
portion of the Project pursuant to this Section 7.3, in no event shall Landlord
be required to expend under this Article VII any amount in excess of the
proceeds actually received from the insurance carried by Landlord pursuant to
Section 7.4(a) of this Lease. Landlord shall not be liable for any inconvenience
or annoyance to Tenant or injury to the business of Tenant resulting in any way
from such damage or destruction or the disregard of the repair thereof.
(c) Negligence of Tenant. Notwithstanding the provisions of Sections 7.3(a) and
7.3(b) of this Lease, if the Premises, the Project or any portion thereof, are
damaged by fire or other casualty resulting from the negligence or willful
misconduct of Tenant or any of Tenant's agents, the Rent under this Lease will
not be abated during the repair of that damage.
Section 7.4 Insurance.
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(a) Landlord shall maintain, or cause to be maintained, standard fire and
extended coverage insurance on the Buildings and Building Standard tenant
improvements (excluding leasehold improvements by Tenant in excess of Building
Standard and Tenant's Property) in amounts considered by Landlord to be
reasonable and customary. The insurance required to be obtained by Landlord may
be obtained by Landlord through blanket or master policies insuring other
entities or properties owned or controlled by Landlord.
(b) Tenant shall, at its sole cost and expense, procure and maintain during the
Term of this Lease the following policies of insurance: comprehensive general
liability insurance (including personal injury liability, premises/operation,
property damage, independent contractors and broad form contractual coverage in
support of the indemnifications of Landlord by Tenant under this Lease) in
amounts of not less than a combined single limit of $1,000,000; comprehensive
automobile liability insurance; extra expense insurance; contractual liability
insurance; property insurance with respect to Tenant's Property, and all
leasehold improvements, alterations and additions in excess of Building
Standard, to be written on an "all risk" basis for full replacement cost; and
worker's compensation and employer's liability insurance; all maintained with
companies, on forms and in such amounts as Landlord may, from time to time,
reasonably require and endorsed to include Landlord as an additional insured
(except with respect to Tenant's extra expense insurance), with the premiums
paid in accordance with Tenant's normal payment policy. The insurer must be
licensed to do business in the state in which the Building is located, to the
extent required by applicable law. Tenant, and not Landlord, will be liable for
any costs or damages in excess of the statutory limit for which Tenant would, in
the absence of worker's compensation, be liable. If Tenant does not procure
insurance as required, Landlord may, upon advance written notice to Tenant,
cause this insurance to be issued and Tenant shall pay to Landlord the premium
for such insurance within ten (10) days of Landlord's demand, plus interest at
the past due rate provided for in Section 3.1(c) of this Lease until repaid by
Tenant. All policies of insurance required to be maintained by Tenant shall
specifically make reference to the indemnifications by Tenant in favor of
Landlord under this Lease and shall provide that Landlord shall be given at
least thirty (30) days' prior written notice of any cancellation or nonrenewal
of any such policy. A certificate evidencing each such policy shall be deposited
with Landlord by Tenant on or before the Commencement Date, and a replacement
certificate evidencing each subsequent policy shall be deposited with Landlord
at least thirty (30) days prior to the expiration of the preceding such policy.
All insurance policies obtained by Tenant shall be written as primary policies
(primary over any insurance carried by Landlord), not contributing with and not
in excess of coverage which Landlord may carry, if any.
Section 7.5 Waiver of Subrogation Rights. Each party hereto waives all rights of
recovery, claims, actions or causes of actions arising in any manner in its (the
"Injured Party's") favor and against the other party for loss or damage to the
Injured Party's property located within or constituting a part or all of the
Project, to the extent the loss or damage: (a) is covered by the Injured Party's
insurance; or (b) would have been covered by the insurance the Injured Party is
required to carry under this Lease, whichever is greater, regardless of the
cause or origin, including the sole, contributory, partial, joint, comparative
or concurrent negligence of the other party. This waiver also applies to each
party's directors, officers, employees, shareholders, partners, representatives
and agents. All insurance carried by either Landlord or Tenant covering
<PAGE>
the losses and damages described in this Section 7.5 shall provide for such
waiver of rights of subrogation by the Injured Party's insurance carrier to the
maximum extent that the same is permitted under the laws and regulations
governing the writing of insurance within the state in which the Building is
located. Both parties hereto are obligated to obtain such a waiver and provide
evidence to the other party of such waiver. The waiver set forth in this Section
7.5 shall be in addition to, and not in substitution for, any other waivers,
indemnities or exclusions of liability set forth in this Lease.
ARTICLE VIII.
Section 8.1 Default by Tenant. The occurrence of any one or more of the
following events shall constitute a default by Tenant under this Lease:
(a) Tenant shall fail to pay to Landlord any Rent or any other monetary charge
due from Tenant hereunder within five (5) days after written notice from
Landlord to Tenant that such Rent was not received by Landlord as and when due
and payable;
(b) Tenant breaches or fails to comply with any term, provisions, conditions or
covenant of this Lease, other than as described in Section 8.1(a), or with any
of the Building rules and regulations now or hereafter established to govern the
operation of the Project and the same is not cured by Tenant within thirty (30)
days after written notice from Landlord to Tenant (or if such default is not
reasonably capable of being cured within such 30-day period, Tenant shall not be
in default hereunder so long as Tenant promptly commences to cure such default
and diligently pursues such cure to completion (not to exceed, in any event,
ninety (90) days).
(c) A Transfer (hereinafter defined) shall occur, without the prior
written approval of Landlord;
(d) The interest of Tenant under this Lease shall be levied on under
execution or other legal process;
(e) Any petition in bankruptcy or other insolvency proceedings shall be
filed by or against Tenant, or any petition shall be filed or other action taken
to declare Tenant a bankrupt or to delay, reduce or modify Tenant's debts or
obligations or to reorganize or modify Tenant's capital structure or
indebtedness or to appoint a trustee, receiver or liquidator of Tenant or of any
property of Tenant, or any proceeding or other action shall be commenced or
taken by any governmental authority for the dissolution or liquidation of Tenant
and, within sixty (60) days hereafter, Tenant fails to secure a discharge
thereof;
(f) Tenant shall become insolvent, or Tenant shall make an assignment for the
benefit of creditors, or Tenant shall make a transfer in fraud of creditors, or
a receiver or trustee shall be appointed for Tenant or any of its properties;
<PAGE>
(g) Tenant shall desert, abandon or vacate the Premises or any substantial
portion thereof or fails to operate its business in the Premises for any reason
other than destruction or condemnation of the Premises; or
(h) Tenant shall do or permit to be done anything which creates a lien
upon the Premises or the Project and such lien is not removed by Tenant in
accordance with Section 6.4 of this Lease.
Section 8.2 Landlord's Remedies. Upon occurrence of any default by Tenant
under this Lease and the events described in Sections 8.1 (b), (d), (f) and (g)
are not cured within thirty (30) days after written notice from Landlord of such
default (there being no notice and cure period for events of defaults described
in Sections 8.1 (a), (c), (e) and (h) except as otherwise set forth herein), the
Landlord shall have the option to do and perform any one or more of the
following in addition to, and not in limitation of, any other remedy or right
permitted it by law or in equity by this Lease:
(a) Continue this Lease in full force and effect, and this Lease shall continue
in full force and effect as long as Landlord does not terminate this Lease, and
Landlord shall have the right to collect Rent, Additional Rent and other charges
when due.
(b) Terminate this Lease, and Landlord may forthwith repossess the Premises in
accordance with applicable law and be entitled to recover as damages a sum of
money equal to the total of (i) the cost of recovering the Premises, (ii) the
cost of removing and storing Tenant's or any other occupant's property, (iii)
the unpaid Rent and any other sums accrued hereunder at the date of termination,
(iv) a sum equal to the amount, if any, by which the present value of the total
Rent and other benefits which would have accrued to Landlord under this Lease
for the remainder of the Term, if the terms of this Lease had been fully
complied with by Tenant, discounted at eight percent (8 %) per annum exceeds the
total fair market value of the Premises for the balance of the Term (it being
the agreement of the parties hereto that Landlord shall receive the benefit of
its bargain), (v) the cost of reletting the Premises including, without
limitation, the cost of restoring the Premises to the condition necessary to
rent the Premises at the prevailing market rental rate, normal wear and tear
excepted, (vi) any increase in insurance premiums caused by the vacancy of the
Premises, (vii) the amount of any unamortized improvements to the Premises paid
for by Landlord, (viii) the amount of any unamortized brokerage commission or
other costs paid by Landlord in connection with the leasing of the Premises and
(ix) any other sum of money or damages owed by Tenant to Landlord. In the event
Landlord shall elect to terminate this Lease, Landlord shall at once have all
the rights of reentry upon the Premises, without becoming liable for damages, or
guilty of trespass.
(c) Terminate Tenant's right of occupancy of the Premises and reenter and
repossess the Premises in accordance with applicable law by entry, forcible
entry or detainer suit or otherwise, without demand or notice of any kind,
except to the extent required by applicable law to Tenant and without
terminating this Lease, without acceptance of surrender of possession of the
Premises, and without becoming liable for damages or guilty of trespass, in
which event Landlord may, but shall be under no obligation to, relet the
Premises or any part thereof for the
<PAGE>
account of Tenant (nor shall Landlord be under any obligation to relet the
Premises before Landlord relets or leases any other portion of the Project or
any other property under the ownership or control of Landlord) for a period
equal to or lesser or greater than the remainder of the Term of the Lease on
whatever terms and conditions Landlord, at Landlord's sole discretion, deems
advisable. Tenant shall be liable for and shall pay to Landlord all Rent payable
by Tenant under this Lease (plus interest at the past due rate provided in
Section 3.1(c) of this Lease if in arrears) plus an amount equal to (i) the cost
of recovering possession of the Premises, (ii) the cost of removing and storing
any of Tenant's or any other occupant's property left on the Premises or the
Project after reentry, (iii) the cost of decorations, repairs, changes,
alterations and additions to the Premises and the Project, (iv) the cost of any
attempted reletting or reletting and the collection of the rent accruing from
such reletting, (v) the cost of any brokerage fees or commissions payable by
Landlord in connection with any reletting or attempted reletting, (vi) any other
costs incurred by Landlord in connection with any such reletting or attempted
reletting, (vii) the cost of any increase in insurance premiums caused by the
termination of possession of the Premises, (viii) the amount of any unamortized
improvements to the Premises paid for by Landlord, (ix) the amount of any
unamortized brokerage commissions or other costs paid by Landlord in connection
with the leasing of the Premises and (x) any other sum of money or damages owed
by Tenant to Landlord at law, in equity or hereunder, all reduced by any sums
received by Landlord through any reletting of the Premises; provided, however,
that in no event shall Tenant be entitled to any excess of any sums obtained by
reletting over and above Rent provided in this Lease to be paid by Tenant to
Landlord. For the purpose of such reletting Landlord is authorized to decorate
or to make any repairs, changes, alterations or additions in or to the Premises
that may be necessary. Landlord may file suit to recover any sums falling due
under the terms of this Section 8.2(c) from time to time, and no delivery to or
recovery by Landlord of any portion due Landlord hereunder shall be any defense
in any action to recover any amount not theretofore reduced to judgment in favor
of Landlord. No reletting shall be construed as an election on the part of
Landlord to terminate this Lease unless a written notice of such intention is
given to Tenant by Landlord. Notwithstanding any such reletting without
termination, Landlord may at any time thereafter elect to terminate this Lease
for such previous default and/or exercise its rights under Section 8.3(b) of
this Lease.
(d) Enter upon the Premises and do whatever Tenant is obligated to do under the
terms of this Lease; and Tenant agrees to reimburse Landlord on demand for any
expenses which Landlord may incur in effecting compliance with Tenant's
obligations under this Lease plus interest at the past due rate provided in this
Lease, and Tenant further agrees that Landlord shall not be liable for any
damages resulting to Tenant from such action, unless caused by the negligence or
willful misconduct of Landlord or its agents. No action taken by Landlord under
this Section 8.2(d) shall relieve Tenant from any of its obligations under this
Lease or from any consequences or liabilities arising from the failure to
perform such obligations.
(e) Without waiving such default, apply all or any part of the Security Deposit
and/or any unapplied Prepaid Rent to cure the default or to any damages suffered
as a result of the default to the extent of the amount of damages suffered.
Tenant shall reimburse Landlord for the amount of such depletion of the Security
Deposit and/or any Prepaid Rent on demand.
<PAGE>
(f) Exercise any and all other remedies available to Landlord in this Lease, at
law or in equity.
Section 8.3 Limitation on Duty to Relet or Mitigate. Landlord shall not be
obligated to relet the Premises before leasing any other unoccupied portions of
the Project and any other property under the ownership or control of Landlord.
If Landlord receives any payments from the reletting of the Premises and is
required to mitigate damages (despite the intent of the parties hereunder), any
such payment shall first be applied to any costs or expenses incurred by
Landlord as a result of Tenant's Default under this Lease.
Section 8.4 Reentry. If Tenant fails to allow Landlord to reenter and repossess
the Premises, Landlord shall have full and free license to enter into and upon
the Premises with or without process of law for the purpose of repossessing the
Premises, expelling or removing Tenant and any others who may be occupying or
otherwise within the Premises, removing any and all property therefrom and
changing all door locks of the Premises. Landlord may take these actions without
being deemed in any manner guilty of trespass, eviction or forcible entry or
detainer, without accepting surrender of possession of the Premises by Tenant,
and without incurring any liability for any damage resulting therefrom,
including without limitation any liability arising under applicable state law
and without relinquishing Landlord's right to Rent or any other right given to
Landlord hereunder or by operation of law or in equity, Tenant hereby waiving
any right to claim damage for such reentry and expulsion, including without
limitation any rights granted to Tenant by applicable state law.
Section 8.5 Rights of Landlord in Bankruptcy. Nothing contained in this Lease
shall limit or prejudice the right of Landlord to prove for and obtain in
proceedings for bankruptcy or insolvency, by reason of the expiration or
termination of this Lease or the termination of Tenant's right of occupancy, an
amount equal to the maximum allowed by any statute or rule of law in effect at
the time when, and governing the proceedings in which, the damages are to be
proved, whether or not the amount be greater, equal to, or less than the amount
of the loss or damages referred to in this Section 8.5. In the event that under
applicable law, the trustee in bankruptcy or Tenant has the right to affirm this
Lease and continue to perform the obligations of Tenant hereunder, such trustee
or Tenant shall, in such time period as may be permitted by the bankruptcy court
having jurisdiction, cure all defaults of Tenant hereunder outstanding as of the
date of the affirmance of this Lease and provide to Landlord such adequate
assurances as may be necessary to ensure Landlord of the continued performance
of Tenant's obligations under this Lease.
Section 8.6 Waiver of Certain Rights. To the extent permitted by applicable law,
Tenant hereby expressly waives any and all rights Tenant may have under
applicable state law to redeem this Lease or any other similar right to recover
possession of the Premises.
Section 8.7 NonWaiver. Failure on the part of either party to complain of any
action or nonaction on the part of the other party, no matter how long the same
may continue, shall not be deemed to be a waiver by such party of any of its
rights under this Lease. Further, it is covenanted and agreed that no waiver at
any time of any of the provisions hereof by either party
<PAGE>
shall be construed as a waiver of any of the other provisions hereof and that a
waiver at any time of any of the provisions hereof shall not be construed as a
waiver at any subsequent time of the same provisions. The consent or approval by
either party to or of any action by the other party requiring such party's
consent or approval shall not be deemed to waive or render unnecessary such
party's consent or approval to or of any subsequent similar act by either party.
Section 8.8 Holding Over. In the event Tenant remains in possession of the
Premises after the expiration or termination of this Lease without the execution
of a new lease, then Tenant, at Landlord's option, shall be deemed to be
occupying the Premises as a tenant at will at a base rental equal to one hundred
fifty percent (150%) of the then applicable Base Rent, and shall otherwise
remain subject to all the conditions, provisions and obligations of this Lease
insofar as the same are applicable to a tenancy at will, including without
limitation the payment of all other Rent; provided, however, nothing contained
herein shall require Landlord to give Tenant more than thirty (30) days prior
written consent to terminate Tenant's tenancy-at-will. No holding over by Tenant
after the expiration or termination of this Lease shall be construed to extend
or renew the Term or in any other manner be construed as permission by Landlord
to hold over. Tenant shall indemnify Landlord (y) against all claims for damages
by any other tenant to whom Landlord may have leased all or any part of the
Premises effective upon the termination or expiration of this Lease, and (z) for
all other losses, costs and expenses, including reasonable attorneys' fees,
incurred by reason of such holding over.
Section 8.9 Abandonment of Personal Property. Any personal property left in the
Premises or any personal property of Tenant left about the Project at the
expiration or within five (5) business days after the earlier termination of
this Lease or the termination of Tenant's right to occupy the Premises or the
abandonment, desertion or vacating of the Premises by Tenant, shall be deemed
abandoned by Tenant and may, at the option of Landlord, be immediately removed
from the Premises or such other space by Landlord and stored by Landlord at the
full risk, cost and expense of Tenant. Landlord shall in no event be responsible
for the value, preservation or safekeeping thereof. In the event Tenant does not
reclaim any such personal property and pay all costs for any storage and moving
thereof within thirty (30) days after the expiration or termination of this
Lease, the termination of Tenant's right to occupy the Premises or the
abandonment, desertion or vacating of the Premises by Tenant, Landlord may
dispose of such personal property in any way that it deems proper. If Landlord
shall sell any such personal property, it shall be entitled to retain from the
proceeds the amount of any Rent or other expenses due Landlord, together with
the cost of storage and moving and the expense of the sale. Notwithstanding
anything contained herein to the contrary, in addition to the rights provided
herein with respect to any such property, Landlord shall have the option of
exercising any of its other rights or remedies provided in the Lease or
exercising any rights or remedies available to Landlord at law or in equity.
ARTICLE IX.
Section 9.1 Transfers. Tenant shall not, by operation of law or otherwise, (a)
assign, transfer, mortgage, pledge, hypothecate or otherwise encumber this
Lease, the Premises or any part of or
<PAGE>
interest in this Lease or the Premises, (b) grant any concession or license
within the Premises, (c) sublet all or any part of the Premises or any right or
privilege appurtenant to the Premises, or (d) permit any other party to occupy
or use all or any part of the Premises (collectively, a "Transfer"), without the
prior written consent of Landlord. This prohibition against a Transfer includes,
without limitation, (i) any subletting or assignment which would otherwise occur
by operation of law other than due to merger, consolidation, reorganization,
transfer or other change of Tenant's corporate or proprietary structure; (ii) an
assignment or subletting to or by a receiver or trustee in any federal or state
bankruptcy, insolvency, or other proceedings; (iii) the sale, assignment or
transfer of all or substantially all of the assets of Tenant, with or without
specific assignment of Lease; (iv) the change in control in a partnership; or
(v) conversion of Tenant to a limited liability entity. If Tenant requests
Landlord's consent to any Transfer, then Tenant shall provide Landlord with a
written description of all terms and conditions of the proposed Transfer, copies
of the proposed documentation, and the following information about the proposed
transferee: name and address; reasonably satisfactory information about its
business and business history; its proposed use of the Premises; a copy of the
proposed sublease or assignment agreement; banking, financial and other credit
information; and general references sufficient to enable Landlord to determine
the proposed transferee's creditworthiness and character. Landlord's consent to
a Transfer shall not release Tenant from performing its obligations under this
Lease, but rather Tenant's transferee shall assume all of Tenant's obligations
under this Lease in a writing satisfactory to Landlord, and Tenant and its
transferee shall be jointly and severally liable therefor. Landlord's consent to
any Transfer shall not waive Landlord's rights as to any subsequent Transfer.
While the Premises or any part thereof are subject to a Transfer, Landlord may
collect directly from such transferee all rents or other sums relating to the
Premises becoming due to Tenant or Landlord and apply such rents and other sums
against the Rent and any other sums payable hereunder. If the aggregate rental,
bonus or other consideration paid by a transferee for any such space exceeds the
sum of (y) Tenant's Rent to be paid to Landlord for such space during such
period and (z) Tenant's costs and expenses actually incurred in connection with
such Transfer, including reasonable brokerage fees, reasonable costs of
finishing or renovating the space affected and reasonable cash rental
concessions, which costs and expenses are to be amortized over the term of the
Transfer, then fifty percent (50%) of such excess shall be paid to Landlord
within fifteen (15) days after such amount is earned by Tenant. Such arrearage
amounts in the case of a sublease shall be calculated and adjusted (if
necessary) on a Lease Year (or partial Lease Year) basis, and there shall be no
cumulative adjustment for the Term. Landlord shall have the right upon prior
written notice to Tenant to audit Tenant's books and records relating to the
Transfer. Tenant authorizes its transferees to make payments of rent and any
other sums due and payable, directly to Landlord upon receipt of notice from
Landlord to do so. Any attempted Transfer by Tenant in violation of the terms
and covenants of this Article IX shall be void and shall constitute a default by
Tenant under this Lease. In the event that Tenant requests that Landlord
consider a sublease or assignment hereunder, Tenant shall pay (i) Landlord's
reasonable fees, not to exceed Five Hundred and 00/100 Dollars ($500.00) per
transaction, incurred in connection with the consideration of such request, and
(ii) all attorneys' fees and costs incurred by Landlord in connection with the
consideration of such request or such sublease or assignment.
<PAGE>
Notwithstanding any provision to the contrary, Tenant may assign this
Lease or sublet the Premises without Landlord's consent (i) to any corporation
or other entity that controls, is controlled by or is under common control with
Tenant; (ii) to any corporation or other entity resulting from a merger,
acquisition, consolidation or reorganization of, with or by Tenant; (iii) in
connection with the sale of all or substantially all of the assets of Tenant, so
long as Tenant provides evidence to Landlord in writing that such assignment or
sublease complies with the criteria set forth in (i), (ii) or (iii) above and
provided such assignee, subtenant or successor-in-interest expressly assumes
Tenants' obligations and liabilities hereunder. No such assignment, sublease or
transfer, however, shall release Tenant from any covenant, liability or
obligation under this Lease.
Section 9.2 Assignment by Landlord. Landlord shall have the right at any time to
sell, transfer or assign, in whole or in part, by operation of law or otherwise,
its rights, benefits, privileges, duties, obligations or interests in this Lease
or in the Premises, the Building, the Land, the Project and all other property
referred to herein, without the prior consent of Tenant, and such sale, transfer
or assignment shall be binding on Tenant. After such sale, transfer or
assignment, Tenant shall attorn to such purchaser, transferee or assignee, and
Landlord shall be released from all liability and obligations under this Lease
accruing after the effective date of such sale, transfer or assignment, provided
such transferee expressly assumes Landlord's obligations and liabilities
hereunder.
Section 9.3 Limitation of Landlord's Liability. Any provisions of this Lease to
the contrary notwithstanding, Tenant hereby agrees that no personal, partnership
or corporate liability of any kind or character (including, without limitation,
the payment of any judgment) whatsoever now attaches or at any time hereafter
under any condition shall attach to Landlord or any of Landlord's Related
Parties or any mortgagee of the Project for payment of any amounts payable under
this Lease or for the performance of any obligation under this Lease. The
exclusive remedies of Tenant for the failure of Landlord to perform any of its
obligations under this Lease shall be to proceed against the interest of
Landlord in and to the Project. The provision contained in the foregoing
sentence is not intended to, and shall not, limit any right that Tenant might
otherwise have to obtain injunctive relief against Landlord or Landlord's
successors in interest or any suit or action in connection with enforcement or
collection of amounts which may become owing or payable under or on account of
insurance maintained by Landlord. In no event shall Landlord be liable to
Tenant, or any interest of Landlord in the Project be subject to execution by
Tenant, for any indirect, special, consequential or punitive damages.
ARTICLE X.
Section 10.1 Subordination.
Subject at all times to the provisions of Section 10.1(b) below, this Lease
shall be subject and subordinated at all times to (a) all ground or underlying
leases now existing or which may hereinafter be executed affecting the Project,
and (b) the lien or liens of all mortgages and deeds
<PAGE>
of trust in any amount or amounts whatsoever now or hereafter placed on the
Project or Landlord's interest or estate therein or on or against such ground or
underlying leases and to all renewals, modifications, consolidations,
replacements and extensions thereof and to each advance made or hereafter to be
made thereunder. Tenant shall execute and deliver upon demand any instruments,
releases or other documents reasonably requested by any lessor or mortgagee for
the purpose of subjecting and subordinating this Lease to such ground leases,
mortgages or deeds of trust; provided that the same is either in substantially
the same form as, or will have substantially the same effect as the terms set
forth in Exhibit H or otherwise reasonably approved by Tenant. Tenant shall
attorn to any party succeeding to Landlord's interest in the Premises, whether
by purchase, foreclosure, deed in lieu of foreclosure, power of sale,
termination of lease or otherwise, only upon such party's request and at such
party's sole discretion but not otherwise. Tenant's automatic subordination to
any future ground lease, mortgage or deed of trust is expressly conditioned upon
this Lease and Tenant's rights hereunder not being disturbed so long as Tenant
is not in default hereunder past any applicable notice and cure period.
Notwithstanding the generality of the foregoing, any mortgagee or ground lessor
may at any time subordinate any such deeds of trust, mortgages, other security
instruments or ground leases to this Lease on such terms and conditions as such
mortgagee or ground lessor may deem appropriate. Tenant hereby irrevocably
appoints Landlord its attorney in fact in its name, place and stead to execute
any such subordination, nondisturbance, and attornment documents in
substantially the same form as Exhibit H which Tenant fails to execute within
five (5) business days after demand therefor.
(b) Landlord and Tenant hereby agree to execute the Subordination,
Non-Disturbance and Attornment Agreement ("SNDA") in the form attached hereto as
Exhibit H and by this reference made a part hereof, with respect to the Deed of
Trust filed or to be filed by NationsBank, N.A. against the Project. In the
event that Tenant executes and delivers the SNDA to Landlord and Landlord fails,
within thirty (30) days after Landlord's receipt of such SNDA, to cause
NationsBank, N.A. to execute and deliver the SNDA, Tenant shall have the right
to terminate this Lease by written notice to Landlord at any time after the
expiration of such 30-day period but before Landlord so delivers the executed
SNDA to Tenant. Landlord agrees to use commercially reasonable efforts to obtain
a subordination, non-disturbance and attornment agreement from any future ground
lessor, mortgagee or deed of trust holder for the Building in a form to be
negotiated between Landlord, Tenant and the applicable mortgagee or deed of
trust holder, approval of which by Tenant and Landlord shall not be unreasonably
withheld, conditioned or delayed, providing, inter alia, that as long as Tenant
is not in default hereunder, Tenant's right of possession and other leasehold
rights shall not be disturbed in the event of a foreclosure of such ground
lease, mortgage or deed of trust which Tenant agrees to execute and deliver to
such ground lessor, mortgagee or deed of trust holder; and upon obtaining same,
Tenant agrees to promptly execute and deliver such agreement to Landlord.
Section 10.2 Estoppel Certificate or Three-Party Agreement. Tenant agrees within
ten (10) business days following request by Landlord (a) to execute, acknowledge
and deliver to Landlord and any other persons specified by Landlord, a
certificate or three-party agreement among Landlord, Tenant and/or any third
party dealing with Landlord, certifying (i) that this Lease is unmodified and in
full force and effect, or, if modified, stating the nature of such modification
<PAGE>
(ii) the date to which the Rent and other charges are paid in advance, if any,
(iii) that there are not, to Tenant's knowledge, any uncured defaults on the
part of Landlord hereunder, or so specifying such defaults, if any, as are
claimed and/or (iv) any other matters as such third party may reasonably require
in connection with the business dealings of Landlord and/or such third party and
(b) to deliver to Landlord current publicly available financial statements of
Tenant, including a balance sheet and a profit and loss statement for at least
two (2) years, if available, all prepared in accordance with generally accepted
accounting principles consistently applied. Tenant's failure to deliver such
certificate or three-party agreement within such ten (10) business day period
shall be conclusive upon Tenant (x) that this Lease is in full force and effect
without modification except as may be represented by Landlord, (y) that to
Tenant's knowledge there are no uncured defaults in Landlord's performance, and
(z) that no Rent has been paid in advance except as set forth in this Lease.
Tenant hereby irrevocably appoints Landlord its attorney in fact in its name,
place and stead to execute any such certificate or three-party agreement which
Tenant fails to execute within such ten (10) business day period.
Section 10.3 Notices. Any notice, request, approval, consent or other
communication required or contemplated by this Lease must be in writing, unless
otherwise in this Lease expressly provided, and may be given or be served by
depositing the same in the United States Postal Service, postpaid and certified
and addressed to the party to be notified, with return receipt requested, or by
delivering the same in person to such party (or, in case of a corporate party,
to an officer of such party), or by prepaid telegram or express overnight mail
service, when appropriate, addressed to the party to be notified. Notice
deposited in the mail in the manner hereinabove described shall be effective
from and after three (3) days (exclusive of Saturdays, Sundays and postal
holidays) after such deposit. Notice given in any other manner shall be
effective only if and when delivered to the party to be notified or at such
party's address for purposes of notice as set forth herein. For purposes of
notice the addresses of the parties shall, until changed as herein provided, be
as provided on the first page of this Lease; provided, that any notices sent to
Landlord will only be effective if copies thereof are simultaneously sent to
Brookdale Investors Two, L.P., 3343 Peachtree Road, N.E., Suite 510, Atlanta,
Georgia 3O326, Attention: Mr. Fred Henritze, and Brookdale Investors Two, L.P.,
Capital Associates, 1100 Crescent Green, Suite 115, Cary, North Carolina 27511
Attention: Concourse Lakeside, Property Manager. The parties hereto shall have
the right from time to time to change their respective addresses by giving at
least fifteen (15) days' written notice to the other party in the manner set
forth in this Section 10.3.
ARTICLE XI.
Section 11.1 [Intentionally Omitted].
Section 11.2 Rights and Remedies Cumulative. The rights and remedies of Landlord
under this Lease shall be nonexclusive and each right or remedy shall be in
addition to and cumulative of all other rights and remedies available to
Landlord under this Lease or at law or in equity. Pursuit of any right or remedy
shall not preclude pursuit of any other rights or remedies provided in this
Lease or at law or in equity, nor shall pursuit of any right or remedy
constitute a forfeiture or
<PAGE>
waiver of any Rent due to Landlord or of any damages accruing to Landlord by
reason of the violation of any of the terms of this Lease.
Section 11.3 Legal Interpretation. This Lease and the rights and obligations of
the parties hereto shall be interpreted, construed and enforced in accordance
with the laws of the state in which the Building is located and the United
States. The determination that one or more provisions of this Lease is invalid,
void, illegal or unenforceable shall not affect or invalidate any other
provision of this Lease, and this Lease shall be construed as if such invalid,
illegal or unenforceable provision had never been contained in this Lease, and,
so far as is reasonable and possible, effect shall be given to the intent
manifested by the portion held invalid or inoperative. All obligations of either
party hereunder not fully performed as of the expiration or termination of the
Term of this Lease shall survive the expiration or termination of the Term of
this Lease and shall be fully enforceable in accordance with those provisions
pertaining thereto. Article and section titles and captions appearing in this
Lease are for convenient reference only and shall not be used to interpret or
limit the meaning of any provision of this Lease. No custom or practice which
may evolve between the parties in the administration of the terms of this Lease
shall waive or diminish the right of Landlord or Tenant to insist upon the
performance by the other in strict accordance with the terms of this Lease. This
Lease is for the sole benefit of Landlord and Tenant, and, without the express
written consent thereto, no third party shall be deemed a third party
beneficiary hereof. Landlord and Tenant agree that this Lease supersedes and
cancels any and all previous statements, negotiations, arrangements, brochures,
agreements and understandings, if any, between Landlord and Tenant with respect
to the subject matter of this Lease or the Premises and that this Lease,
including written extrinsic documents referred to herein, is the entire
agreement of the parties, and that there are no representations, understandings,
stipulations, agreements, warranties or promises (express or implied, oral or
written) between Landlord and Tenant with respect to the subject matter of this
Lease or the Premises. It is likewise agreed that this Lease may not be altered,
amended, changed or extended except by an instrument in writing signed by both
Landlord and Tenant. The terms and provisions of this Lease shall not be
construed against or in favor of a party hereto merely because such party is the
"Landlord" or the "Tenant" hereunder or because such party or its counsel is the
draftsman of this Lease. All references to days in this Lease and any Exhibits
or Addenda hereto mean calendar days, not working or business days, unless
otherwise stated.
Section 11.4 Tenant's Authority. Both Tenant and the person executing this Lease
on behalf of Tenant (in such person's capacity as an officer of Tenant only and
not personally) warrant and represent unto Landlord that (a) Tenant is a duly
organized and validly existing legal entity, in good standing and qualified to
do business in the state in which the Building is located, with no proceedings
pending or contemplated for its dissolution or reorganization, voluntary or
involuntary, (b) Tenant has full right, power and authority to execute, deliver
and perform this Lease, (c) the person executing this Lease on behalf of Tenant
is authorized to do so, and (d) upon request of Landlord, such person will
deliver to Landlord satisfactory evidence of the matters set forth in this
Section.
Section 11.5 Brokers. Landlord and Tenant warrant and represent to the other
that it has not dealt with any real estate broker and/or salesman other than
Capital Associates who represented
<PAGE>
Landlord in connection with the negotiation or execution of this Lease and no
such broker or salesman has been involved in connection with this Lease, and
each party agrees to defend, indemnify and hold harmless the other party from
and against any and all costs, expenses, attorneys' fees or liability for any
compensation, commission and charges claimed by any real estate broker and/or
salesman (other than the aforesaid brokers) due to acts of such party or such
party's representatives.
Section 11.6 Consents by Landlord. In all circumstances under this Lease where
the prior consent or permission of Landlord is required before Tenant is
authorized to take any particular type of action, such consent must be in
writing and shall not be unreasonably withheld or delayed, unless the provision
specifically provides to the contrary.
With respect to any provision of this Lease which provides that Landlord shall
not unreasonably withhold or unreasonably delay any consent or any approval,
Tenant, in no event, shall be entitled to make nor shall Tenant make any claim
for, and Tenant hereby waives any claim for money damages; nor shall Tenant
claim any money damages by way of setoff, counterclaim or defense, based upon
any claim or assertion by Tenant that Landlord has unreasonably withheld or
unreasonably delayed any consent or approval, but Tenant's remedy shall be an
action or proceeding to enforce any such provision, or for specific performance,
injunction or declaratory judgment or for a breach of this Lease.
Section 11.7 Joint and Several Liability. If there is more than one Tenant, then
the obligations hereunder imposed upon Tenant shall be joint and several. If
there is a guarantor of Tenant's obligations hereunder, then the obligations
hereunder imposed upon Tenant shall be the joint and several obligations of
Tenant and such guarantor, and Landlord need not first proceed against Tenant
before proceeding against such guarantor nor shall any such guarantor be
released from its guaranty for any reason whatsoever.
Section 11.8 Independent Covenants. The obligation of Tenant to pay Rent and
other monetary obligations provided to be paid by Tenant under this Lease and
the obligation of Tenant to perform Tenant's other covenants and duties under
this Lease constitute independent, unconditional obligations of Tenant to be
performed at all times provided for under this Lease, save and except only when
an abatement thereof or reduction therein is expressly provided for in this
Lease and not otherwise, and Tenant acknowledges and agrees that in no event
shall such obligations, covenants and duties of Tenant under this Lease be
dependent upon the condition of the Premises or the Project, or the performance
by Landlord of its obligations hereunder.
Section 11.9 Attorneys' Fees and Other Expenses. In the event either party
hereto defaults in the faithful performance or observance of any of the terms,
covenants, provisions, agreements or conditions contained in this Lease, the
party in default shall be liable for and shall pay to the nondefaulting party
all expenses incurred by such party in enforcing any of its remedies for any
such default, and if the nondefaulting party places the enforcement of all or
any part of this Lease in the hands of an attorney, the party in default agrees
to pay the nondefaulting party's reasonable attorneys' fees in connection
therewith.
<PAGE>
Section 11.10 Recording. Neither Landlord nor Tenant shall record this Lease.
Upon the request of Tenant, Landlord shall execute and deliver to Tenant a
Memorandum of Lease in the form attached hereto as Exhibit H and by this
reference made a part hereof. Tenant shall bear all costs associated with the
recordation of such Memorandum of Lease. Upon termination or expiration of this
Lease, Tenant shall, upon ten (10) days prior written notice, execute an
instrument terminating or canceling the memorandum of lease. In the event that
Tenant does not so execute such an instrument, Tenant has appointed and does
hereby appoint Landlord as its authorized agent solely for the purpose of
executing such an instrument on Tenant's behalf.
Section 11.11 Disclaimer; Waiver of Jury Trial. LANDLORD AND TENANT EXPRESSLY
ACKNOWLEDGE AND AGREE, AS A MATERIAL PART OF THE CONSIDERATION FOR LANDLORD'S
ENTERING INTO THIS LEASE WITH TENANT, THAT, EXCEPT AS OTHERWISE SET FORTH IN
THIS LEASE, LANDLORD HAS MADE NO WARRANTIES TO TENANT AS TO THE USE OR CONDITION
OF THE PREMISES OR THE PROJECT, EITHER EXPRESS OR IMPLIED, AND LANDLORD AND
TENANT EXPRESSLY DISCLAIM ANY IMPLIED WARRANTY THAT THE PREMISES OR THE PROJECT
ARE SUITABLE FOR TENANT'S INTENDED COMMERCIAL PURPOSE OR ANY OTHER WARRANTY
(EXPRESS OR IMPLIED) REGARDING THE PREMISES OR THE PROJECT, EXCEPT AS EXPRESSLY
SET FORTH IN THIS LEASE, LANDLORD AND TENANT EXPRESSLY AGREE THAT THERE ARE NO,
AND SHALL NOT BE ANY, IMPLIED WARRANTIES OF MERCHANTABILITY, HABITABILITY,
FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER KIND ARISING OUT OF THIS LEASE,
ALL SUCH OTHER EXPRESS OR IMPLIED WARRANTIES IN CONNECTION HEREWITH BEING
EXPRESSLY DISCLAIMED AND WAIVED.
LANDLORD AND TENANT WAIVE THE RIGHT TO A TRIAL BY JURY IN ANY SUMMARY OR
DISPOSESSORY ACTION OR PROCEEDING INITIATED BY LANDLORD TO RECOVER POSSESSION
THE PREMISES. THIS WAIVER IS KNOWINGLY, INTENTIONALLY, AND VOLUNTARILY MADE BY
TENANT AND TENANT ACKNOWLEDGES THAT NEITHER LANDLORD NOR ANY PERSON ACTING ON
BEHALF OF LANDLORD HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF
TRIAL BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS EFFECT. TENANT FURTHER
ACKNOWLEDGES THAT IT HAS BEEN REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE
REPRESENTED) IN THE SIGNING OF THIS LEASE AND IN THE MAKING OF THIS WAIVER BY
INDEPENDENT LEGAL COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD
THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL. TENANT FURTHER ACKNOWLEDGES
THAT IT HAS READ AND UNDERSTANDS THE MEANING AND RAMIFICATIONS OF THIS WAIVER
PROVISION AND AS EVIDENCE OF SAME HAS EXECUTED THIS LEASE.
Section 11.12 No Access to Roof. Tenant shall have no right of access to the
roof of the Premises or the Building except as set forth in Special Stipulation
No. 9 in Exhibit C.
<PAGE>
Section 11.13 Parking. Tenant's occupancy of the Premises shall include the use
of [REDACTED] unreserved parking spaces, which shall be used in common with
other tenants, invitees and visitors of the Building. Tenant shall have the
right to park in the Building parking facilities in common with other tenants of
the Building upon such terms and conditions as established by Landlord at any
time during the term of this Lease. Tenant agrees not to overburden the parking
facilities and agrees to cooperate with Landlord and other tenants in use of the
parking facilities. Landlord reserves the right in its absolute discretion to
determine whether the parking facilities are becoming overburdened and to
allocate and assign parking spaces among Tenant and other tenants, and to
reconfigure the parking area and modify the existing ingress to and egress from
the parking area as Landlord shall deem appropriate.
Section 11.14 No Accord or Satisfaction. No payment by Tenant or receipt by
Landlord of a lesser amount than the Rent and other sums due hereunder shall be
deemed to be other than on account of the earliest Rent or other sums due, nor
shall any endorsement or statement on any check or accompanying any check or
payment be deemed an accord and satisfaction; and Landlord may accept such check
or payment without prejudice to Landlord's right to recover the balance of such
Rent or other sum and to pursue any other remedy provided in this Lease.
Section 11.15 Acceptance. The submission of this Lease by Landlord does not
constitute an offer by Landlord or other option for, or restriction of, the
Premises, and this Lease shall only become effective and binding upon Landlord,
upon full execution hereof by Landlord and delivery of a signed copy to Tenant.
Section 11.16 Waiver of Counterclaim. Tenant hereby waives the right to
interpose any nonmandatory or noncompulsory counterclaim of whatever
description in any summary proceeding.
Section 11.17 Time Is of the Essence. Time is of the essence of this Lease.
Unless specifically provided otherwise, all references to terms of days or
months shall be construed as references to calendar days or calendar months,
respectively.
Section 11.18 Counterparts. This Lease may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
but such counterparts shall together constitute one and the same instrument.
Section 11.19 Covenant of Quiet Enjoyment. So long as Tenant is not in default
hereunder, past any applicable notice and cure period, Landlord hereby covenants
and agrees that this Lease and Tenant's right of possession shall not be
disturbed by any party claiming by, through or under Landlord.
Section 11.20 Regulatory Disclosure. Landlord and Tenant acknowledge and agree
that Tenant may be required by applicable federal securities law to disclose and
file with the Securities and Exchange Commission this Lease. In such event,
Tenant shall make all reasonable efforts to maintain the confidentiality of all
economic terms of this Lease.
<PAGE>
IN TESTIMONY WHEREOF, the parties hereto have executed this Lease as of the day
and year first above written.
LANDLORD:
CONCOURSE LAKESIDE I, LLC a Delaware limited liability company
By: Brookdale Investors Two, L.P., a Delaware limited partnership, its sole
member
By: Brookdale Partners II, LLC, a Georgia limited liability company, its
sole General Partner
By: ______________________________
Fred H. Henritze, its Manager
TENANT:
MIDWAY AIRLINES CORPORATION,
a Delaware corporation
By:
Name:
Title:
219068
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION OF LAND
[to be provided by Management Company]
<PAGE>
EXHIBIT B
FLOOR PLAN OF PREMISES
[to be provided by Management Company]
<PAGE>
EXHIBIT C
SPECIAL STIPULATIONS
These Special Stipulations are hereby incorporated into this Lease and in the
event that they conflict with any provisions of this Lease, these Special
Stipulations shall control.
1. Tenant shall take early occupancy of a portion of the Premises consisting of
approximately 30,500 rsf of space as more particularly shown on Exhibit B (the
"Early Occupancy Premises") as of October 8, 1998 subject to the Early Occupancy
Premises being substantially complete in accordance with the terms of Exhibit E.
If and to the extent that any delay by Landlord in delivering the Early
Occupancy Premises is caused by a Tenant Delay, the Commencement Date with
respect to the Early Occupancy Premises shall continue to be October 8, 1998.
Tenant's possession of the Early Occupancy Premises shall be on all of the other
terms and conditions of this Lease and Tenant shall pay to Landlord all Base
Rent and additional rent that would have otherwise been due with respect to the
Early Occupancy Premises had the Commencement Date already occurred calculated
based upon the rentable area of the Early Occupancy Premises and the Base Rent
per square foot set forth in Section 3.1 of this Lease.
2. Landlord and Tenant acknowledge and agree that electricity serving the
Premises shall be separately metered as part of Tenant's Work. The cost of
separately metering shall be Tenant's sole cost and expense, subject to the
application of the Tenant Improvement Allowance (as that term is defined in
Exhibit E). Tenant shall pay to Landlord or the supplying utility company all
such electrical costs and if paid to Landlord, such costs shall be considered
additional rent hereunder.
3. [REDACTED]
4. So long as this Lease is in full force and effect and Tenant is not in
default thereunder, Tenant shall have the right, at its sole cost and expense,
to install and maintain one (1) identification sign on the Building, subject to
the following terms and conditions:
The design, location, construction, size and all other aspects of such signage
shall be subject to Landlord's prior approval, which approval shall not be
unreasonably withheld.
The expense of installing, constructing, maintaining and removing the sign shall
be the sole cost and expense of Tenant and shall be paid directly by Tenant.
Notwithstanding the foregoing, Tenant shall have the right to use the Tenant
Improvement Allowance to pay for such costs. Tenant shall be responsible for all
costs and expenses associated with such signage and Tenant shall promptly repair
any damage to the Building resulting from the installation, construction,
maintenance or removal of such signage. Upon the termination or expiration of
this Lease, Tenant shall promptly remove the sign at its sole cost and expense.
<PAGE>
Tenant agrees to indemnify and hold Landlord harmless for any cost, expense,
loss (normal wear and tear excepted) or other liability associated with the
installation, construction, maintenance and removal of the sign.
The sign shall also be subject to the review and approval of the Concourse
Architectural Review Committee and should be subject to all laws, ordinances and
regulations promulgated by the City of Morrisville, North Carolina.
So long as this Lease is in full force and effect and Tenant is not in default
in the performance of any of the covenants or terms and conditions of this Lease
at the time of notification to Landlord or at the time of commencement of the
Renewal Period, as that term is hereinafter defined, Tenant shall have the
option (the "Renewal Option") to renew the Term for the entire Premises
(including any Expansion Space or Right of First Offer Space then being leased
by Tenant) for one (1) additional period of five (5) years (the "Renewal
Period") at the Prevailing Market Rate (as hereinafter defined). Tenant shall
provide Landlord with twelve (12) months prior written notice of its desire to
renew this Lease. Landlord shall provide Tenant with a written proposal setting
forth its good faith determination of the Prevailing Market Rate to renew this
Lease for five (5) additional years within thirty (30) days of such notice.
Tenant shall have thirty (30) days from receipt of Landlord's proposal to either
accept such proposal or to not extend this lease term. As used in this Lease,
the term "Prevailing Market Rate" shall mean the annual base rental rate then
being charged in the I-40 submarket including Cary, Durham, and Morrisville,
North Carolina for space comparable to the space for which the Prevailing Market
Rate is being determined (taking into consideration use, location and/or floor
level within the applicable building, definition of net rentable area, leasehold
improvements provided, quality and location of the applicable building, rental
concessions [such as abatements or lease assumption], credit-worthiness of other
tenants and the time the particular rate under consideration became effective).
It is agreed that bona fide written offers to lease the Premises or comparable
space made to Landlord by third parties (at arm's length) may be used by
Landlord as an indication of the Prevailing Market Rate. In the event that
Landlord and Tenant are unable to agree upon the Prevailing Market Rate within
thirty (30) days after Landlord's determination of the same, this Extension
Option and Tenant's exercise of the same shall be void and of no further force
or effect; subject, however, to the enforcement of any legal remedy Tenant may
exercise with respect to a breach by Landlord of the terms of this Section 5.
[REDACTED]
9. So long as this Lease is in full force and effect and Tenant is not is not in
default thereunder, Tenant shall have the right, at its sole cost and expense,
to install and maintain one (1) generator (diesel powered) to serve the Premises
(the "Generator") subject to the following terms and conditions:
The Generator shall be located in the area designated on Exhibit I attached
hereto and by this reference made a part hereof. The design, construction, size
and all other aspects of such
<PAGE>
Generator and the construction of the area around the Generator shall be subject
to Landlord's prior approval, which approval shall not be unreasonable withheld.
The expense of installing, constructing, maintaining and removing the Generator
shall be the sole cost and expense of Tenant and shall be paid directly by
Tenant. Notwithstanding the foregoing, Tenant shall have the right to use the
Tenant Improvement Allowance to pay for such costs. Tenant shall be responsible
for all costs and expenses associated with such Generator and Tenant shall
promptly repair any damage to the Building or the Project resulting from the
installation, construction, maintenance or removal of such Generator. Upon the
termination or expiration of this Lease, Tenant shall promptly remove the
Generator at its sole cost and expense. Landlord and Tenant acknowledge and
agree that Tenant shall retain title to the Generator notwithstanding that the
Generator shall become attached to the Project.
Landlord acknowledges that Tenant shall have the exclusive right to use the
Generator.
Tenant agrees to indemnify and hold Landlord harmless for any cost, expense,
loss (normal wear and tear excepted) or other liability associated with the
installation, construction, maintenance and removal of the Generator.
Tenant shall, at its sole cost and expense, comply with all applicable local,
state and federal laws, ordinances and regulations in connection with the
installation, maintenance, use and removal of the Generator.
Satellite Dish
a. Subject to the terms and conditions set forth in this Special Stipulation and
so long as Tenant is not in default under the Lease past any applicable notice
and cure period, Landlord hereby grants to Tenant a license (the "License") to:
(1) install, maintain and operate a satellite dish or dishes on the roof of the
Building, including necessary wiring and cabling (collectively, the "Satellite
Equipment") of a size (not to exceed 8 feet in diameter) and in a location
approved by Landlord which approval shall not be unreasonably withheld,
conditioned or delayed, (2) use, in common with others, common utility conduits
and shafts within the Building and connecting the Premises to the Satellite
Equipment for the purpose of installing, operating and maintaining the Satellite
Equipment and for connecting the Satellite Equipment to the Premises by means of
coaxial or other wire or cable through common utility shafts and conduits
located in the Building. Landlord shall designate the portions or areas of the
Building or the common area to be used by Tenant.
b. Tenant shall pay to Landlord, as additional Rent, on a monthly basis, the
actual costs incurred by Landlord in furnishing electric power for the operation
of the Satellite Equipment. Landlord and Tenant agree that Landlord may install,
at Tenant's sole cost, a meter to monitor Tenant's use of electricity furnished
by Landlord in the operation of the Satellite Equipment.
c. All of the Satellite Equipment installed shall be and remain the sole
property of Tenant, and Tenant shall, upon the expiration or earlier termination
of the Lease, remove the Satellite
<PAGE>
Equipment (including all installation and anchoring hardware) installed and
surrender the area used by Tenant in substantially the same condition existing
prior to the installation of the Satellite Equipment, normal wear and tear, fire
or other casualty excepted. Tenant shall be liable for, and shall promptly
reimburse Landlord for, the cost of repairing all damage done to the Building by
Tenant's removal, including filling and sealing any holes or cavities left by
the removal of installation or anchoring hardware, normal wear and tear, fire or
other casualty excepted.
d. Tenant shall, at its sole cost and expense, and at its sole risk, install the
Satellite Equipment in a good and workmanlike manner, and in compliance with all
building, electric, communications, and safety codes, ordinances, standards,
regulations and requirements of the Federal Government, including, without
limitation, the Federal Communications Commission (the "FCC") or any successor
agency having jurisdiction over radio or telecommunications, the State of North
Carolina, and the County of Wake. Tenant shall install the Satellite Equipment
in an aesthetically pleasing manner and shield or screen the Satellite Equipment
from public view. Tenant hereby agrees to conduct the installation and
maintenance of the Satellite Equipment in a good and workmanlike manner so as to
not interfere with other tenants. Tenant shall deliver to Landlord Tenant's
plans and specifications for the installation of the Satellite Equipment and for
the screening for review and approval by Landlord's engineer not less that
thirty (30) days prior to commencing installation of the Satellite Equipment.
Tenant shall fence and screen the Satellite Equipment so as to minimize any
risks and to ensure that the Satellite Equipment does not create a nuisance.
Tenant shall not commence installation of the Satellite Equipment without prior
written consent of Landlord which consent shall not be unreasonably withheld or
delayed. In no event shall Tenant's installation of the Satellite Equipment
damage the Building or existing structure on the Building, or interfere with the
maintenance of the Building, any system currently serving the Building, any
radio or telecommunications equipment currently being operated from or within
the Building or in any manner invalidate any existing warranties in place on the
Building, or the improvements to the Building. Tenant shall notify Landlord upon
completion of the installation of the Satellite Equipment, and Landlord shall
have ten (10) days after installation of the Satellite Equipment in which to
inspect the installation. Tenant shall not commence operation of the Satellite
Equipment until Landlord has approved the installation. Landlord's review and
approval of the plans and specifications for the installation of the Satellite
Equipment and Landlord's supervision and inspection of such installation shall
not be construed in any way as approval by Landlord of the adequacy or safety of
the installation of the Satellite Equipment or a waiver of any of Landlord's
rights hereunder, and Tenant shall be solely responsible for the adequacy and
safety of the installation and operation of the Satellite Equipment and solely
liable for any damages or injury arising out of such installation, operation and
removal. Tenant shall pay to Landlord upon demand the cost of repairing any
damage to the Building caused by such installation. The Satellite Equipment
shall be connected to Landlord's power supply in strict compliance with all
applicable building, electrical, fire and safety codes. Landlord shall not be
liable to Tenant for any stoppages or shortages of electrical power furnished to
the Equipment Space Area because of any act, omission, or requirement of the
public utility serving the Building, or the act or omission of any other tenant,
licensee or contractor of the Building, or for any other cause, and Tenant shall
not be entitled to any rental abatement for any such stoppage or shortage of
electrical power.
<PAGE>
e. Landlord agrees that Tenant shall have access to the Satellite Equipment for
the purpose of installing, operating, maintaining, repairing and removing such
Satellite Equipment; provided, however, that such access shall be limited to
authorized engineers or employees of Tenant, or persons under their direct
supervision. Landlord shall have no responsibility or liability for the conduct
or safety of any of Tenant's representatives, repair, maintenance and
engineering personnel or employees while in any part of the Building or on the
roof, it being understood and agreed that except as otherwise provided herein,
Tenant shall be solely liable for any injury to or death of any such person from
any cause resulting from the installation, operation, maintenance, repair,
inspection, use or removal of such equipment by Tenant or its agents, employees,
representatives, contractors or invitees.
f. Tenant shall operate the Satellite Equipment in strict compliance with
Landlord's rules and regulations, now or hereafter promulgated, and all
applicable statutes, codes, rules, regulations, standards and requirements of
all federal, state, and local governmental boards, authorities and agencies
including, without limitation, the FCC (collectively, the "Regulations") and, to
the extent the same do not conflict with or are more restrictive than the
Regulations, the rules and regulations now or hereafter promulgated by Landlord.
Throughout the Lease term, Tenant shall operate the Satellite Equipment at its
own risk, and Tenant shall be solely responsible throughout the term of this
Lease for maintaining, servicing and repairing the Satellite Equipment and to
the extent the same is not covered by the insurance which Landlord is required
to carry under this Lease, for repairing any damage to the Building or any
systems serving the Building caused by the Satellite Equipment or any act,
negligence or misconduct of Tenant, Tenant's employees, agents or contractors,
while using, servicing, repairing or maintaining the Satellite Equipment.
Tenant, prior to installing the Satellite Equipment, shall have, and shall
deliver to Landlord, copies of all required permits, licenses and consents to
install and operate the Satellite Equipment, and Tenant shall install the
Satellite Equipment in compliance with the Regulations and the technical
standards approved by Landlord. During the Lease term, Tenant shall operate and
maintain the Satellite Equipment in strict compliance with the Regulations and
the technical standards approved by Landlord. If, at any time during the term of
this Lease, Landlord desires Tenant to remove or relocate the Satellite
Equipment to allow Landlord to repair or replace the Building roof or to perform
any maintenance function on the Building, Tenant, upon reasonable prior written
notice from Landlord (which shall not be less than thirty (30) days except in
the event of an emergency), shall be required to relocate or remove the
Satellite Equipment at Tenant's sole cost to allow Landlord to repair or replace
the roof; provided Landlord makes other space available to Tenant for the
Satellite Equipment on a temporary basis. If Tenant fails to relocate or remove
the Satellite Equipment after reasonable prior written notice, Landlord shall be
entitled to relocate or remove the Satellite Equipment at Tenant's sole cost,
and Landlord shall not be liable for resulting damage, if any, to the Satellite
Equipment. The operation of the Satellite Equipment shall not interfere with the
maintenance or operation of the Building, or any system now or hereafter serving
the Building, or the operation of any existing radio, microwave, Satellite or
telecommunications equipment operated on or from the Building. In the event that
the operation of the Satellite Equipment would violate any of the terms or
conditions of this Subsection (f), Tenant agrees to either cure such violation
or suspend operation of the Satellite Equipment within forty-eight (48) hours
after notice from Landlord of
<PAGE>
such violation, and not to resume operation of the Satellite Equipment until
such operation is in strict compliance with all of the requirements of this
Subsection (f). In the event Tenant refuses to either cure such violation or
suspend operation of the Satellite Equipment when so notified by Landlord, or in
the event of any emergency, Landlord shall have the right to either cure such
violation or suspend the supply of electric power to the Satellite Equipment,
and Landlord shall have no liability to Tenant, and Tenant shall have no right
to a rental abatement for such suspension.
g. During the term hereof, Landlord reserves the right to grant licenses for
space on the roof of the Building, for the operation of other satellite, radio,
microwave, satellite and telecommunications equipment by other tenants and
licensees; provided, however, that such other equipment shall not hinder or
unreasonably interfere with Tenant's installation, operation, maintenance, or
repair of the Satellite Equipment.
Throughout the Lease term, Tenant hereby agrees to indemnify and hold Landlord,
its agents, employees, contractors and representatives, harmless from and
against any and all costs, claims, damages (including, but not limited to, any
damage to the Building, the roof or Landlord's property), causes of action and
liability which may arise by reasons of any occurrence attributable to or
arising out of Tenant's installation, maintenance, use, repair, operation or
removal of any of the Satellite Equipment, including, without limitation, any
claim or cause of action for injury to or death of any person or damage to any
property arising therefrom. Tenant agrees to defend any claim, cause of action
or demand against Landlord, its agents and employees, arising out of any such
occurrence, excepting the gross negligence or willful misconduct of Landlord,
its employees, agents or contractors or a breach by Landlord of its obligations
under this Lease. In addition, Tenant shall, upon thirty (30) days prior written
notice from Landlord, reimburse Landlord for all costs and expenses incurred by
Landlord as a result of Tenant's operation of the Satellite Equipment, including
damages to the Building and additional expenses Landlord incurs attributable to
the Satellite Equipment. In addition to the types and amounts of insurance set
forth in the Lease, Tenant shall ensure that all individuals or entities
maintaining, repairing, installing or removing the Satellite Equipment on
Tenant's behalf shall have general liability insurance of not less than One
Million Dollars ($1,000,000.00) inclusive and name Landlord, Tenant and
Landlord's authorized agents as additional insureds.
[REDACTED]
<PAGE>
EXHIBIT D
COMMENCEMENT DATE AGREEMENT
This Commencement Date Agreement (this "Agreement") is made and entered into
this ____day of June, 1998, by and between CONCOURSE LAKESIDE I, LLC
("Landlord") and MIDWAY AIRLINES CORPORATION("Tenant").
WHEREAS, Landlord and Tenant entered into that certain Lease (the "Lease") dated
___________, 1998, with respect to certain premises located at 2900 Slater Road,
Morrisville, North Carolina 27560, as such demised premises are more
particularly described in the Lease.
WHEREAS, this Agreement is executed by Landlord and Tenant to confirm the
Commencement Date and the Expiration Date, as those terms are defined in the
Lease;
NOW, THEREFORE, for and in consideration of the demised premises and the mutual
covenants expressed in the Lease, it is hereby agreed by Landlord and Tenant as
follows:
1. The Premises were substantially complete and the Base Rent and Additional
Rent (as such terms are defined in the Lease) commenced on _____________, 1998
(the "Commencement Date") and will expire on ___________, 2008 (the "Expiration
Date").
2. This Agreement shall not be deemed or construed to alter or amend the Lease
in any manner.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Agreement to be
executed as of the day and year first above written.
LANDLORD:
CONCOURSE LAKESIDE I, LLC a Delaware limited liability company
By: Brookdale Investors Two, L.P., a Delaware limited partnership, its sole
member
By: Brookdale Partners II, LLC, a Georgia limited liability company, its
Sole General Partner
By: ______________________________
Fred H. Henritze, its Manager
<PAGE>
TENANT:
MIDWAY AIRLINES CORPORATION,
a Delaware corporation
By:
Name:
Title:
<PAGE>
EXHIBIT E
WORK LETTER AGREEMENT
The following provisions shall govern (A) the construction of the building
shell which Landlord shall perform in accordance with the terms of this Exhibit
E, (B) the preparation and approval process for the drawings and specifications
for the buildout of the Premises, which Landlord shall perform in accordance
with the terms of this Exhibit E, and (C) terms and conditions relating to
contractors and subcontractors in connection with the build-out of the Premises.
Description of Landlord's Work. Subject to the terms and conditions of this Work
Agreement, Landlord agrees to construct, at its sole cost and expense, a
building shell which shall contain the following items("Landlord's Work"):
Ceiling tile installed
Ceiling grid installed
Parabolic light fixtures (1 per 100 SF, installed in the ceiling, but not
switched)
Window mini blinds Building standard HVAC, with perimeter diffusers and flex
duct installed
Electricity distributed into tenant space from main panel
Drywall ready to receive paint on perimeter walls.
General Matters regarding Plans and Specification. Landlord shall cause its
architect and/or engineer to prepare "Tenant's Space Plans", the "Working
Drawings" and the "Final Plans" (as such terms are defined below) for Tenant's
work. The fees of the architect and engineer shall be paid by Landlord from the
"Tenant Improvement Allowance", as defined below.
Tenant's Work. On or before June 3, 1998, Tenant shall submit to Landlord for
Landlord's approval a space plan for the build out of the Premises ("Tenant's
Space Plans") prepared by the architect showing the interior layout of the
Premises and its integration with Building systems, core areas and the building
shell improvements in sufficient detail to permit Landlord a reasonable
opportunity to review and provide preliminary approval or comments regarding
Tenant's proposed interior design. Landlord shall review and approve or
disapprove of Tenant's Space Plans by the date set forth on the attached
construction schedule, which approval shall not be unreasonably withheld,
conditioned or delayed. If Landlord disapproves, either in whole or in part, of
Tenant's Space Plans, Landlord shall provide to Tenant with reasonable
specificity Landlord's reasons for its disapproval. Tenant shall promptly
correct or otherwise address all disapproved items identified by Landlord.
Working Drawings and Final Plans. Landlord shall cause its architects and/or
engineers to prepare and complete (i) preliminary architectural plans,
construction drawings and mechanical, electrical and plumbing drawings for the
Premises (the "Working Drawings"), including those base building improvements
(such as HVAC and sprinkler distribution and the like) which are interior to the
Premises or otherwise need to be coordinated with Landlord's Work in order to be
performed properly, and (ii) the final drawings, plans, and specifications (the
"Final Plans"),
<PAGE>
based on the Working Drawings, and Tenant hereby agrees to review, approve or
otherwise cooperate with Landlord, its architect and/or engineers and
contractors in such preparation and completion of the Working Drawings and the
Final Plans, in accordance with and all as more particularly set forth on the
construction schedule attached hereto as Exhibit E-1. No plans and
specifications shall constitute the Final Plans hereunder unless and until the
same have been approved in writing by both Landlord and Tenant.
Construction. Following the preparation and approval of Tenant's Space Plans and
the Working Drawings, Landlord agrees to build-out the Premises according to the
Final Plans. All construction for the Premises shall be awarded following a
competitive bid format, with Capital Associates serving as construction manager
("Construction Manager"). The Construction Manager shall: (1) prepare a bid
package approved by Landlord and Tenant; (2) either solicit bids from a minimum
of three qualified general contractors approved by Landlord and Tenant or
negotiate the contract price with one or more preferred contractors used by
Landlord and approved by Tenant with final terms of contract to be subject to
Tenant's review and approval which approval shall not be unreasonably withheld
or conditioned; (3) prepare a bid analysis for review by Landlord and Tenant;
and (4) award the bid to the lowest qualified general contractor (as approved by
Tenant). On behalf of Landlord and Tenant, the Construction Manager shall
supervise the construction for the Premises.
Tenant Allowance. All work shown on Tenant's Space Plans, the Working Drawings
and the Final Plans shall be made by Landlord at Tenant's sole cost and expense,
except Landlord agrees to provide to Tenant an allowance with respect to the
Premises of [REDACTED] per rentable square foot (the "Tenant Improvement
Allowance") (i.e., a [REDACTED]). Up to [REDACTED] rentable square foot
[REDACTED] of such Tenant Improvement Allowance may be applied for the cost of
all space planning, architectural and mechanical drawings. Any unused portion of
the Tenant Improvement Allowance shall be retained by Landlord. Such Tenant
Improvement Allowance shall be applied for the cost of all construction
documents/drawings, actual construction costs (materials and labor), general
contractor fees, and other costs and expenses relating to work contemplated by
the Final Plans (such total costs hereinafter referred to as "Tenant Improvement
Costs"). Tenant Improvement Costs shall not include, however, any overtime costs
of the general contractor which were not in the original budget approved by
Tenant or not expressly authorized by Tenant. To the extent that the Tenant
Improvement Costs exceed the Tenant Improvement Allowance (a "Shortfall"),
Landlord shall bill to Tenant the Shortfall throughout the construction process
when payments are made or are due to be made to the general contractor,
architect, engineer or other such contractor based upon Tenants pro rata share
of any such payment (Tenant's pro rata share being the proportion that the
Shortfall bears to the Tenant Improvement costs). Landlord shall submit payment
requests to Tenant no more frequently than every two (2) weeks and such payment
requests shall be paid by Tenant within 30 days after receipt.
Delay. If Landlord's architect does not complete preparation of Tenant's Space
Plans and Working Drawings within the time periods specified above and on
Exhibit E-1 due to Tenant's failure to timely assist in the preparation, review
and approval of the same, and such delay causes Landlord to postpone substantial
completion of the Premises or delays the Commencement Date or should Tenant or
its agents fail to timely comply with all of the provisions of this Exhibit E or
otherwise cause a delay in substantial completion (collectively, a "Tenant
Delay"), then Tenant shall pay to Landlord on the date Rent would have commenced
hereunder in the absence of such
<PAGE>
delay, a sum of money equivalent to the Rent for the Premises for the period
during which Tenant would have been obligated to pay Rent to Landlord had not
the Commencement Date been so delayed.
Changes to Tenant Plans. Tenant shall have the right to request changes in the
Final Plans and any such change shall be initiated by Tenant by request to
Landlord's architect and approved by Landlord and the general contractor. No
change shall be permitted without the prior written consent of Landlord which as
to nonstructural changes which do not effect building systems, shall not be
unreasonably withheld. Further, if changes are made by Tenant to the Final Plans
after Landlord's approval, and should these changes to Tenant's Final Plans
cause Landlord to postpone substantial completion of the space or delay the
Commencement Date and such postponement or delay is not attributable to a delay
caused by Landlord or Landlord's architect or contractor, then Landlord shall
have the right to refuse to permit the making of such changes unless and until
Tenant shall have committed in writing, in a manner reasonably satisfactory to
Landlord, to pay to Landlord on the date Rent would have commenced hereunder in
the absence of such delay, a sum of money equivalent to the Rent for the
Premises for the period during which Tenant would have been obligated to pay
Rent to Landlord had not the Commencement Date been so delayed.
Tenant's Work. Notwithstanding anything to the contrary in this Exhibit E as
between Landlord and Tenant only, Tenant shall be responsible for all work,
construction and installation in the Premises which is not designated as
Landlord's Work (including but not limited to all fixtures, furniture, equipment
and other office installations) or part of the Base Building condition. Such
work shall be referred to as "Tenant's Work," and shall be at Tenant's sole cost
and expense subject to the application of the Tenant Improvement Allowance.
Tenant's Work shall be considered an alteration for purposes of this Lease, and
shall be subject to the provisions of Section 6.1 thereof. Prior to commencing
Tenant's Work, Landlord's architect on behalf of Tenant shall submit drawings
and specifications for Tenant's Work to Landlord, showing all aspects of such
work, for Landlord's review and approval.
Permits, Certificate of Occupancy. Except as provided below, Landlord shall
obtain all necessary permits in connection with Landlord's Work and all work
contemplated by the Final Plans. On or before the date Landlord tenders delivery
of the Premises to Tenant, Landlord agrees to obtain all final inspection
approvals which are required for Landlord to deliver the Premises to Tenant with
Landlord's Work and all work contemplated by the Final Plans completed, and that
can be obtained by Landlord prior to Tenant installing its fixtures, furniture
and equipment including, without limitation, the Final Certificate of Occupancy
or its equivalent. Tenant shall be responsible for applying for and obtaining
all permits required for Tenant to perform Tenant's Work other than the work
contemplated by the Final Plans or to operate within the Premises.
Notice. Tenant shall, by notice to Landlord in writing, designate a single
individual who Tenant agrees shall be available to meet and consult with
Landlord at the Premises as Tenant's representative respecting the matters which
are the subject of this Exhibit and who, as between Landlord and Tenant, shall
have the power to legally bind Tenant, in making requests for changes, giving
approval of plans or work, giving directions to Landlord or the like, under this
Exhibit.
Substantial Completion. For purposes of this Lease, "substantially complete"
means full completion, except for minor or insubstantial details of
construction, decoration or installation.
<PAGE>
Landlord shall give Tenant at least thirty (30) days prior written notice of the
date the Premises will be substantially complete.
Permits; Compliance with Laws. The Tenant's Space Plans shall be in a form in
which building permits can be readily obtained and shall comply with all
applicable local, state and federal laws, ordinances, codes and regulations. The
architect shall certify to Landlord and Tenant that Tenant's Space Plans comply
with the Americans with Disabilities Act of 1990 and all other applicable local,
state and federal laws, ordinances, codes and regulations.
Default. The failure by Tenant to comply with the provisions of this Exhibit E
shall constitute a default by Tenant under the Lease and Landlord shall have the
benefit of all remedies provided for in the Lease.
No Liability. Notwithstanding the review and approval by Landlord of
Tenant's Space Plans and specifications, Landlord shall have no responsibility
or liability in regard to the safety, sufficiency, adequacy or legality thereof
and as between Landlord and Tenant only, Tenant shall be solely responsible for
the compliance of such plans and specifications (and improvement constructed as
a result thereof) with all applicable laws and regulations, the architectural
completeness and sufficiency thereof and other matters relating thereto, except
as set forth in the Lease.
Phased Construction. Landlord and Tenant acknowledge and agree that the work
contemplated by the Final Plans shall be completed by Landlord's general
contractor in two (2) phases as follows: (i) the Early Occupancy Premises
consisting of approximately 25,000 rentable square feet of space shall be
constructed and substantially completed first with a targeted substantial
completion date of October 8, 1998, and (ii) the balance of the Premises shall
be constructed and substantially completed on or before December 1, 1998.
Warranty of Construction. Landlord shall secure from its general contractor
normal and customary construction warranties with respect to all work contracted
to be completed and Landlord hereby assigns such warranties to Tenant for
Tenant's benefit and use. Landlord and Tenant hereby agree to cooperate
reasonably with respect to any claim to be made by Tenant with respect to such
warranties.
<PAGE>
EXHIBIT E-1
Event Date
Submission of Tenant's Space Plans June 3, 1998
by Tenant to Landlord
Landlord to complete review and approval or June 5, 1998
disapproval of Tenant's Space Plans
Architect to begin Working Drawings June 8, 1998
Working Drawings Complete and Submitted July 8, 1998
For Permit
Construction Bid Submission Date (if needed) July 8, 1998
(construction packages to general contractor)
Construction Bid Acceptance Date (Landlord July 24, 1998
and Tenant approve general contractor based
upon bids received)
Building Permit Received from Town of Morrisville August 5, 1998
Construction Start Date August 5, 1998
Target Date for Substantial Completion of October 8, 1998
Landlord's Work
<PAGE>
EXHIBIT F
BUILDING RULES AND REGULATIONS
1. Sidewalks, doorways, vestibules, halls, stairways, and other similar areas
shall not be used for the disposal of trash, be obstructed by Tenant or be used
by Tenant for any purpose other than ingress and egress to and from the Premises
and for going from one part of the Building to another part of the Building.
2. Plumbing fixtures and appliances shall be used only for the purposes for
which designed, and no sweepings, rubbish, rags, or other unsuitable material
shall be thrown or placed therein. Damage resulting to any such fixtures or
appliances from misuse by Tenant shall be paid by such Tenant and Landlord shall
not in any case be responsible therefor.
3. Signs, advertisements, or notices visible in or from public corridors or from
outside the Building shall be subject to Landlord's prior written approval.
Without Landlord's prior consent, no nails, hooks, or screws shall be driven or
inserted into any part of the Building, and no curtains or other window
treatments shall be placed between the glass and the Building standard window
treatments.
4. With respect to work being performed by Tenant in the Premises, Tenant shall
refer all contractors, contractors' representatives, and installation
technicians rendering any service to Tenant to Landlord for Landlord's
supervision and approval before the performance of any contractual services.
This provision shall apply to all work performed in the Building, including, but
not limited to, installations of telephones, telegraph equipment, electrical
devices and attachments, and any and all installations of every nature affecting
floors, walls, woodwork, trim, windows, ceilings, equipment, and other physical
portions of the Building.
5. Movement in or out of the Building of furniture, office equipment, safes and
other heavy equipment, or the dispatch or receipt by Tenant of any bulky
material or merchandise, or materials which require use of elevators or
stairways or movement through the Building entrances or lobby, shall be
restricted to such hours as Landlord designates. All such movement shall be
under the supervision of Landlord and in the manner agreed between Tenant and
Landlord by prearrangement before performance. Such prearrangement, to be
initiated by Tenant, will include determination by Landlord as to the time,
method, and routing of such movement and as to limitations for safety or other
concerns. Tenant assumes all risks of damage to articles moved and injury to
persons engaged or not engaged in such movement.
6. Building management shall have the right and authority to prescribe the
maximum weight and position of safes and other heavy equipment which may
overstress any portion of a floor. All damages done to the Building by taking in
or putting out any property of Tenant, or done by Tenant's property while in the
Building, shall be repaired at the expense of Tenant.
7. Corridor doors, when not in use, shall be kept closed.
<PAGE>
8. Tenant space visible from a public area must be kept neat and clean.
9. Should Tenant require telegraphic, telephonic, annunciator, or other
communication services, Landlord will direct the electricians as to where and
how wires are to be introduced and placed, and none shall be introduced or
placed except as Landlord shall direct. Tenant shall not use space or area
heaters.
10. No animals shall be brought into or kept in, on, or about the Building.
11. All routine deliveries to the Premises during 8:00 a.m. to 5:00 p.m.
weekdays shall be made through the freight elevators. Passenger elevators are to
be used only for the movement of persons, unless an exception is approved by the
Building management office.
12. All freight elevator lobbies are to be kept neat and clean. The disposal of
trash or storage of materials in these areas by Tenant is prohibited.
13. Tenant shall not tamper with or attempt to adjust temperature control
thermostats in the Premises. Landlord shall adjust thermostats as required to
maintain the Building standard temperature. Landlord requests that all window
blinds remain down and tilted at a 45 degree angle toward the street to help
maintain comfortable room temperatures and conserve energy.
14. Tenant will comply with all reasonable security procedures during business
hours and after hours and on weekends.
15. Tenants are requested to lock all office doors leading to corridors and to
turn out all lights at the close of their working day.
16. No flammable or explosive fluids or materials shall be kept or used within
the Building except in areas approved by Landlord, and Tenant shall comply with
all applicable building and fire codes relating thereto.
Tenant may not place any items on the balconies of the Building without
obtaining Landlord's prior written consent.
Landlord reserves the right to rescind any of these rules and regulations and to
make such other and further rules and regulations as in its good faith judgment
shall from time to time be needed for the safety, protection, care and
cleanliness of the Property, the operation thereof, the preservation of good
order therein, and the protection and comfort of the tenants and their agents,
employees, and invitees, which rules and regulations, when made and written
notice thereof is given to Tenant, shall be binding upon Tenant in like manner
as if originally herein prescribed.
<PAGE>
RECORDING REQUESTED BY AND PREPARED OUTSIDE
WHEN RECORDED RETURN TO: THE STATE OF NORTH CAROLINA
Alston & Bird
One Atlantic Center
1201 West Peachtree Street TAX MAP NO._________
Atlanta, Georgia 30309-3424
Attn: Timothy J. Pakenham, Esq.
SUBORDINATION, NON-DISTURBANCE
AND ATTORNMENT AGREEMENT
THIS SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT AGREEMENT (the "Agreement")
is made as of June ___, 1998, among NATIONSBANK, N.A., a National Banking
Association formed under the laws of the United States of America, as Agent for
NationsBank, N.A., AmSouth Bank, Comerica Bank-Texas and SouthTrust Bank,
National Association (hereinafter collectively referred to as "Lender"),
CONCOURSE LAKKESIDE I, LLC, a Georgia limited liability company (hereinafter
referred to as "Landlord"), MIDWAY AIRLINES CORPORATION., a Delaware
corporation, (hereinafter referred to as "Tenant"), and TIM, Inc., as Trustee
for Lender.
WITNESSETH:
WHEREAS, Landlord and Tenant have entered into a certain Lease Agreement dated
as of June ____, 1998, (said lease hereafter referred to as the "Lease")
relating to premises (hereinafter referred to as the "Premises") within the
building located on the land described in Exhibit A attached hereto and by this
reference made a part hereof (hereinafter referred to as the "Building");
WHEREAS, Lender has made a loan (the "Loan") to Landlord in the principal amount
of Seven Million Five Hundred Ninety One Thousand Four Hundred and No/100
Dollars ($7,591,400.00) secured, in part, by a deed of trust, mortgage or
security deed (hereinafter referred to as the "Mortgage") and an assignment of
Landlord's interest in leases and rents (hereinafter referred to as the
"Assignment") which Mortgage and Assignment encumber or will encumber the
Building; and
WHEREAS, Tenant has agreed that the Lease shall be subject and subordinate to
the Mortgage, provided Tenant is assured of continued occupancy of the Premises
under the terms of the Lease;
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained, the sum of Ten Dollars ($10.00) in hand paid and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and notwithstanding anything in the Lease to the contrary, it is
hereby agreed as follows:
<PAGE>
1. Lender, Tenant and Landlord do hereby covenant and agree that the Lease with
all rights, options, liens and charges created thereby is and shall continue to
be subject and subordinate in all respects to the Mortgage and to any
advancements made thereunder and to any renewals, modifications, consolidations,
replacements and extensions thereof (as used hereafter the term "Mortgage" shall
mean the Mortgage and any renewals, modifications, consolidations, replacements
and extensions thereof).
2. Lender does hereby agree with Tenant that so long as Tenant complies with and
performs its obligations under the Lease, and is not in default under the Lease
(beyond any period expressly given Tenant under the Lease to cure any such
default) in any manner which would entitle Landlord to terminate the Lease or
would cause, without any further action of Landlord, the termination of the
Lease or would entitle Landlord to dispossess Tenant thereunder, then, in the
event Lender or its successor or assign (Lender and any such successor or assign
is herein referred to as the "Successor Landlord") becomes the owner of the
Premises by foreclosure judicial or nonjudicial), exercise of a power of sale or
other enforcement right under the Mortgage, exercise of the rights of a
mortgagee in possession pursuant to the Mortgage or the Assignment, pursuant to
a receivership or otherwise, conveyance in lieu of foreclosure or other exercise
of Lender's remedies pursuant to the Mortgage, the Assignment or any other
documents executed in connection therewith (any or all of the foregoing
hereinafter referred to as a "Foreclosure"), neither the Lease nor any of
Tenant's rights pursuant to the Lease shall be extinguished by reason of such
Successor Landlord acquiring the interest of Landlord or coming into the
possession of, or acquiring title to, the Premises by reason of such
Foreclosure. In any Foreclosure, Lender shall not join Tenant as a party in any
action or proceeding brought pursuant to the Mortgage in any manner which would
alter, disturb or invalidate Tenant's rights to possess and use the Premises
pursuant to the terms of the Lease, as the terms of the Lease are affected by
this Agreement. In the event of a Foreclosure, the Successor Landlord shall
recognize Tenant as the tenant of the Premises for the remainder of the term of
the Lease in accordance with the provisions thereof, as the terms of the Lease
are affected by this Agreement. Notwithstanding anything to the contrary
hereinabove contained, any interest of Tenant in an option to purchase all or
any part of the Premises or the Building contained in the Lease is specifically
subordinated to the rights of Lender under the terms of the Mortgage and such
option to purchase shall not be binding upon Lender or any Successor Landlord.
3. In the event that a Successor Landlord acquires title to the Premises through
Foreclosure or otherwise, (a) the Lease and all of the rights of Landlord
pursuant to the Lease shall remain in full force and effect, (b) Tenant shall be
bound to the Successor Landlord under all of the provisions of the Lease for the
balance of the term thereof (including any extensions or renewals thereof which
may be effected in accordance with any options contained in the Lease) with the
same force and effect as if the Successor Landlord was the original landlord
under the Lease, and (c) Tenant shall attorn to and recognize the Successor
Landlord as its landlord under the Lease as aforesaid. Tenant further agrees to
attorn to: (i) Lender when in possession of the Premises pursuant to Lender's
rights under the Mortgage or the Assignment; and (ii) any receiver appointed in
an action or proceeding to foreclose the Mortgage or otherwise pursuant to
Lender's rights at law, in equity or under the Mortgage or the Assignment. These
provisions of attornment
<PAGE>
and recognition shall be effective and self-operative and shall operate
automatically without execution of any further instruments on the part of any of
the parties hereto. Tenant agrees, however, to execute and deliver at any time,
and from time to time, upon the request of Landlord, Lender or any Successor
Landlord, any further instrument or certificate which, is reasonably necessary
or appropriate in any such Foreclosure proceeding or conveyance or otherwise to
evidence such attornment.
4. Notwithstanding anything herein or in the Lease to the contrary, upon any
Foreclosure the Successor Landlord shall not be:
(a) liable for any act or omission of any prior landlord,
(b) subject to any off sets or defenses which Tenant might have against any
prior landlord,
(c) bound by any rent or additional rent which Tenant might have paid more than
thirty (30) days in advance,
(d) bound by any amendment or modification of the Lease which altered, modified
or changed the material economic terms of the Lease or any waiver or release of
Tenant by Landlord from the performance or observance by Tenant of any
obligation or condition of Tenant under the Lease, made without Lender's written
consent; provided that Lender agrees not to unreasonably withhold or delay its
consent to any proposed amendment, modification, consent or waiver which does
not materially adversely affect Lender's security,
(e) bound by any provisions of the Lease regarding the commencement or
completion of any construction of the Premises which occurred prior to such
Foreclosure,
(f) bound by any provision of the Lease which provides for warranties of
construction from the Landlord to the Tenant; provided, however, the foregoing
shall not be deemed to apply to Landlord's obligation to assign construction
warranties to Tenant which arise after Foreclosure,
(g) bound by any provisions of the Lease restricting the use of other properties
owned by the Successor Landlord as of the date of the Foreclosure for purposes
which compete with Tenant, or
(h) liable for the return of any security deposit except to the extent actually
received by the Successor Landlord from Landlord.
5. So long as the Mortgage remains outstanding and unsatisfied, Tenant will use
reasonable efforts to mail or deliver to Lender, at the address and in the
manner hereinbelow provided, a copy of all notices permitted or required to be
given to Landlord by Tenant under and pursuant to the terms and provisions of
the Lease. Without limiting the foregoing, Tenant agrees that in the event of a
default by Landlord under the Lease, Tenant shall give written notice to Lender
specifying in detail the nature and extent of the default. Lender shall have a
period of time equal to the period of time permitted Landlord for curing any
default under the Lease as therein provided or, if greater, thirty (30) days
after receipt by Lender of such notice, during which time
<PAGE>
it shall have the right, but not any obligation, to remedy such default of
Landlord, by paying any taxes and assessments owing by Landlord, making any
repairs and improvements, making any deposits or doing any other act or thing
required of Landlord by the terms of the Lease; and all payments so made and all
things so done and performed by Lender shall be as effective to prevent the
rights of Landlord from being forfeited or adversely affected because of any
default under the Lease as the same would have been if done and performed timely
by Landlord; provided, however, that if the act or omission does not involve
solely the payment of money from Landlord to Tenant and (i) is of such a nature
that it can not be reasonably remedied by Lender within said thirty (30) day
period or such greater period as is permitted Landlord under the Lease, or (ii)
the nature of the default, act or omission, the requirements of local law or
prudent mortgage lending practices require Lender to take possession of, appoint
a receiver with respect to, or to foreclose on, or otherwise commence legal
proceedings to recover possession of, the Premises in order to effect such
remedy and such legal proceedings and consequent remedy cannot reasonably be
achieved within the said thirty (30) days (or such greater period as is
permitted under the Lease), then Lender shall have such further time as is
reasonable under the circumstances to effect such remedy provided that Lender
shall promptly take all reasonable, temporary actions necessary to remedy a
default causing the Premises to be untenantable in part of in whole and shall
notify Tenant within thirty (30) days (or such greater period as is permitted
under the Lease) after receipt of Tenant's notice of Lender's intention to
effect such remedy, and Lender reasonably and promptly undertakes such remedy,
and, provided further, that if required under the circumstances, Lender shall
promptly institute legal proceedings to appoint a receiver for the Premises or
to foreclose on or recover possession of the Premises within said thirty (30)
day period (or such greater period as is permitted under the Lease) and
thereafter prosecute said proceedings and remedy with due diligence to
completion. In the event that neither Lender nor Landlord cures the default
specified in the notice within the time periods specified herein, Tenant shall
be entitled to exercise and assert its rights under the Lease against Landlord
(to the extent therein permitted and subject to the limitations of liability of
Landlord, if any, therein contained), and any Successor Landlord (subject to the
limitations set forth in paragraph 4 above) but not otherwise. For purposes of
this paragraph 5, Landlord agrees that if Lender received any notice from Tenant
alleging an event of default by Landlord under the Lease, Lender may rely upon
such notice and, at Lender's option, but without any obligation, may take such
actions as Lender deems necessary in its sole discretion with respect to such
notice. Landlord agrees that Lender shall be under no duty whatsoever to inquire
as to the validity of any such notice and that Lender shall have no liability
whatsoever to Landlord for any actions taken by Lender with respect to any such
notice. Landlord and Lender agree that any amounts expended, or any costs
incurred, by Lender as a result of any such notice received from Tenant shall be
payable on demand by Landlord to Lender, shall bear interest until paid at the
"Past Due Rate" (as defined in the promissory note (the "Note") secured by the
Mortgage), and such amounts and interest thereon shall be added to and become a
part of the indebtedness secured by the Mortgage until repaid.
6. Tenant acknowledges that Landlord will execute and deliver to Lender the
Assignment which will assign the Lease as security for the Loan, and Tenant
hereby expressly consents to such assignment. Landlord hereby authorizes and
directs Tenant or any other or future tenants or occupants of the Premises, upon
receipt from Lender (or Lender's agent) of written notice to the effect that
Lender is then the holder of the Note and the Mortgage and that an event of
default
<PAGE>
exists thereunder or under the Assignment, to pay over to Lender all rents,
payments, reimbursements and other amounts due, payable, arising or accruing
under the Lease (hereinafter referred to collectively as the Rents"), and to
continue so to do until otherwise notified in writing by Lender (or Lender's
specifically authorized agent). Landlord agrees that payment of such amounts to
Lender shall be in accordance with the terms of the Lease, that Tenant shall be
under no duty to inquire as to the validity of any such notice, that Tenant
shall have no liability whatsoever to Landlord for making payments to Lender in
reliance on any such notice, and that Landlord shall have no right to declare
Tenant in default under the Lease on account of such payments made to Lender,
notwithstanding any notices or contrary instructions which Landlord or
Landlord's agents may hereafter deliver to Tenant at the time of any such notice
from Lender (or Lender's agent) or otherwise. At such time as Tenant receives
written notice from Lender (or Lender's agent) or the Successor Landlord stating
that Lender or such Successor Landlord has exercised its rights as aforesaid
under the Mortgage or the Assignment to receive the Rents under the Lease
directly from Tenant, Tenant shall thereafter pay the Rents under the Lease
directly to Lender or such Successor Landlord, as the case may be. Without
limiting the foregoing, written notice from Lender's counsel shall be deemed to
be notice from Lender for purposes of this paragraph 6.
7. Landlord and Tenant hereby certify to Lender that the Lease has been duly
executed by Landlord and Tenant and is in full force and effect; that the Lease
and any modifications and amendments specified herein are a complete statement
of the agreement between Landlord and Tenant with respect to the leasing of the
Premises, and the Lease has not been modified or amended except as specified
herein; that to the knowledge of Landlord and Tenant, no party to the Lease is
in default thereunder; that no rent under the Lease has been paid more than
thirty (30) days in advance of its due date and that Tenant, as of this date,
has no charge, lien or claim of offset under the Lease, or otherwise, against
the rents or other charges due or to become due thereunder.
8. Landlord's waiver or release of Tenant under or with respect to the Lease or
the Premises or any matter related thereto shall not be effective against Lender
unless such waiver or release is accompanied by the written consent of Lender
which consent shall not be unreasonably withheld or delayed provided such
consent, approval or waiver does not materially adversely affect Lender's
security. Without limiting the generality of the foregoing, without the prior
written consent of Lender, neither Landlord nor Tenant will cancel the term of,
terminate or surrender, the Lease, or accept any cancellation, termination or
surrender of the Lease except under circumstances in which it is commercially
reasonable to do so. Nothing in this paragraph 8 shall, however, prevent Tenant
from exercising its rights and remedies with respect to any default under the
Lease by Landlord provided that Tenant has first given Lender the notice and
opportunity to cure such default as required by paragraph 5 hereof.
9. Any and all notices, elections or demands permitted or required to be made
under this Agreement shall be in writing, signed by the party giving such
notice, election or demand and shall be delivered personally (which shall
include delivery by a recognized overnight courier that obtains receipts
acknowledging delivery such as Federal Express), or sent by registered or
certified United States mail, postage prepaid, to the other party at the address
set forth below.
<PAGE>
The date of personal delivery or the date of receipt as evidenced by the return
receipt in the case of delivery by registered or certified mail, as the case may
be, shall be the date of such notice, election or demand. For the purposes of
this Agreement:
The address of Lender is:
NationsBank, N.A.
NationsBank Plaza, 6th Floor
Real Estate Banking Group
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
Attn: Loan Administration
The address of Tenant is:
Midway Airlines Corporation
300 W. Morgan Street
12th Floor
Durham, North Carolina 27701
The address of Landlord is:
Concourse Lakeside I, LLC
c/o Brookdale Investors Two, L.P.
3343 Peachtree Road, N.E.
Suite 510
Atlanta, Georgia 30326
Attn: Mr. Fred Henritze
Any party may change the address to which notices to such party are to be given,
or may specify up to two (2) additional addresses to which any such notices to
such party are to be given, by giving at least ten (10) days' advance written
notice of such new or additional addresses in the manner set forth above
provided that any such new address or additional addresses must be in the
continental United States. Rejection or refusal of any attempted delivery, or
the inability of the United States Postal Service or any courier to deliver a
notice because of a change of address of which no previous notice was given in
accordance with the immediately preceding sentence, shall be deemed an effective
delivery on the day such personal delivery was attempted or, in the case of
attempted delivery by registered or certified mail, three (3) business days
after such notice was deposited with the United States Postal Service.
10. Tenant shall look solely to the Premises for recovery of any judgment or
damages from Lender or such other Successor Landlord, and neither Lender nor
such other Successor Landlord shall have any personal liability, directly or
indirectly, under or in connection with the Lease or this Agreement or any
amendment or amendments to either thereof made at any time or times, heretofore
or hereafter, and Tenant hereby forever and irrevocably waives and releases any
and
<PAGE>
all such personal liability. The limitation of liability provided in this
paragraph is in addition to, and not in limitation of, any limitation on
liability applicable to Lender or such other Successor Landlord provided by law
or by any other contract, agreement or instrument.
11. This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective heirs, legal representatives, successors,
successors-in-title and assigns. When used herein, the term "Landlord" refers to
Landlord and to any successor to the interest of Landlord under the Lease, the
term "Tenant" refers to Tenant and to any successor to the interest of Tenant
under the Lease but only to the extent a successor to such interest is permitted
under the Lease and subject to the terms of this Agreement, and the term
"Lender" refers to Lender and any successor to the interest of Lender, or any
participant with Lender, under the Mortgage and to any purchaser, including
Lender, of the Premises at a Foreclosure. Nothing in this paragraph 11 shall in
any way alter or modify the provisions of the Mortgage relating to transfers of
the Landlord's interest in the Building.
12. This Agreement shall be governed by and construed and interpreted in
accordance with the laws of the State in which the Premises is located.
13. This Agreement may be executed in multiple counterparts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
under seal as of the date first above written by persons duly authorized
thereunto, and the persons signing this Agreement hereby represent and warrant
that they are fully authorized to do so for the party for whom they are signing
and that this Agreement as executed and delivered by them constitutes the valid
and binding obligation of the party for whom they are signing.
TENANT:
MIDWAY AIRLINES CORPORATION,
a Delaware corporation
By:
Name:
Title:
Attest:
Name:
Title:
[CORPORATE SEAL]
State of
City/County of : to wit
<PAGE>
The foregoing instrument was acknowledged before me this ____ day of
_________ 1998, by ___________ of Midway Airlines Corporation, a Delaware
corporation for and on behalf of the corporation as its act and deed.
Notary Public
My Commission Expires:
LANDLORD:
CONCOURSE LAKESIDE I, LLC, a Delaware limited liability company
By: Brookdale Investors Two, L.P., a Delaware limited
partnership, its sole member
By: Brookdale Partners II, LLC, a Georgia limited liability company, its
sole General Partner
By:_________________________
Fred H. Henritze, its Manager
[CORPORATE SEAL]
State of
City/County of : to wit
The foregoing instrument was acknowledged before me this ____ day of
_________ 1998, by ________ of Brookdale Partners II, LLC, the sole general
partner of Brookdale Investors Two, L.P., its sole member of CONCOURSE LAKESIDE
I, LLC, a Delaware corporation for and on behalf of the corporation as its act
and deed.
Notary Public
My Commission Expires:
LENDER:
NATIONSBANK, N.A., a National
<PAGE>
Banking Association formed under the laws of the United States of America, as
Agent for NationsBank, N.A., AmSouth Bank, Comerica Bank-Texas and SouthTrust
Bank, National Association
By:
Name:
Title:
[BANK SEAL]
State of
City/County of : to wit
The foregoing instrument was acknowledged before me this ____ day of
_________ 1998, by of , a
corporation for and on behalf of the corporation as its act and deed.
Notary Public
My Commission Expires:
<PAGE>
TRUSTEE:
TIM, INC.
By:
Name:
Title:
[CORPORATE SEAL]
State of
City/County of : to wit
The foregoing instrument was acknowledged before me this ____ day of
_________ 1998, by of , a
corporation for and on behalf of the corporation as its act and deed.
Notary Public
My Commission Expires:
<PAGE>
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE is made and entered into as of
__________________, 1998 by and between CONCOURSE LAKESIDE I, LLC, a Delaware
limited liability company ("Landlord"), and MIDWAY AIRLINES CORPORATION, a
Delaware corporation ("Tenant").
W I T N E S S E T H
WHEREAS, Landlord and Tenant have entered into a certain Lease Agreement
dated of even date herewith (the "Lease") whereby Landlord did lease to Tenant,
and Tenant did lease from Landlord approximately 39,239 rentable square feet of
space (the "Premises") in the Concourse Lakeside building (the "Building")
situated upon the land described on Exhibit A attached hereto, located at 2801
Slater Road, County of Wake, Morrisville, North Carolina 27560, as the same
currently exists or as it may from time to time hereafter be expanded or
modified; and
WHEREAS, Landlord and Tenant desire to enter into and record this
Memorandum of Lease in order that third parties may have notice of Tenant's
interest and rights under the Lease, of the leasehold estate of Tenant and of
the Lease.
NOW THEREFORE, Landlord, in consideration of the rents and covenants
provided for in the Lease to be paid and performed by Tenant, does hereby lease
unto Tenant, and Tenant does hereby lease from Landlord, the Premises in
accordance with the terms and provisions of the Lease.
Specific reference is hereby made to the following provisions of the
Lease:
Pursuant to the Lease, Tenant shall have and hold the Premises for an initial
term of ten (10) years, which commences on the Commencement Date (as that term
is defined in the Lease), and expiring as to the entire Premises on the day
preceding the tenth (10th) anniversary of the Commencement Date, all as more
particularly described in the Lease.
Pursuant to the Lease, Tenant is restricted in its ability to sublease the
Premises or assign the Lease.
Pursuant to, and subject to the provisions of the Lease, Tenant is granted one
option to extend the initial term of the Lease as to all of the Premises for one
(1) additional period of five (5) years, as more particularly described in the
Lease.
All terms, conditions, provisions and covenants of the Lease are incorporated in
this Memorandum of Lease by reference as though fully set forth herein, and the
Lease and this Memorandum of Lease shall be deemed to constitute a single
instrument or document. This Memorandum of Lease has been entered into by
Landlord and Tenant for purposes of recordation
<PAGE>
in the appropriate real estate records of Wake County, North Carolina, to
provide notice to third parties of the Lease and nothing contained herein shall
be deemed or construed to amend, modify, change, alter, amplify, interpret or
supersede any of the terms and provisions of the Lease. In the event of a
conflict between the terms of the Lease and the terms of this Memorandum of
Lease, the terms of the Lease shall control.
IN WITNESS WHEREOF, the parties hereto have executed this Memorandum of Lease as
of the date first above written.
LANDLORD:
CONCOURSE LAKESIDE I, LLC
a Delaware limited liability company
By: BROOKDALE INVESTORS TWO, L.P.,
a Delaware limited partnership,
its sole member
By: BROOKDALE PARTNERS II, LLC,
a Georgia limited liability company,
its sole general partner
By:
Name:
Title:
<PAGE>
TENANT:
MIDWAY AIRLINES CORPORATION,
a Delaware corporation
By:
Name:
Title:
STATE OF _____________ )
)
COUNTY OF ___________ )
This instrument was acknowledged before me on _________________, 1998, by
______________ of ___________________, a _____________________________, on
behalf of said entity.
Notary Public in and for the
State of ___________
My commission expires:
STATE OF _____________ )
)
COUNTY OF ___________ )
This instrument was acknowledged before me on _________________, 1998, by
______________, of MIDWAY AIRLINES CORPORATION, a Delaware corporation, on
behalf of said entity.
<PAGE>
Notary Public in and for the
State of ____________
My commission expires:
<PAGE>
EXHIBIT I
SITE PLAN DEPICTING LOCATION OF GENERATOR
PAGE 20
C - PAGE 6
D - PAGE 1
E - PAGE 3
E - PAGE 2
F - PAGE 2
<PAGE>
G - PAGE 6
H - PAGE 2
I - 1
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 39,151
<SECURITIES> 8,250
<RECEIVABLES> 17,730
<ALLOWANCES> (1,628)
<INVENTORY> 3,078
<CURRENT-ASSETS> 75,712
<PP&E> 112,194
<DEPRECIATION> 9,025
<TOTAL-ASSETS> 200,705
<CURRENT-LIABILITIES> 55,917
<BONDS> 79,946
0
0
<COMMON> 86
<OTHER-SE> 64,756
<TOTAL-LIABILITY-AND-EQUITY> 200,705
<SALES> 0
<TOTAL-REVENUES> 155,700
<CGS> 0
<TOTAL-COSTS> 135,732
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (1,378)
<INCOME-PRETAX> 18,590
<INCOME-TAX> 3,718
<INCOME-CONTINUING> 14,872
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,872
<EPS-PRIMARY> 1.74
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