EXHIBIT A-3 to
Note Purchase Agreement
FORM OF LEASED AIRCRAFT INDENTURE
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TRUST INDENTURE AND MORTGAGE
Dated as of ____________, ____
Between
FIRST SECURITY BANK, NATIONAL ASSOCIATION,
not in its individual capacity,
except as expressly stated herein,
but solely as Owner Trustee,
Owner Trustee
and
WILMINGTON TRUST COMPANY,
not in its individual capacity,
except as expressly stated herein,
but solely as Mortgagee,
Mortgagee
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EQUIPMENT NOTES COVERING
ONE BOEING 747-47UF FREIGHTER AIRCRAFT
BEARING U.S. REGISTRATION XXXX N_____
LEASED BY ATLAS AIR, INC.
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TABLE OF CONTENTS
Page
GRANTING CLAUSE...............................................................2
ARTICLE I
DEFINITIONS
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes........................................8
SECTION 2.02. Issuance and Terms of Equipment Notes.........................13
SECTION 2.03. Payments from Trust Indenture Estate Only.....................16
SECTION 2.04. Method of Payment.............................................17
SECTION 2.05. Application of Payments.......................................20
SECTION 2.06. Termination of Interest in Trust Indenture Estate.............20
SECTION 2.07. Registration Transfer and Exchange of Equipment Notes.........20
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes..........22
SECTION 2.09. Payment of Expenses on Transfer; Cancellation.................23
SECTION 2.10. Mandatory Redemptions of Equipment Notes......................23
SECTION 2.11. Voluntary Redemptions of Equipment Notes; Assumption of
Equipment Notes.............................................23
SECTION 2.12. Redemptions; Notice of Redemption.............................24
SECTION 2.13. Option to Purchase Equipment Notes............................25
SECTION 2.14. Subordination.................................................27
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Basic Rent Distribution.......................................27
SECTION 3.02. Event of Loss; Replacement; Voluntary Termination;
Optional Redemption.........................................29
SECTION 3.03. Payments After Event of Default...............................30
SECTION 3.04. Certain Payments..............................................32
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SECTION 3.05. Other Payments................................................33
SECTION 3.06. Payments to Owner Trustee.....................................34
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF DEFAULT;
REMEDIES OF MORTGAGEE
SECTION 4.01. Covenants of Owner Trustee....................................34
SECTION 4.02. Event of Default..............................................35
SECTION 4.03. Certain Rights................................................38
SECTION 4.04. Remedies......................................................39
SECTION 4.05. Return of Aircraft, Etc.......................................42
SECTION 4.06. Remedies Cumulative...........................................44
SECTION 4.07. Discontinuance of Proceedings.................................44
SECTION 4.08. Waiver of Past Defaults.......................................44
SECTION 4.09. Appointment of Receiver.......................................45
SECTION 4.10. Mortgagee Authorized to Execute Bills of Sale, Etc............45
SECTION 4.11. Rights of Note Holders to Receive Payment.....................45
ARTICLE V
DUTIES OF THE MORTGAGEE
SECTION 5.01. Notice of Event of Default....................................46
SECTION 5.02. Action upon Instructions; Certain Rights and Limitations......46
SECTION 5.03. Indemnification...............................................49
SECTION 5.04. No Duties Except as Specified in Trust Indenture
or Instructions.............................................50
SECTION 5.05. No Action Except Under Lease, Trust Indenture
or Instructions.............................................50
SECTION 5.06. Replacement Airframes and Replacement Engines.................51
SECTION 5.07. Indenture Supplements for Replacements........................51
SECTION 5.08. Effect of Replacement.........................................51
SECTION 5.09. Investment of Amounts Held by Mortgagee.......................51
ARTICLE VI
THE OWNER TRUSTEE AND THE MORTGAGEE
SECTION 6.01. Acceptance of Trusts and Duties...............................52
SECTION 6.02. Absence of Duties.............................................53
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SECTION 6.03. No Representations or Warranties as to Aircraft
or Documents................................................53
SECTION 6.04. No Segregation of Monies; No Interest.........................54
SECTION 6.05. Reliance; Agreements; Advice of Counsel.......................54
SECTION 6.06. Capacity in Which Acting......................................55
SECTION 6.07. Compensation..................................................55
SECTION 6.08. Instructions from Note Holders................................55
ARTICLE VII
INDEMNIFICATION OF MORTGAGEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification......................................56
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee.............................57
SECTION 8.02. Resignation of Mortgagee; Appointment of Successor............57
SECTION 8.03. Appointment of Additional and Separate Trustees...............58
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS TRUST
INDENTURE AND OTHER DOCUMENTS
SECTION 9.01. Instructions of Majority; Limitations.........................60
SECTION 9.02. Trustees Protected............................................63
SECTION 9.03. Documents Mailed to Note Holders..............................63
SECTION 9.04. No Request Necessary for Lease Supplement or Trust
Indenture Supplement........................................63
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Trust Indenture................................63
SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders......64
SECTION 10.03. Sale of Aircraft by Mortgagee Is Binding......................64
SECTION 10.04. Trust Indenture for Benefit of Owner Trustee, Mortgagee,
Owner Participant, Note Holders and the Other
Indenture Indemnitees......................................64
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SECTION 10.05. Notices.......................................................65
SECTION 10.06. Severability..................................................65
SECTION 10.07. No Oral Modification or Continuing Waivers....................65
SECTION 10.08. Successors and Assigns........................................66
SECTION 10.09. Headings......................................................66
SECTION 10.10. Normal Commercial Relations...................................66
SECTION 10.11. Governing Law; Counterpart Form...............................66
SECTION 10.12. Voting By Note Holders........................................67
SECTION 10.13. Bankruptcy....................................................67
EXHIBIT A Form of Trust Indenture and Mortgage Supplement
SCHEDULE I Equipment Notes Amortization and Interest Rates
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TRUST INDENTURE AND MORTGAGE
TRUST INDENTURE AND MORTGAGE, dated as of ___________, ____ ("Trust
Indenture"), between FIRST SECURITY BANK, NATIONAL ASSOCIATION, a national
banking association, not in its individual capacity, except as expressly stated
herein, but solely as Owner Trustee under the Trust Agreement referred to below
(together with its successors under the Trust Agreement, the "Owner Trustee"),
and WILMINGTON TRUST COMPANY ("WTC"), a Delaware banking corporation, not in its
individual capacity, except as expressly stated herein, but solely as Mortgagee
hereunder (together with its successors hereunder, the "Mortgagee").
W I T N E S S E T H
WHEREAS, all capitalized terms used herein shall have the respective
meanings set forth or referred to in Article I hereof;
WHEREAS, the Owner Participant and the Owner Trustee in its individual
capacity have entered into the Trust Agreement whereby, among other things, (i)
the Owner Trustee has established a certain trust for the use and benefit of the
Owner Participant subject, however, to the Trust Indenture Estate created
pursuant hereto for the use and benefit of, and with the priority of payment to,
the holders of Equipment Notes issued hereunder, and (ii) the Owner Trustee has
been authorized and directed to execute and deliver this Agreement;
WHEREAS, the parties hereto desire by this Trust Indenture, among other
things, (i) to provide for the issuance by the Owner Trustee of the Equipment
Notes and (ii) to provide for the assignment, mortgage and pledge by the Owner
Trustee to the Mortgagee, as part of the Trust Indenture Estate hereunder, among
other things, of all of the Owner Trustee's right, title and interest in and to
the Aircraft and, except as hereinafter expressly provided, all of the Owner
Trustee's right, title and interest in, to and under the Lease and all payments
and other amounts received thereunder and under the Participation Agreement in
accordance with the terms hereof or thereof, as security for, among other
things, the Owner Trustee's and the Lessee's obligations to the Note Holders and
the Indenture Indemnitees;
WHEREAS, all things have been done to make the Equipment Notes, when
executed by the Owner Trustee and authenticated and delivered by the Mortgagee
hereunder, the valid, binding and enforceable obligations of the Owner Trustee;
and
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WHEREAS, all things necessary to make this Trust Indenture the valid,
binding and legal obligation of the Owner Trustee for the uses and purposes
herein set forth, in accordance with its terms, have been done and performed and
have happened;
GRANTING CLAUSE
NOW, THEREFORE, THIS TRUST INDENTURE AND MORTGAGE WITNESSETH, that, to
secure the prompt payment of the Original Amount of, interest on, Make-Whole
Amount, if any, and all other amounts due with respect to, all Equipment Notes
from time to time outstanding hereunder according to their tenor and effect and
to secure the performance and observance by the Owner Trustee of all the
agreements, covenants and provisions contained herein and in the Participation
Agreement and the Equipment Notes, for the benefit of the Note Holders, the Loan
Participants and each of the Indenture Indemnitees and the prompt payment of all
amounts from time to time owing hereunder, under the Participation Agreement and
the Lease to the Loan Participants, the Note Holders or any Indenture Indemnitee
by the Owner Trustee or the Lessee and for the uses and purposes and subject to
the terms and provisions hereof, and in consideration of the premises and of the
covenants herein contained, and of the acceptance of the Equipment Notes by the
holders thereof, and for other good and valuable consideration the receipt and
adequacy whereof are hereby acknowledged, the Owner Trustee has granted,
bargained, sold, assigned, transferred, conveyed, mortgaged, pledged and
confirmed, and does hereby grant, bargain, sell, assign, transfer, convey,
mortgage, pledge and confirm, unto the Mortgagee, its successors in trust and
assigns, for the security and benefit of the Loan Participants, the Note Holders
and each of the Indenture Indemnitees, a first priority security interest in and
mortgage lien on all right, title and interest of the Owner Trustee in, to and
under the following described property, rights and privileges, whether now or
hereafter acquired, other than Excluded Payments (which, collectively, excluding
Excluded Payments but including all property hereafter specifically subject to
the Lien of this Trust Indenture by the terms hereof or any supplement hereto,
are included within, and are referred to as, the "Trust Indenture Estate"), to
wit:
(1) The Airframe which is one Boeing 747-47UF aircraft with the FAA
Registration number of N________ and the manufacturer's serial number of and
four Engines, each of which Engines is a General Electric CF6-80C2B5FG04 engine
with the manufacturer's serial numbers _____, _____, _____ and _____, is of 750
or more rated takeoff horsepower or the equivalent of such horsepower (such
Airframe and Engines more particularly described in the Indenture Supplement
executed and delivered as provided herein) as the same is now and will hereafter
be constituted, whether now owned by the Owner Trustee or hereafter acquired,
leased or intended to be leased under the Lease, and in the case of such
Engines, whether or not any such Engine shall be installed in or attached to the
Airframe or any other airframe, together with (a) all Parts of whatever nature,
which
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are from time to time included within the definitions of "Airframe" or
"Engines," whether now owned or hereafter acquired, including all substitutions,
renewals and replacements of and additions, improvements, accessions and
accumulations to the Airframe and Engines (other than additions, improvements,
accessions and accumulations which constitute appliances, parts, instruments,
appurtenances, accessories, furnishings or other equipment excluded from the
definition of Parts) and (b) all Aircraft Documents;
(2) Subject to Section 5.02 hereof, all right, title, interest, claims and
demands of the Owner Trustee, as Lessor, in, to and under the Lease, together
with all rights, powers, privileges, options and other benefits of the Owner
Trustee as lessor under the Lease, including the immediate and continuing right
to receive and collect all Rent, income, revenues, issues, profits, insurance
proceeds, condemnation awards and other payments, tenders and security now or
hereafter payable to or receivable by the Lessor under the Lease pursuant
thereto, and, subject to Section 5.02 hereof, the right to make all waivers and
agreements, to give and receive copies of all notices and other instruments or
communications, and to accept surrender or redelivery of the Aircraft or any
part thereof, as well as all the rights, powers and remedies on the part of the
Owner Trustee as Lessor under the Lease, to take such action upon the occurrence
of a Lease Event of Default thereunder, including the commencement, conduct and
consummation of legal, administrative or other proceedings, as shall be
permitted by the Lease or by Law, and to do any and all other things whatsoever
which the Owner Trustee or any lessor is or may be entitled to do under or in
respect of the Lease and any right to restitution from the Lessee or any other
Person in respect of any determination of invalidity of the Lease;
(3) All right, title, interest, claims and demands of the Owner Trustee in,
to and under:
(a) the Purchase Agreement and the GTA (to the extent assigned by the
Purchase Agreement Assignment);
(b) the Purchase Agreement Assignment, with the Consent and Agreement
and the Engine Consent and Agreement attached thereto;
(c) the Bills of Sale; and
(d) any and all other contracts, agreements and instruments (other
than the Participation Agreement, except to the extent provided in clause
(6) below) relating to the Airframe and Engines or any rights or interests
therein to which the Owner Trustee is now or may hereafter be a party;
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together with, but subject to Section 5.02, all rights, powers, privileges,
licenses, easements, options and other benefits of the Owner Trustee under each
contract, agreement and instrument (other than the Participation Agreement,
except to the extent provided in clause (6) below) referred to in this clause
(3), including the right to receive and collect all payments to the Owner
Trustee thereunder now or hereafter payable to or receivable by the Owner
Trustee pursuant thereto and, subject to Section 5.02 hereof, the right to make
all waivers and agreements, to give and receive notices and other instruments or
communications, or to take any other action under or in respect of any thereof
or 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 Owner Trustee is or may be entitled to do thereunder and
any right to restitution from the Lessee, the Owner Participant or any other
Person in respect of any determination of invalidity of any thereof;
(4) All rents, issues, profits, revenues and other income (other than
rents, issues, profits, revenues and other income from any ACMI Contract) of the
property subjected or required to be subjected to the Lien of this Trust
Indenture, including all payments or proceeds payable to the Owner Trustee after
termination of the Lease with respect to the Aircraft as the result of the sale,
lease or other disposition thereof, and all estate, right, title and interest of
every nature whatsoever of the Owner Trustee in and to the same (other than
rents, issues, profits, revenues and other income from any ACMI Contract);
(5) Without limiting the generality of the foregoing, all insurance
and requisition proceeds with respect to the Aircraft or any part thereof,
including the insurance required under Section 11 of the Lease but excluding any
insurance maintained by the Lessee and not required under the Lease;
(6) Without limiting the generality of the foregoing, all rights of the
Owner Trustee to amounts paid or payable by Lessee to the Owner Trustee under
the Participation Agreement and all rights of the Owner Trustee to enforce
payments of any such amounts thereunder;
(7) Without limiting the generality of the foregoing, all monies and
securities from time to time deposited or required to be deposited with the
Mortgagee pursuant to any terms of this Trust Indenture or the Lease or required
hereby or by the Lease to be held by the Mortgagee hereunder as security for the
obligations of the Lessee under the Lease or of the Owner Trustee hereunder;
(8) All proceeds of the foregoing; excluding, however, in all events from
each of the foregoing clauses (1) through (8) inclusive all Excluded Payments
and the right
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to specifically enforce the same or to xxx for damages for the breach thereof as
provided in Section 5.02 hereof.
Concurrently with the delivery of this Trust Indenture, the Owner Trustee
will deliver to the Mortgagee the original executed counterpart of the Lease and
the Lease Supplement No. 1 (to each of which a chattel paper receipt is
attached), and executed copies of the Participation Agreement, the Purchase
Agreement and the GTA (to the extent assigned by the Purchase Agreement
Assignment), and the Purchase Agreement Assignment, with the Consent and
Agreement and the Engine Consent and Agreement attached thereto.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Mortgagee, and its successors and assigns, in trust for the equal and
proportionate benefit and security of the Loan Participants, the Note Holders
and the Indenture Indemnitees, except as provided in Section 2.14 and Article
III hereof without any preference, distinction or priority of any one Equipment
Note over any other by reason of priority of time of issue, sale, negotiation,
date of maturity thereof or otherwise for any reason whatsoever, and for the
uses and purposes, and in all cases and as to all property specified in
paragraphs (1) through (8) inclusive above, subject to the terms and provisions
set forth in this Trust Indenture.
It is expressly agreed that anything herein contained to the contrary
notwithstanding, the Owner Trustee shall remain liable under the Indenture
Agreements to perform all of the obligations assumed by it thereunder, except to
the extent prohibited or excluded from doing so pursuant to the terms and
provisions thereof, and the Mortgagee, the Loan Participants, the Note Holders
and the Indenture Indemnitees shall have no obligation or liability under the
Indenture Agreements by reason of or arising out of the assignment hereunder,
nor shall the Mortgagee, the Loan Participants, the Note 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
Agreements, or, except as herein expressly provided, to make any payment, or to
make any inquiry as to the nature or sufficiency of any payment received by it,
or present or file any claim, or take any action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.
The Owner Trustee does hereby constitute the Mortgagee the true and lawful
attorney of the Owner Trustee, irrevocably, granted for good and valuable
consideration and coupled with an interest and with full power of substitution,
and with full power (in the name of the Owner Trustee or otherwise) to ask for,
require, demand, receive, compound and give acquittance for any and all monies
and claims for monies (in each case including insurance and requisition proceeds
but in all cases excluding Excluded Payments) due and to become due under or
arising out of the Indenture Agreements, and all other property
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which now or hereafter constitutes part of the Trust Indenture Estate, to
endorse any checks or other instruments or orders in connection therewith and to
file any claims or to take any action or to institute any proceedings which the
Mortgagee 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 2.13, 4.03 and 4.04(a) hereof,
during the continuance of any Event of Default under this Trust Indenture, the
Mortgagee 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 xxxx 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 Mortgagee may deem
necessary or appropriate to protect and preserve the right, title and interest
of the Mortgagee in and to such Rents and other sums and the security intended
to be afforded hereby; provided, however, that no action of the Mortgagee
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 Trust Indenture and in the other Operative
Agreements. Under the Lease, Lessee is directed, so long as this Trust Indenture
shall not have been fully discharged, to make all payments of Rent (other than
Excluded Payments) and all other amounts which are required to be paid to or
deposited with the Owner Trustee pursuant to the Lease (other than Excluded
Payments) directly to, or as directed by, the Mortgagee at such address or
addresses as the Mortgagee shall specify, for application as provided in this
Trust Indenture. The Owner Trustee agrees that promptly upon receipt thereof, it
will transfer to the Mortgagee any and all monies from time to time received by
it constituting part of the Trust Indenture Estate, for distribution by the
Mortgagee pursuant to this Trust Indenture, except that the Owner Trustee shall
accept for distribution pursuant to the Trust Agreement any amounts distributed
to it by the Mortgagee under this Trust Indenture.
The Owner Trustee agrees that at any time and from time to time, upon the
written request of the Mortgagee, the Owner Trustee will promptly and duly
execute and deliver or cause to be duly executed and delivered any and all such
further instruments and documents as the Mortgagee may reasonably deem necessary
or desirable to perfect, preserve or protect the mortgage, security interests
and assignments created or intended to be created hereby or to obtain for the
Mortgagee the full benefits of the assignment hereunder and of the rights and
powers herein granted.
The Owner Trustee does hereby warrant and represent that it has not
assigned or pledged, and hereby covenants and agrees that it will not assign or
pledge, so
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long as the assignment hereunder shall remain in effect, and the Lien hereof
shall not have been released pursuant to Section 10.01 hereof, any of its right,
title or interest hereby assigned, to anyone other than the Mortgagee, and that
it will not, except as otherwise provided in this Trust Indenture and except
with respect to Excluded Payments to which it is entitled, (i) accept any
payment from Lessee under any Indenture Agreement, (ii) enter into any agreement
amending or supplementing any Indenture Agreement, (iii) execute any waiver or
modification of, or consent under, the terms of, or exercise any rights, powers
or privileges under, any Indenture Agreement, (iv) settle or compromise any
claim arising under any Indenture Agreement or (v) submit or consent to the
submission of any dispute, difference or other matter arising under or in
respect of any Indenture Agreement to arbitration thereunder.
The Owner Trustee does hereby agree that it will not without the written
consent of the Mortgagee:
(a) receive or collect or agree to the receipt or collection of any payment
(other than Excluded Payments) of Rent, including Basic Rent, Stipulated Loss
Value, Termination Value or any other payment to be made pursuant to Section 9
or 10 of the Lease prior to the date for the payment thereof provided for by the
Lease or assign, transfer or hypothecate (other than to the Mortgagee hereunder)
any payment of Rent, including Basic Rent, Stipulated Loss Value, Termination
Value or any other payment (other than Excluded Payments) to be made pursuant to
Section 9 or 10 of the Lease, then due or to accrue in the future under the
Lease in respect of the Airframe and Engines; or
(b) except as contemplated by the Trust Agreement in connection with the
appointment of a successor owner trustee, sell, mortgage, transfer, assign or
hypothecate (other than to the Mortgagee hereunder) its interest in the Airframe
and Engines or any part thereof or in any amount to be received by it from the
use or disposition of the Airframe and Engines, other than amounts distributed
to it pursuant to Article III hereof.
It is hereby further agreed that any and all property granted, bargained,
sold, assigned, transferred, conveyed, mortgaged, pledged or confirmed in the
granting clauses hereof which is hereafter acquired by the Owner Trustee shall
ipso facto, and without any other conveyance, assignment or act on the part of
the Owner Trustee or the Mortgagee, become and be subject to the Lien herein
granted as fully and completely as though specifically described herein, but
nothing contained in this paragraph shall be deemed to modify or change the
obligations of the Owner Trustee contained in the foregoing paragraphs.
The Owner Trustee does hereby ratify and confirm the Lease and does hereby
agree that it will not violate any covenant or agreement made by it therein,
herein or in any other Owner Trustee Agreement.
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Notwithstanding the Granting Clause or any of the preceding paragraphs,
there is hereby excluded from the foregoing grant, bargain, sale, assignment,
transfer, conveyance, mortgage, pledge and security interest all Excluded
Payments. Further, nothing in the Granting Clause or the preceding paragraphs
shall impair any of the rights of the Owner Trustee or the Owner Participant
under Section 2.13, 4.03, 4.04, 4.08, 5.02 or 5.03 hereof.
IT IS HEREBY COVENANTED AND AGREED by and between the parties hereto as
follows:
ARTICLE I
DEFINITIONS
Capitalized terms used but not defined herein shall have the respective
meanings set forth or incorporated by reference, and shall be construed in the
manner described, in Annex A to the Lease.
ARTICLE II
THE EQUIPMENT NOTES
SECTION 2.01. Form of Equipment Notes
The Equipment Notes shall be substantially in the form set forth below:
THIS EQUIPMENT NOTE HAS NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY
STATE. ACCORDINGLY, THIS EQUIPMENT NOTE MAY NOT BE SOLD UNLESS EITHER REGISTERED
UNDER THE ACT AND SUCH APPLICABLE STATE LAWS OR AN EXEMPTION FROM SUCH
REGISTRATIONS IS AVAILABLE.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, AS OWNER TRUSTEE UNDER TRUST
AGREEMENT DATED AS OF _______________, ____. SERIES [_____] LIMITED RECOURSE
EQUIPMENT NOTE DUE [____] ISSUED IN CONNECTION WITH THE BOEING MODEL 747-47UF
FREIGHTER AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N_____.
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No. ____ Date: [__________, ____]
$_____________
INTEREST RATE MATURITY DATE
[_________] [___________]
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not in its individual capacity
but solely as Owner Trustee (herein in such capacity called the "Owner Trustee")
under that certain Trust Agreement, dated as of ____________, ____, between the
Owner Participant named therein and First Security Bank, National Association
(herein as such Trust Agreement may be supplemented or amended from time to time
called the "Trust Agreement"), hereby promises to pay to __________________, or
the registered assignee thereof, the principal sum of $____________ (the
"Original Amount"), together with interest on the amount of the Original Amount
remaining unpaid from time to time (calculated on the basis of a year of 360
days comprised of twelve 30-day months) from the date hereof until paid in full
at a rate per annum equal to the Debt Rate. The Original Amount of this
Equipment Note shall be payable in installments on the dates set forth in
Schedule I hereto equal to the corresponding percentage of the Original Amount
of this Equipment Note set forth in Schedule I hereto. Accrued but unpaid
interest shall be due and payable in arrears in semiannual installments
commencing on _____________, ____, and thereafter on _______ _ and _______ _of
each year, to and including _______________. Notwithstanding the foregoing, the
final payment made on this Equipment Note shall be in an amount sufficient to
discharge in full the unpaid Original 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.
For purposes hereof, the term "Trust Indenture" means the Trust Indenture
and Mortgage, dated as of _____________, ____, between the Owner Trustee and
Wilmington Trust Company (the "Mortgagee"), as the same may be amended or
supplemented from time to time. All other capitalized terms used in this
Equipment Note and not defined herein shall have the respective meanings
assigned in the Trust Indenture.
This Equipment Note shall bear interest, payable on demand, at the Payment
Due Rate (calculated on the basis of a year of 360 days comprised of twelve
30-day months) on any overdue Original Amount, any overdue Make-Whole Amount, if
any, and (to the extent permitted by applicable Law) any overdue interest and
any other amounts payable
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hereunder which are overdue, in each case for the period the same is overdue.
Amounts shall be overdue if not paid when due (whether at stated maturity, by
acceleration or otherwise).
All payments of Original Amount, interest, Make-Whole Amount, if any, and
other amounts, if any, to be made by the Owner Trustee hereunder and under the
Trust Indenture or the Participation Agreement shall be payable only from the
income and proceeds from the Trust Estate to the extent included in the Trust
Indenture Estate and only to the extent that the Owner Trustee shall have
sufficient income or proceeds from the Trust Estate to the extent included in
the Trust Indenture Estate to enable the Mortgagee to make such payments in
accordance with the terms of Section 2.03 and Article III of the Trust
Indenture, and each holder hereof, by its acceptance of this Equipment Note,
agrees that it will look solely to the income and proceeds from the Trust
Indenture Estate to the extent available for distribution to the holder hereof
as above provided and that none of the Owner Participant, the Owner Trustee and
the Mortgagee is personally liable or liable in any manner extending to any
assets other than the Trust Indenture Estate to the holder hereof for any
amounts payable or any liability under this Equipment Note or, except as
provided in the Trust Indenture or in the Participation Agreement, for any
liability under the Trust Indenture or the Participation Agreement; provided,
however, that nothing herein contained shall limit, restrict or impair the right
of the Mortgagee, subject always to the terms and provisions of the Trust
Indenture, to accelerate the maturity of this Equipment Note upon occurrence of
an Event of Default under the Trust Indenture in accordance with Section 4.04(b)
of the Trust Indenture, to bring suit and obtain a judgment against the Owner
Trustee on this Equipment Note for purposes of realizing upon the Trust
Indenture Estate and to exercise all rights and remedies provided under the
Trust Indenture or otherwise realize upon the Trust Indenture Estate as provided
under the Trust Indenture.
There shall be maintained an Equipment Note Register for the purpose of
registering transfers and exchanges of Equipment Notes at the Corporate Trust
Office of the Mortgagee or at the office of any successor in the manner provided
in Section 2.07 of the Trust Indenture.
The Original Amount and interest and other amounts due hereunder shall be
payable in Dollars in immediately available funds at the Corporate Trust Office
of the Mortgagee, or as otherwise provided in the Trust Indenture. Each such
payment shall be made on the date such payment is due and without any
presentment or surrender of this Equipment Note, except that in the case of any
final payment with respect to this Equipment Note, this Equipment Note shall be
surrendered promptly thereafter to the Mortgagee for cancellation.
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The holder hereof, by its acceptance of this Equipment Note, agrees that,
except as provided in the Trust Indenture, each payment of the Original Amount,
Make-Whole Amount, if any, and interest received by it hereunder shall be
applied, first, to the payment of accrued interest on this Equipment Note (as
well as any interest on any overdue Original Amount, any overdue Make-Whole
Amount, if any, or, to the extent permitted by Law, any overdue interest and
other amounts hereunder) to the date of such payment, second, to the payment of
the Original Amount of this Equipment Note then due, third, to the payment of
Make-Whole Amount, if any, and any other amount due hereunder or under the Trust
Indenture, and fourth, the balance, if any, remaining thereafter, to the payment
of installments of the Original Amount of this Equipment Note remaining unpaid
in the inverse order of their maturity.
This Equipment Note is one of the Equipment Notes referred to in the Trust
Indenture which have been or are to be issued by the Owner Trustee pursuant to
the terms of the Trust Indenture. The Trust Indenture Estate is held by the
Mortgagee as security, in part, for the Equipment Notes. The provisions of this
Equipment Note are subject to the Trust Indenture. Reference is hereby made to
the Trust Indenture for a complete statement of the rights and obligations of
the holder of, and the nature and extent of the security for, this Equipment
Note and the rights and obligations of the holders of, and the nature and extent
of the security for, any other Equipment Notes executed and delivered under the
Trust Indenture, as well as for a statement of the terms and conditions of the
Trust created by the Trust Indenture, to all of which terms and conditions in
the Trust Indenture each holder hereof agrees by its acceptance of this
Equipment Note.
As provided in the Trust Indenture and subject to certain limitations
therein set forth, this Equipment Note is exchangeable for a like aggregate
Original Amount of Equipment Notes of different authorized denominations, as
requested by the holder surrendering the same.
Prior to due presentment for registration of transfer of this Equipment
Note, the Owner Trustee and the Mortgagee shall treat the person in whose name
this Equipment Note is registered as the owner hereof for all purposes, whether
or not this Equipment Note be overdue, and neither the Owner Trustee nor he
Mortgagee shall be affected by notice to the contrary.
This Equipment Note is subject to redemption as provided in Sections 2.10,
2.11 and 2.12 of the Trust 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 2.13 of the Trust Indenture but not otherwise and
to assumption by the Lessee as provided in Section 2.11(b) of the Trust
Indenture. In addition, this Equipment Note may be accelerated as provided in
Section 4.04 of the Trust Indenture.
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[The indebtedness evidenced by this Equipment Note is, to the extent and in
the manner provided in the Trust Indenture, subordinate and subject in right of
payment to the prior payment in full of the Secured Obligations (as defined in
the Trust Indenture) in respect of [Series A-1 Equipment Notes](1) [Series A-1
and Series B Equipment Notes],(2) and this Equipment Note is issued subject to
such provisions. The Note Holder of this Equipment Note, by accepting the same,
(a) agrees to and shall be bound by such provisions, (b) authorizes and directs
the Mortgagee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination as provided in the Trust Indenture
and (c) appoints the Mortgagee his attorney-in-fact for such purpose.](3)
Unless the certificate of authentication hereon has been executed by or on
behalf of the Mortgagee by manual signature, this Equipment Note shall not be
entitled to any benefit under the Trust Indenture or be valid or obligatory for
any purpose.
THIS EQUIPMENT NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS OF THE STATE OF NEW YORK.
* * *
IN WITNESS WHEREOF, the Owner Trustee has caused this Equipment Note to be
executed in its corporate name by its officer thereunto duly authorized on the
date hereof.
FIRST SECURITY BANK, NATIONAL
ASSOCIATION,
not in its individual capacity
but solely as Owner Trustee
By
----------------------------------
Name:
Title:
----------
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 for each Equipment Note other than any Series A-1 Equipment
Note.
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MORTGAGEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Equipment Notes referred to in the within-mentioned
Trust Indenture.
WILMINGTON TRUST COMPANY, as
Mortgagee
By
----------------------------------
Name:
Title:
SCHEDULE
EQUIPMENT NOTE AMORTIZATION
Percentage of
Original Amount
Payment Date to Be Paid
------------ ----------
SEE SCHEDULE I TO TRUST INDENTURE THE APPLICABLE
PORTION OF WHICH IS INSERTED UPON ISSUANCE
* * *
SECTION 2.02. Issuance and Terms of Equipment Notes
The Equipment Notes shall be dated the date of issuance thereof, shall be
issued in up to three separate series consisting of Series A-1, Series B and
Series C and in the maturities and principal amounts and shall bear interest as
specified in Schedule I hereto. On the date of the consummation of the
Transaction, each Equipment Note shall be issued to the Subordination Agent on
behalf of the Pass Through Trustees under the Pass Through Trust Agreements. The
Equipment Notes shall be issued in registered form only. The Equipment Notes
shall be issued in denominations of $1,000 and integral multiples thereof,
except that one Equipment Note of each Series may be in an amount that is not an
integral multiple of $1,000.
Each Equipment Note shall bear interest at the applicable Debt Rate
(calculated on the basis of a year of 360 days comprised of twelve 30-day
months) on the unpaid Original Amount thereof from time to time outstanding,
payable in arrears in semi-
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annual installments commencing on _____________, ____, and on each _______ _ and
_______ _thereafter until maturity. The Original Amount of each Equipment Note
shall be payable on the dates and in the installments equal to the corresponding
percentage of the Original Amount as set forth in Schedule I hereto, the
applicable portion of which shall be attached as Schedule I to such Equipment
Notes. Notwithstanding the foregoing, the final payment made under each
Equipment Note shall be in an amount sufficient to discharge in full the unpaid
Original Amount and all accrued and unpaid interest on, and any other amounts
due under, such Equipment Note. Each Equipment Note shall bear interest at the
Payment Due Rate (calculated on the basis of a year of 360 days comprised of
twelve 30-day months) on any part of the Original Amount, Make-Whole Amount, if
any, and, to the extent permitted by applicable Law, interest and any other
amounts payable thereunder not paid when due for any period during which the
same shall be overdue, in each case for the period the same is overdue. Amounts
shall be overdue if not paid when due (whether at stated maturity, by
acceleration or otherwise). Notwithstanding anything to the contrary contained
herein, if any date on which a payment under any Equipment Note becomes due and
payable is not a Business Day then such payment shall not be made on such
scheduled date but shall be made on the next succeeding Business Day and if such
payment is made on such next succeeding Business Day, no interest shall accrue
on the amount of such payment during such extension.
The Owner Trustee agrees to pay to the Mortgagee for distribution in
accordance with Section 3.04 hereof: (i) to the extent not payable (whether or
not in fact paid) under Section 6(a) of the Note Purchase Agreement (as
originally in effect or amended with the consent of the Owner Participant), an
amount equal to the fees payable to the relevant Liquidity Provider under
Section 2.03 of each Liquidity Facility and the related Fee Letter (as defined
in the Intercreditor Agreement) multiplied by a fraction the numerator of which
shall be the then outstanding aggregate principal amount of the Series A-1
Equipment Notes, Series B Equipment Notes and Series C Equipment Notes and the
denominator of which shall be the then outstanding aggregate principal amount of
all "Series A-1 Equipment Notes," "Series A-2 Equipment Notes," "Series B
Equipment Notes" and "Series C Equipment Notes" (each as defined in the Note
Purchase Agreement); (ii) (x) the amount equal to interest on any Downgrade
Advance (other than any Applied Downgrade Advance) payable under Section 3.07(e)
of each Liquidity Facility minus Investment Earnings from such Downgrade Advance
multiplied by (y) the fraction specified in the foregoing clause (i); (iii) (x)
the amount equal to interest on any Non-Extension Advance (other than any
Applied Non-Extension Advance) payable under Section 3.07(a)(i) of each
Liquidity Facility minus Investment Earnings from such Non-Extension Advance
multiplied by (y) the fraction specified in the foregoing clause (i); (iv) if
any payment default shall have occurred and be continuing with respect to
interest on any Series A-1 Equipment Note, Series B Equipment Note or Series C
Equipment Note, (x) the excess, if any, of (1) the amount
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equal to interest on any Unpaid Advance, Applied Downgrade Advance or Applied
Non-Extension Advance payable under Section 3.07(a)(i) of each Liquidity
Facility over (2) the sum of Investment Earnings from any Final Advance plus any
amount of interest at the Payment Due Rate actually payable (whether or not in
fact paid) by the Owner Trustee on the overdue scheduled interest on the
Equipment Notes in respect of which such Unpaid Advance, Applied Downgrade
Advance or Applied Non-Extension Advance was made multiplied by (y) a fraction
the numerator of which shall be the then aggregate overdue amounts of interest
on the Series A-1 Equipment Notes, Series B Equipment Notes and Series C
Equipment Notes (other than interest becoming due and payable solely as a result
of acceleration of any such Equipment Notes) and the denominator of which shall
be the then aggregate overdue amounts of interest on all "Series A-1 Equipment
Notes," "Series A-2 Equipment Notes," "Series B Equipment Notes" and "Series C
Equipment Notes" (each as defined in the Note Purchase Agreement) (other than
interest becoming due and payable solely as a result of acceleration of any such
"Equipment Notes") and (v) 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 advances)
except to the extent payable pursuant to clause (i), (ii), (iii) or (iv) above
multiplied by the fraction specified in the foregoing clause (i). For purposes
of this paragraph, the terms "Applied Downgrade Advance," "Applied Non-Extension
Advance," "Cash Collateral Account," "Downgrade Advance," "Final Advance,"
"Investment Earnings," "Non-Extension Advance" and "Unpaid Advance" shall have
the meanings specified in each Liquidity Facility.
The Equipment Notes shall be executed on behalf of the Owner Trustee by its
President or one of its Vice Presidents, Assistant Vice Presidents or Assistant
Secretaries or other authorized officer. Equipment Notes bearing the signatures
of individuals who were at any time the proper officers of the Owner Trustee
shall bind the Owner Trustee, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Equipment Notes or did not hold such offices at the respective dates of
such Equipment Notes. The Owner Trustee may from time to time execute and
deliver Equipment Notes with respect to the Aircraft to the Mortgagee for
authentication upon original issue and such Equipment Notes shall thereupon be
authenticated and delivered by the Mortgagee upon the written request of the
Owner Trustee signed by a Vice President or Assistant Vice President or other
authorized officer of the Owner Trustee; provided, however, that each such
request shall specify the aggregate Original Amount of all Equipment Notes to be
authenticated hereunder on original issue with respect to the Aircraft. No
Equipment Note shall be secured by or entitled to any benefit under this Trust
Indenture or be valid or obligatory for any purposes, unless there appears on
such Equipment Note a certificate of authentication in the form provided for
herein executed by the Mortgagee by the manual signature of one of its
authorized officers and such certificate
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upon any Equipment Notes be conclusive evidence, and the only evidence, that
such Equipment Note has been duly authenticated and delivered hereunder.
The aggregate Original Amount of the Equipment Notes issued hereunder shall
not exceed 80% of Lessor's Cost.
SECTION 2.03. Payments from Trust Indenture Estate Only
(a) Without impairing any of the other rights, powers, remedies,
privileges, liens or security interests of the Note Holders under this Trust
Indenture, each Note Holder, by its acceptance of an Equipment Note, agrees that
as between it and the Owner Trustee, except as expressly provided in this Trust
Indenture, the Participation Agreement or any other Operative Agreement, (i) the
obligation to make all payments of the Original Amount of, interest on,
Make-Whole Amount, if any, and all other amounts due with respect to the
Equipment Notes, and the performance by the Owner Trustee of every obligation or
covenant contained in this Trust Indenture and in the Participation Agreement or
any of the other Operative Agreements, shall be payable only from the income and
proceeds from the Trust Estate to the extent included in the Trust Indenture
Estate and only to the extent that the Owner Trustee shall have sufficient
income or proceeds from the Trust Estate to the extent included in the Trust
Indenture Estate to enable the Mortgagee to make such payments in accordance
with the terms of Article III hereof, and all of the statements,
representations, covenants and agreements made by the Owner Trustee (when made
in such capacity) contained in this Trust Indenture and any agreement referred
to herein other than the Trust Agreement, unless expressly otherwise stated, are
made and intended only for the purpose of binding the Trust Estate and
establishing the existence of rights and remedies which can be exercised and
enforced against the Trust Estate; therefore, anything contained in this Trust
Indenture or such other agreements to the contrary notwithstanding (except for
any express provisions or representations that the Owner Trustee is responsible
for, or is making, in its individual capacity, for which there would be personal
liability of the Owner Trustee), no recourse shall be had with respect to this
Trust Indenture or such other agreements against the Owner Trustee in its
individual capacity or against any institution or person which becomes a
successor trustee or co-trustee or any officer, director, trustee, servant or
direct or indirect parent or controlling Person or Persons of any of them, and
(ii) none of the Owner Trustee, in its individual capacity, the Owner
Participant, the Mortgagee and any officer, director, trustee, servant,
employee, agent or direct or indirect parent or controlling Person or Persons of
any of them shall have any personal liability for any amounts payable hereunder,
under the Participation Agreement or any of the other Operative Agreements or
under the Equipment Notes except as expressly provided herein, in the Lease or
in the Participation Agreement; provided, however, that nothing contained in
this Section 2.03(a) shall be construed to limit the exercise and enforcement in
accordance with
-17-
the terms of this Trust Indenture or such other agreements of rights and
remedies against the Trust Indenture Estate.
(b) If (i) all or any part of the Trust Estate becomes the property of, or
the Owner Trustee or Owner Participant becomes, a debtor subject to the
reorganization provisions of the Bankruptcy Code, (ii) pursuant to such
reorganization provisions, including Section 1111(b) of the Bankruptcy Code, the
Owner Trustee (in its individual capacity) or the Owner Participant is required,
by reason of the Owner Trustee (in its individual capacity) or the Owner
Participant being held to have recourse liability to any Note Holder or the
Mortgagee, directly or indirectly (other than the recourse liability of the
Owner Trustee (in its individual capacity) or the Owner Participant under the
Participation Agreement, the Lease or this Trust Indenture or by separate
agreement), to make payment on account of any amount payable as principal,
Make-Whole Amount, if any, interest or other amounts on the Equipment Notes and
(iii) any Note Holder or the Mortgagee actually receives any Excess Amount (as
hereinafter defined) which reflects any payment by the Owner Trustee (in its
individual capacity) or the Owner Participant on account of clause (ii) above,
then such Note Holder or the Mortgagee, as the case may be, shall promptly
refund to the Owner Trustee (in its individual capacity) or the Owner
Participant (whichever shall have made such payment) such Excess Amount.
For purposes of this Section 2.03(b), "Excess Amount" means the amount by
which such payment exceeds the amount that would have been received by a Note
Holder or the Mortgagee if the Owner Trustee (in its individual capacity) or the
Owner Participant had not become subject to the recourse liability referred to
in clause (ii) above. Nothing contained in this Section 2.03(b) shall prevent a
Note Holder or the Mortgagee from enforcing any personal recourse obligation
(and retaining the proceeds thereof) of the Owner Trustee (in its individual
capacity) or the Owner Participant under the Participation Agreement, the Lease
or this Trust Indenture (and any exhibits or annexes hereto or thereto) or from
retaining any amount paid by Owner Participant under Section 2.13 or 4.03
hereof.
SECTION 2.04. Method of Payment
(a) The Original Amount of, interest on, Make-Whole Amount, if any, and
other amounts due under each Equipment Note or hereunder will be payable in
Dollars by wire transfer of immediately available funds not later than 12 noon,
New York City time, on the due date of payment to the Mortgagee at the Corporate
Trust Office for distribution among the Note Holders in the manner provided
herein. The Owner Trustee shall not have any responsibility for the distribution
of such payment to any Note Holder. Notwithstanding the foregoing or any
provision in any Equipment Note to the contrary, the Mortgagee will use
reasonable efforts to pay or cause to be paid, if so directed in writing by any
Note Holder (with a copy to the Owner Trustee), all amounts paid by the Owner
Trustee hereun-
-18-
der and under such holder's Equipment Note or Equipment Notes to such holder or
a nominee therefor (including all amounts distributed pursuant to Article III of
this Trust Indenture) by transferring, or causing to be transferred, by wire
transfer of immediately available funds in Dollars, prior to 12:30 p.m., New
York City time, on the due date of payment, to an account maintained by such
holder with a bank located in the continental United States the amount to be
distributed to such holder, for credit to the account of such holder maintained
at such bank. Any payment made hereunder shall be made without any presentment
or surrender of any Equipment Note, except that, in the case of the final
payment in respect of any Equipment Note, such Equipment Note shall be
surrendered to the Mortgagee for cancellation promptly after such payment.
Notwithstanding any other provision of this Trust Indenture to the contrary, the
Mortgagee shall not be required to make, or cause to be made, wire transfers as
aforesaid prior to the first Business Day on which it is practicable for the
Mortgagee to do so in view of the time of day when the funds to be so
transferred were received by it if such funds were received after 12:30 p.m.,
New York City time, at the place of payment. Prior to the due presentment for
registration of transfer of any Equipment Note, the Owner Trustee and the
Mortgagee shall deem and treat the Person in whose name any Equipment Note is
registered on the Equipment Note Register as the absolute owner and holder of
such Equipment Note for the purpose of receiving payment of all amounts payable
with respect to such Equipment Note and for all other purposes, and none of the
Owner Trustee or the Mortgagee shall be affected by any notice to the contrary.
So long as any signatory to the Participation Agreement or nominee thereof shall
be a registered Note Holder, all payments to it shall be made to the account of
such Note Holder specified in Schedule I thereto and otherwise in the manner
provided in or pursuant to the Participation Agreement unless it shall have
specified some other account or manner of payment by notice to the Mortgagee
consistent with this Section 2.04.
(b) The Mortgagee, as agent for the Owner Trustee, shall exclude and
withhold at the appropriate rate from each payment of Original Amount of,
interest on, Make-Whole Amount, if any, and other amounts due hereunder or under
each Equipment Note (and such exclusion and withholding shall constitute payment
in respect of such Equipment Note) any and all United States withholding taxes
applicable thereto as required by Law. The Mortgagee agrees to act as such
withholding agent and, in connection therewith, whenever any present or future
United States taxes or similar charges are required to be withheld with respect
to any amounts payable hereunder or in respect of the Equipment Notes, to
withhold such amounts and timely pay the same to the appropriate authority in
the name of and on behalf of the Note Holders, that it will file any necessary
United States withholding tax returns or statements when due, and that as
promptly as possible after the payment thereof it will deliver to each Note
Holder (with a copy to the Owner Trustee and the Lessee) appropriate receipts
showing the payment thereof, together with such additional documentary evidence
as any such Note Holder may reasonably request from time to time.
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If a Note Holder which is a Non-U.S. Person has furnished to the Mortgagee
a properly completed, accurate and currently effective U.S. Internal Revenue
Service Form 1001 or W-8 (or such successor form or forms as may be required by
the United States Treasury Department) during the calendar year in which the
payment hereunder or under the Equipment Note(s) held by such holder is made
(but prior to the making of such payment), or in either of the two preceding
calendar years, and has not notified the Mortgagee of the withdrawal or
inaccuracy of such form prior to the date of such payment (and the Mortgagee has
no reason to believe that any information set forth in such form is inaccurate),
the Mortgagee shall withhold only the amount, if any, required by Law (after
taking into account any applicable exemptions properly claimed by the Note
Holder) to be withheld from payments hereunder or under the Equipment Notes held
by such holder in respect of United States federal income tax. If a Note Holder
(x) which is a Non-U.S. Person has furnished to the Mortgagee a properly
completed, accurate and currently effective U.S. Internal Revenue Service Form
4224 in duplicate (or such successor certificate, form or forms as may be
required by the United States Treasury Department as necessary in order to
properly avoid withholding of United States federal income tax), for each
calendar year in which a payment is made (but prior to the making of any payment
for such year), and has not notified the Mortgagee of the withdrawal or
inaccuracy of such certificate or form prior to the date of such payment (and
the Mortgagee has no reason to believe that any information set forth in such
form is inaccurate) or (y) which is a U.S. Person has furnished to the Mortgagee
a properly completed, accurate and currently effective U.S. Internal Revenue
Service Form W-9, if applicable, prior to a payment hereunder or under the
Equipment Notes held by such holder, no amount shall be withheld from payments
in respect of United States federal income tax. If any Note Holder has notified
the Mortgagee that any of the foregoing forms or certificates is withdrawn or
inaccurate, or if such holder has not filed a form claiming an exemption from
United States withholding tax or if the Code or the regulations thereunder or
the administrative interpretation thereof is at any time after the date hereof
amended to require such withholding of United States federal income taxes from
payments under the Equipment Notes held by such holder, the Mortgagee agrees to
withhold from each payment due to the relevant Note Holder withholding taxes at
the appropriate rate under Law and will, on a timely basis as more fully
provided above, deposit such amounts with an authorized depository and make such
returns, statements, receipts and other documentary evidence in connection
therewith as required by Law.
Neither the Owner Trustee nor the Owner Participant shall have any
liability for the failure of the Mortgagee to withhold taxes in the manner
provided for herein or for any false, inaccurate or untrue evidence provided by
any Note Holder hereunder.
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SECTION 2.05. Application of Payments
In the case of each Equipment Note, each payment of Original Amount,
Make-Whole Amount, if any, and interest due thereon shall be applied:
First: to the payment of accrued interest on such Equipment Note (as
well as any interest on any overdue Original Amount, any overdue Make-Whole
Amount, if any, and to the extent permitted by Law, any overdue interest
and any other overdue amounts thereunder) to the date of such payment;
Second: to the payment of the Original Amount of such Equipment Note
(or a portion thereof) then due thereunder;
Third: to the payment of Make-Whole Amount, if any, and any other
amount due hereunder or under such Equipment Note; and
Fourth: the balance, if any, remaining thereafter, to the payment of
the Original Amount of such Equipment Note remaining unpaid (provided that
such Equipment Note shall not be subject to redemption except as provided
in Sections 2.10, 2.11 and 2.12 hereof).
The amounts paid pursuant to clause "Fourth" above shall be applied to the
installments of Original Amount of such Equipment Note in the inverse order of
their normal maturity.
SECTION 2.06. Termination of Interest in Trust Indenture Estate
No Note Holder nor any other Indenture Indemnitee shall, as such, have any
further interest in, or other right with respect to, the Trust Indenture Estate
when and if the Original Amount of, Make-Whole Amount, if any, and interest on
and other amounts due under all Equipment Notes held by such Note Holder and all
other sums then due and payable to such Note Holder, such Indenture Indemnitee
or the Mortgagee hereunder (including, without limitation, under the third
paragraph of Section 2.02 hereof) and under the other Operative Agreements by
the Owner Trustee and the Lessee (collectively, the "Secured Obligations") shall
have been paid in full.
SECTION 2.07. Registration Transfer and Exchange of Equipment Notes
The Mortgagee shall keep a register (the "Equipment Note Register") in
which the Mortgagee shall provide for the registration of Equipment Notes and
the regis-
-21-
tration of transfers of Equipment Notes. No such transfer shall be given effect
unless and until registration hereunder shall have occurred. The Equipment Note
Register shall be kept at the Corporate Trust Office of the Mortgagee. The
Mortgagee is hereby appointed "Equipment Note Registrar" for the purpose of
registering Equipment Notes and transfers of Equipment Notes as herein provided.
A holder of any Equipment Note intending to exchange such Equipment Note shall
surrender such Equipment Note to the Mortgagee at the Corporate Trust Office,
together with a written request from the registered holder thereof for the
issuance of a new Equipment Note, specifying, in the case of a surrender for
transfer, the name and address of the new holder or holders. Upon surrender for
registration of transfer of any Equipment Note, the Owner Trustee shall execute,
and the Mortgagee shall authenticate and deliver, in the name of the designated
transferee or transferees, one or more new Equipment Notes of a like aggregate
Original Amount and of the same series. At the option of the Note Holder,
Equipment Notes may be exchanged for other Equipment Notes of any authorized
denominations of a like aggregate Original Amount, upon surrender of the
Equipment Notes to be exchanged to the Mortgagee at the Corporate Trust Office.
Whenever any Equipment Notes are so surrendered for exchange, the Owner Trustee
shall execute, and the Mortgagee shall authenticate and deliver, the Equipment
Notes which the Note Holder making the exchange is entitled to receive. All
Equipment Notes issued upon any registration of transfer or exchange of
Equipment Notes (whether under this Section 2.07 or under Section 2.08 hereof or
otherwise under this Trust Indenture) shall be the valid obligations of the
Owner Trustee evidencing the same respective obligations, and entitled to the
same security and benefits under this Trust Indenture, as the Equipment Notes
surrendered upon such registration of transfer or exchange. Every Equipment Note
presented or surrendered for registration of transfer shall (if so required by
the Mortgagee) be duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Mortgagee duly executed by the Note Holder
or such holder's attorney duly authorized in writing, and the Mortgagee shall
require evidence satisfactory to it as to the compliance of any such transfer
with the Securities Act, and the securities Laws of any applicable state. The
Mortgagee shall make a notation on each new Equipment Note of the amount of all
payments of Original Amount previously made on the old Equipment Note or
Equipment Notes with respect to which such new Equipment Note is issued and the
date to which interest on such old Equipment Note or Equipment Notes has been
paid. Interest shall be deemed to have been paid on such new Equipment Note to
the date on which interest shall have been paid on such old Equipment Note, and
all payments of the Original Amount marked on such new Equipment Note, as
provided above, shall be deemed to have been made thereon. The Owner Trustee
shall not be required to exchange any surrendered Equipment Notes as provided
above during the ten-day period preceding the due date of any payment on such
Equipment Note. The Owner Trustee shall in all cases deem the Person in whose
name any Equipment Note shall have been issued and registered as the absolute
owner and holder of such Equipment Note for the purpose of receiving payment of
all
-22-
amounts payable by the Owner Trustee with respect to such Equipment Note and
for all purposes until a notice stating otherwise is received from the Mortgagee
and such change is reflected on the Equipment Note Register. The Mortgagee will
promptly notify the Owner Trustee and the Lessee of each registration of a
transfer of an Equipment Note. Any such transferee of an Equipment Note, by its
acceptance of an Equipment Note, agrees to the provisions of the Participation
Agreement applicable to Note 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. Subject to compliance
by the Note Holder and its transferee (if any) of the requirements set forth in
this Section 2.07, Mortgagee and Owner Trustee shall use all reasonable efforts
to issue new Equipment Notes upon transfer or exchange within 10 Business Days
of the date an Equipment Note is surrendered for transfer or exchange.
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment Notes
If any Equipment Note shall become mutilated, destroyed, lost or stolen,
the Owner Trustee shall, upon the written request of the holder of such
Equipment Note, execute and the Mortgagee shall authenticate and deliver in
replacement thereof a new Equipment Note, payable in the same Original Amount
dated the same date and captioned as issued in connection with the Aircraft. If
the Equipment Note being replaced has become mutilated, such Equipment Note
shall be surrendered to the Mortgagee and a photocopy thereof shall be furnished
to the Owner Trustee. If the Equipment Note being replaced has been destroyed,
lost or stolen, the holder of such Equipment Note shall furnish to the Owner
Trustee and the Mortgagee such security or indemnity as may be required by them
to save the Owner Trustee and the Mortgagee harmless and evidence satisfactory
to the Owner Trustee and the Mortgagee of the destruction, loss or theft of such
Equipment Note and of the ownership thereof. If a "qualified institutional
buyer" of the type referred to in paragraph (a)(1)(i)(A), (B), (D) or (E) of
Rule 144A under the Securities Act (a "QIB") is the holder of any such
destroyed, lost or stolen Equipment Note, then the written indemnity of such
QIB, signed by an authorized officer thereof, in favor of, delivered to and in
form reasonably satisfactory to Lessee, Owner Trustee and Mortgagee shall be
accepted as satisfactory indemnity and security and no further indemnity or
security shall be required as a condition to the execution and delivery of such
new Equipment Note. Subject to compliance by the Note Holder of the requirements
set forth in this Section 2.08, Mortgagee and Owner Trustee shall use all
reasonable efforts to issue new Equipment Notes within 10 Business Days of the
date of the written request therefor from the Note Holder.
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SECTION 2.09. Payment of Expenses on Transfer; Cancellation
(a) No service charge shall be made to a Note Holder for any registration
of transfer or exchange of Equipment Notes, but the Mortgagee, as Equipment Note
Registrar, may require payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Equipment Notes.
(b) The Mortgagee shall cancel all Equipment Notes surrendered for
replacement, redemption, transfer, exchange, payment or cancellation and shall
destroy the canceled Equipment Notes.
SECTION 2.10. Mandatory Redemptions of Equipment Notes
(a) On the date on which Lessee is required pursuant to Section 10.1.2 or
Section 10.1.3 of the Lease to make payment for an Event of Loss with respect to
the Aircraft, all of the Equipment Notes shall be redeemed in whole at a
redemption price equal to 100% of the unpaid Original Amount thereof, together
with all accrued interest thereon to the date of redemption and all other
Secured Obligations owed or then due and payable to the Note Holders but without
Make-Whole Amount.
(b) If the Lease is terminated with respect to the Aircraft by Lessee
pursuant to Section 9 or Section 17.3.1 thereof, and Lessee shall not have
assumed all of the obligations of the Owner Trustee hereunder pursuant to
Section 2.11(b) and to Section 10.1.4 of the Participation Agreement, on the
date the Lease is so terminated, all the Equipment Notes shall be redeemed in
whole at a redemption price equal to 100% of the unpaid Original Amount thereof,
together with accrued interest thereon to the date of redemption and all other
amounts then due and payable hereunder and under the Participation Agreement and
all other Operative Agreements to the Note Holders plus the Make-Whole Amount,
if any.
SECTION 2.11. Voluntary Redemptions of Equipment Notes; Assumption of
Equipment Notes
(a) All (but not less than all) of the Equipment Notes may be redeemed by
the Owner Trustee in connection with a transaction described in, and subject to
the terms and conditions of, Section 11 of the Participation Agreement, or
otherwise, with the prior written consent of Lessee, upon in either case at
least 20 days revocable prior written notice to the Mortgagee and the Note
Holders and the Equipment Notes shall, as provided in Section 11 of the
Participation Agreement, be redeemed in whole at a redemption price equal to
100% of the unpaid Original Amount thereof, together with accrued interest
thereon to the date of redemption and all other Secured Obligations owed or then
due and payable to
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the Note Holders plus (except as provided in Section 11 of the Participation
Agreement) the Make-Whole Amount, if any.
(b) If, in accordance with Section 10.1.4 of the Participation Agreement,
Lessee shall assume (on a full recourse basis) all of the obligations of the
Owner Trustee hereunder, under the Equipment Notes and all other Operative
Agreements by supplemental indenture satisfactory to the Mortgagee (which shall
contain (i) the provisions substantially similar to Sections 6, 7, 8, 10, 11, 12
and 13.2 of the Lease and (ii) other provisions necessary or advisable, in the
reasonable discretion of the Mortgagee, to effectuate such assumption), then
upon delivery of such supplemental indenture, payment by Lessee of all expenses
(including reasonable fees and expenses of counsel) of the Owner Trustee, the
Owner Participant and each Indenture Indemnitee and delivery of an opinion of
counsel for Lessee that such assumption has been duly and validly effected, the
Owner Trustee shall be released and discharged from any further obligations
hereunder and under the Equipment Notes and all other Operative Agreements and
the Owner Participant shall be released and discharged from any further
obligations hereunder and under the Equipment Notes and any other Operative
Agreement to which it is a party, except with respect to any such obligations
that accrued prior thereto.
SECTION 2.12. Redemptions; Notice of Redemption
(a) Neither any redemption of any Equipment Note nor any purchase by the
Owner Trustee of any Equipment Note may be made except to the extent and in the
manner expressly permitted by this Trust Indenture. No purchase of any Equipment
Note may be made by the Mortgagee.
(b) Notice of redemption or purchase with respect to the Equipment Notes
shall be given by the Mortgagee by first-class mail, postage prepaid, mailed not
less than 15 nor more than 60 days prior to the applicable redemption date and
purchase date, as applicable, to each Note Holder of such Equipment Notes to be
redeemed or purchased, at such Note Holder's address appearing in the Equipment
Note Register; provided that, in the case of a redemption to be made pursuant to
Section 2.10(b) or Section 2.11(a), such notice shall be revocable and shall be
deemed revoked in the event that the Lease does not in fact terminate on the
specified termination date or if notice of such redemption shall have been given
in connection with a refinancing of Equipment Notes and the Mortgagee receives
written notice of such revocation from the Lessee or the Owner Trustee not later
than three days prior to the redemption date; provided, further, that, in the
case of a redemption where the Lessee is terminating the Lease pursuant to
Section 9 thereof, the specified redemption date may be postponed up to 10
Business Days. All notices of redemption or purchase, as applicable, shall
state: (1) the redemption or purchase date, (2) the applicable basis for
determining the redemption or purchase price, (3) whether or not such notice is
revocable or the
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redemption date may be postponed and, if so, the conditions under which the
notice may be revoked or the redemption date may be postponed, (4) that on the
redemption or purchase date, the redemption or purchase price will become due
and payable upon each such Equipment Note, and that, if any such Equipment Notes
are then outstanding, interest on such Equipment Notes shall cease to accrue on
and after such redemption or purchase date, and (5) the place or places where
such Equipment Notes are to be surrendered for payment of the redemption or
purchase price.
(c) On or before the redemption or purchase date, (unless, if a redemption
date, the notice with respect thereto shall have been revoked pursuant to
Section 2.12(b)), as applicable, the Owner Trustee or the Owner Participant (or
any person on behalf of the Owner Trustee or Owner Participant), as the case may
be, shall, to the extent an amount equal to the redemption or purchase price for
the Equipment Notes to be redeemed or purchased on the redemption or purchase
date shall not then be held in the Trust Indenture Estate, deposit or cause to
be deposited with the Mortgagee by 12:00 noon on the redemption or purchase date
in immediately available funds the redemption or purchase price of the Equipment
Notes to be redeemed or purchased.
(d) Notice of redemption or purchase having been given as aforesaid (and
not revoked or deemed revoked as contemplated in the proviso to Section
2.12(b)), the Equipment Notes to be redeemed or purchased shall, on the
redemption date, postponed redemption date or purchase date, as applicable,
become due and payable at the Corporate Trust Office of the Mortgagee or at any
office or agency maintained for such purposes pursuant to Section 2.07, and from
and after such redemption date, postponed redemption date or purchase date
(unless there shall be a default in the payment of the redemption or purchase
price) any such Equipment Notes then outstanding shall cease to bear interest.
Upon surrender of any such Equipment Note for redemption or purchase in
accordance with said notice, such Equipment Note shall be redeemed or purchased
at the redemption or purchase price, as applicable. If any Equipment Note called
for redemption or purchase shall not be so paid upon surrender thereof for
redemption or purchase, the principal amount thereof shall, until paid, continue
to bear interest from the applicable redemption or purchase date at the interest
rate in effect for such Equipment Note as of such redemption or purchase date.
SECTION 2.13. Option to Purchase Equipment Notes
The Owner Trustee and the Owner Participant may, upon the events and
subject to the terms and conditions and for the price set forth in this Section
2.13, purchase all but not less than all of the Equipment Notes outstanding
hereunder, and each Note Holder agrees that it will, upon such events and
subject to such terms and conditions and upon receipt of such price, sell,
assign, transfer and convey to such purchaser or its nominee (without recourse
or warranty of any kind except against Liens on such Equipment Notes arising by,
through or under such holder), all of the right, title and interest of such Note
Holder in and to the Equipment Notes held by it, and such purchaser or its
nomi-
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nee shall assume all of such holder's obligations under the Participation
Agreement and hereunder.
Such option to purchase the Equipment Notes may be exercised by the Owner
Trustee or the Owner Participant at any time following the occurrence of any of
the following events, and in any such event the purchase price thereof shall
equal for each Equipment Note, the aggregate unpaid Original Amount thereof,
plus accrued and unpaid interest thereon to, but not including, the date of
purchase and all other Secured Obligations owed, or then due and payable
hereunder, to the holder thereof (including under the third paragraph of Section
2.02 hereof). Such option to purchase the Equipment Notes may be exercised (x)
upon a Mortgagee Event described in clause (i) of the definition thereof or (y)
in the event there shall have occurred and be continuing a Lease Event of
Default or (z) upon either the Equipment Notes becoming due and payable pursuant
to Section 4.04(b) hereof or the Mortgagee taking action or notifying the Owner
Trustee that it intends to take action to foreclose the Lien of this Trust
Indenture or otherwise commence the exercise of any significant remedy under
this Trust Indenture or the Lease, provided that if such option is exercised
pursuant to clause (y) when there shall have occurred and be continuing for less
than 180 days a Lease Event of Default, the purchase price thereof shall equal
the price provided in the preceding sentence plus the Make-Whole Amount, if any.
Such option to purchase the Equipment Notes may be exercised by the Owner
Trustee or the Owner Participant giving irrevocable written notice of its
election of such option to the Mortgagee, which notice shall specify a date for
such purchase within 15 days of the date of such notice. The Mortgagee shall not
exercise any of the remedies hereunder and, without the consent of the Owner
Trustee or the Owner Participant, under the Lease, during the period from the
date of the giving of such notice until the date on which such purchase is
required to occur pursuant to the terms of the preceding sentence.
If the Owner Trustee or the Owner Participant on or before the date of such
purchase shall so request, the Note Holders will comply with all the provisions
of Section 2.07 to enable new Equipment Notes to be issued to the Owner Trustee
or the Owner Participant or its nominee in such denominations as the Owner
Trustee or the Owner Participant shall request. All taxes, charges and expenses
required pursuant to Section 2.09 in connection with the issuance of such new
Equipment Note shall be borne by the Owner Participant.
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SECTION 2.14. Subordination
(a) The Owner Trustee and, by acceptance of its Equipment Notes of any
Series, each Note Holder of such Series, hereby agree that no payment or
distribution shall be made on or in respect of the Secured Obligations owed to
such Note Holder of such Series, including any payment or distribution of cash,
property or securities after the commencement of a proceeding of the type
referred to in Section 4.02(g) hereof, except as expressly provided in Article
III hereof.
(b) By the acceptance of its Equipment Notes of any Series (other than
Series A-1 and Series A-2), each Note Holder of such Series agrees that in the
event that such Note Holder, in its capacity as a Note Holder, shall receive any
payment or distribution on any Secured Obligations in respect of such Series
which it is not entitled to receive under this Section 2.14 or Article III
hereof, it will hold any amount so received in trust for the Senior Holder (as
defined in Section 2.14(c) hereof) and will forthwith turn over such payment to
the Mortgagee in the form received to be applied as provided in Article III
hereof.
(c) As used in this Section 2.14, the term "Senior Holder" shall mean (i)
the Note Holders of Series A-1 and Series A-2 until the Secured Obligations in
respect of Series A-1 and Series A-2 Equipment Notes have been paid in full and
(ii) after the Secured Obligations in respect of Series A-1 and Series A-2
Equipment Notes have been paid in full, the Note Holders of Series B until the
Secured Obligations in respect of Series B Equipment Notes have been paid in
full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Basic Rent Distribution
Except as otherwise provided in Sections 3.02 and 3.03 hereof, each
installment of Basic Rent, any payment of interest on overdue installments of
Basic Rent and any payment received by the Mortgagee pursuant to Section 4.03
hereof shall be promptly distributed in the following order of priority:
First, (i) so much of such installment or payment as shall be required to pay in
full the aggregate amount of the payment or payments of Original Amount and
interest (as well as any interest on any overdue Original Amount and, to
the extent permitted by Law, on any overdue interest)
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then due under all Series A-1 and Series A-2 Equipment Notes shall be
distributed to the Note Holders of Series A-1 and Series A-2 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-1 and
Series A-2 Equipment Note bears to the aggregate amount of the
payments then due under all Series A-1 and Series A-2 Equipment Notes;
(ii) after giving effect to paragraph (i) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Original Amount and
interest (as well as any interest on any overdue Original Amount and,
to the extent permitted by Law, on interest) then due under all Series
B Equipment Notes shall be distributed to the Note Holders of Series B
ratably, without priority of one over the other, in the proportion
that the amount of such payment or payments then due under each Series
B Equipment Note bears to the aggregate amount of the payments then
due under all Series B Equipment Notes; and
(iii) after giving effect to paragraph (ii) above, so much of such
installment or payment remaining as shall be required to pay in full
the aggregate amount of the payment or payments of Original Amount and
interest (as well as any interest on any overdue Original Amount and,
to the extent permitted by Law, on any overdue interest) then due
under all Series C Equipment Notes shall be distributed to the Note
Holders of Series C ratably, without priority of one over the other,
in the proportion that the amount of such payment or payments then due
under each Series C Equipment Note bears to the aggregate amount of
the payments then due under all Series C Equipment Notes; and
Second, the balance, if any, of such installment remaining thereafter shall be
distributed to the Owner Trustee; provided, however, that if an Event of
Default shall have occurred and be continuing, then such balance as shall
not constitute Excluded Payments shall not be distributed as provided in
this clause "Second" but shall be held by the Mortgagee as part of the
Trust Indenture Estate and invested in accordance with Section 5.09 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 3.03
hereof shall be applicable, in which event such balance shall be
distributed in accordance with the provisions of such Section 3.03, or
(iii) the 120th day after the receipt of such payment in which
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case such payment shall be distributed as provided in this clause
"Second".
SECTION 3.02. Event of Loss; Replacement; Voluntary Termination; Optional
Redemption
Except as otherwise provided in Section 3.03 hereof, any
payments received by the Mortgagee (i) with respect to the Airframe or the
Airframe and one or more Engines as the result of an Event of Loss, (ii)
pursuant to a voluntary termination of the Lease pursuant to Section 9 thereof,
(iii) pursuant to a purchase of the Aircraft by the Lessee pursuant to Section
17.3.1(a) (B) or (C) of the Lease, or (iv) pursuant to an optional redemption of
the Equipment Notes pursuant to Section 2.11 hereof shall be applied to
redemption of the Equipment Notes and to all other Secured Obligations by
applying such funds in the following order of priority:
First, (a) to reimburse the Mortgagee and the Note Holders
for any reasonable costs or expenses incurred in
connection with such redemption for which they are
entitled to reimbursement, or indemnity by Lessee,
under the Operative Agreements and then (b) to pay any
other amounts then due to the Mortgagee, the Note
Holders and the other Indenture Indemnitees under this
Trust Indenture, the Participation Agreement or the
Equipment Notes;
Second, (i) to pay the amounts specified in paragraph (i) of
clause "Third" of Section 3.03 hereof plus Make-Whole
Amount, if any, then due and payable in respect of the
Series A-1 and Series A-2 Equipment Notes;
(ii) after giving effect to paragraph (i) above, to pay the
amounts specified in paragraph (ii) of clause "Third"
of Section 3.03 hereof plus Make-Whole Amount, if any,
then due and payable in respect of the Series B
Equipment Notes; and
(iii) after giving effect to paragraph (ii) above, to pay
the amounts specified in paragraph (iii) of clause
"Third" of Section 3.03 hereof plus Make-Whole Amount,
if any, then due and payable in respect of the Series
C Equipment Notes; and
Third, as provided in clause "Fourth" of Section 3.03 hereof;
provided, however, that if a Replacement Airframe or Replacement Engine shall be
substituted for the Airframe or Engine subject to such Event of Loss as provided
in Section 10 of
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the Lease and in accordance with Section 5.06 hereof, any insurance,
condemnation or similar proceeds which result from such Event of Loss and are
paid over to the Mortgagee shall be held by the Mortgagee as permitted by
Section 6.04 hereof (provided that such moneys shall be invested as provided in
Section 5.09 hereof) as additional security for the obligations of Lessee under
the Lessee Operative Agreements and, unless otherwise applied pursuant to the
Lease, such proceeds (and such investment earnings) shall be released to the
Lessee at the Lessee's written request upon the release of such damaged Airframe
or Engine and the replacement thereof as provided in the Lease.
SECTION 3.03. Payments After Event of Default
Except as otherwise provided in Section 3.04 hereof, all payments received
and amounts held or realized by the Mortgagee (including any amounts realized by
the Mortgagee from the exercise of any remedies pursuant to Section 15 of the
Lease or Article IV hereof) after an Event of Default shall have occurred and be
continuing and after the Equipment Notes shall have become due and payable, as
well as all payments or amounts then held by the Mortgagee as part of the Trust
Indenture Estate, shall be promptly distributed by the Mortgagee in the
following order of priority:
First, so much of such payments or amounts as shall be required to (i) reimburse
the Mortgagee or WTC for any tax (except to the extent resulting from a
failure of the Mortgagee to withhold taxes pursuant to Section 2.04(b)
hereof), expense or other loss (including, without limitation, all amounts
to be expended at the expense of, or charged upon the rents, revenues,
issues, products and profits of, the property included in the Trust
Indenture Estate (all such property being herein called the "Mortgaged
Property") pursuant to Section 4.05(b) hereof) incurred by the Mortgagee or
WTC (to the extent not previously reimbursed), the expenses of any sale, or
other proceeding, reasonable attorneys' fees and expenses, court costs, and
any other expenditures incurred or expenditures or advances made by the
Mortgagee, WTC or the Note Holders in the protection, exercise or
enforcement of any right, power or remedy or any damages sustained by the
Mortgagee, WTC or any Note Holder, liquidated or otherwise, upon such Event
of Default shall be applied by the Mortgagee as between itself, WTC and the
Note Holders in reimbursement of such expenses and any other expenses for
which the Mortgagee, WTC or the Note Holders are entitled to reimbursement
under any Operative Agreement and (ii) all amounts payable to the other
Indenture Indemnitees hereunder and under the Participation Agreement and
the Lease; and in the case the aggregate amount to be so distributed is
insufficient to pay as aforesaid in clauses (i) and (ii), then ratably,
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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 Note Holders for payments made
pursuant to Section 5.03 hereof (to the extent not previously reimbursed)
shall be distributed to such then existing or prior Note 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 Note
Holder pursuant to said Section 5.03 hereof;
Third, (i) so much of such payments or amounts remaining as shall be required to
pay in full the aggregate unpaid Original Amount of all Series A-1 and
Series A-2 Equipment Notes, and the accrued but unpaid interest and other
amounts due thereon (other than Make-Whole Amount which shall not be due
and payable) and all other Secured Obligations in respect of the Series A-1
and Series A-2 Equipment Notes (other than Make-Whole Amount) to the date
of distribution, shall be distributed to the Note Holders of Series A-1 and
Series A-2, 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 Original
Amount of all Series A-1 and Series A-2 Equipment Notes held by each holder
plus the accrued but unpaid interest and other amounts due hereunder or
thereunder (other than Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid Original Amount of all Series
A-1 and Series A-2 Equipment Notes held by all such holders plus the
accrued but unpaid interest and other amounts due thereon (other than
Make-Whole Amount) to the date of distribution;
(ii) after giving effect to paragraph (i) above, so much of such payments
or amount remaining as shall be required to pay in full the aggregate
unpaid Original Amount of all Series B Equipment Notes, and the
accrued but unpaid interest and other amounts due thereon (other than
Make-Whole Amount which shall not be due and payable) and all other
Secured Obligations in respect of the Series B Equipment Notes (other
than Make-Whole Amount) to the date of distribution, shall be
distributed to the Note Holders of Series B, and in case the aggregate
amount so to be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the other, in
the proportion that the aggregate unpaid Original Amount of all Series
B Equipment Notes held by
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each holder plus the accrued but unpaid interest and other amounts due
hereunder or thereunder (other than the Make-Whole Amount, if any) to
the date of distribution, bears to the aggregate unpaid Original
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 the Make-Whole Amount) to the date of distribution; and
(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 Original Amount of all Series C Equipment Notes, and the
accrued but unpaid interest and other amounts due thereon (other than
Make-Whole Amount which shall not be due and payable) and all other
Secured Obligations in respect of the Series C Equipment Notes (other
than Make-Whole Amount) to the date of distribution, shall be
distributed to the Note Holders of Series C, and in case the aggregate
amount so to be distributed shall be insufficient to pay in full as
aforesaid, then ratably, without priority of one over the other, in
the proportion that the aggregate unpaid Original 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 the
Make-Whole Amount, if any) to the date of distribution, bears to the
aggregate unpaid Original 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 the Make-Whole Amount) to the date of
distribution; and
Fourth: the balance, if any, of such payments or amounts remaining thereafter
shall be distributed to the Owner Trustee.
No Make-Whole Amount shall be due and payable on the Equipment Notes as a
consequence of the acceleration of the Equipment Notes as a result of an Event
of Default.
SECTION 3.04. Certain Payments
(a) Any payments received by the Mortgagee for which no provision as to the
application thereof is made in this Trust Indenture and for which such provision
is made in the Lease or the Participation Agreement shall be applied forthwith
to the purpose for which such payment was made in accordance with the terms of
the Lease or the Participation Agreement, as the case may be.
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(b) Notwithstanding anything to the contrary contained in this Article III,
the Mortgagee will distribute promptly upon receipt any indemnity payment
received by it from the Owner Trustee or Lessee in respect of the Mortgagee in
its individual capacity, any Note Holder or any other Indenture Indemnitee, in
each case whether pursuant to Section 9 of the Participation Agreement or as
Supplemental Rent, directly to the Person entitled thereto. Any payment received
by the Mortgagee under the third paragraph of Section 2.02 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 in this Article III,
any payments received by the Mortgagee which constitute Excluded Payments shall
be distributed promptly upon receipt by the Mortgagee directly to the Person or
Persons entitled thereto.
(d) Notwithstanding any provision of this Trust Indenture to the contrary,
any amounts held by Mortgagee pursuant to the terms of the Lease shall be held
by the Mortgagee as security for the obligations of Lessee under the Lessee
Operative Agreements and, if and when required by the Lease, paid and/or applied
in accordance with the applicable provisions of the Lease.
SECTION 3.05. Other Payments
Any payments received by the Mortgagee for which no provision as to the
application thereof is made in the Lease, the Participation Agreement, elsewhere
in this Trust Indenture or in any other Operative Agreement shall be distributed
by the Mortgagee to the extent received or realized at any time (i) prior to the
payment in full of all Secured Obligations due the Note Holders, in the order of
priority specified in Section 3.01 hereof subject to the proviso thereto, and
(ii) after payment in full of all Secured Obligations, in the following order of
priority:
First, to the extent payments or amounts described in clause "First" of Section
3.03 hereof are otherwise obligations of Lessee under the Operative
Agreements or for which the Lessee is obligated to indemnify against
thereunder, in the manner provided in clause "First" of Section 3.03
hereof, and
Second, in the manner provided in clause "Fourth" of Section 3.03 hereof.
Further, and except as otherwise provided in Sections 3.02, 3.03 and 3.04
hereof, all payments received and amounts realized by the Mortgagee 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
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thereto), to the extent received or realized at any time after payment in full
of all Secured Obligations due the Note Holders, shall be distributed by the
Mortgagee in the order of priority specified in clause (ii) of the immediately
preceding sentence of this Section 3.05.
SECTION 3.06. Payments to Owner Trustee
Any amounts distributed hereunder by the Mortgagee to the Owner Trustee
shall be paid to the Owner Trustee (within the time limits contemplated by
Section 2.04(a)) by wire transfer of funds of the type received by the Mortgagee
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 Mortgagee from time
to time. The Owner Trustee hereby notifies the Mortgagee that unless and until
the Mortgagee receives notice to the contrary from the Owner Trustee, all
amounts to be distributed to the Owner Trustee pursuant to clause "Second" of
Section 3.01 or clause "Fourth" of Section 3.03 hereof shall be distributed by
wire transfer of funds of the type received by the Mortgagee to the Owner
Participant's account (within the time limits contemplated by Section 2.04(a))
specified in Schedule 1 to the Participation Agreement.
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF MORTGAGEE
SECTION 4.01. Covenants of Owner Trustee
The Owner Trustee hereby covenants and agrees (the covenants and agreements
only in clause (b) below being made by the Owner Trustee in its individual
capacity) as follows:
(a) the Owner Trustee will duly and punctually pay the Original Amount of,
Make-Whole Amount, if any, and interest on and other amounts due under the
Equipment Notes and hereunder in accordance with the terms of the Equipment
Notes and this Trust Indenture and all amounts, if any, payable by it to the
Note Holders under the Participation Agreement or Section 9 of the Lease;
(b) the Owner Trustee in its individual capacity covenants and agrees that
it shall not, directly or indirectly, cause or permit to exist a Lessor Lien
attributable to it in its individual capacity with respect to the Aircraft or
any other portion of the Trust Estate; that it will promptly, at its own
expense, take such action as may be necessary to duly discharge such Lessor Lien
attributable to it in its individual capacity; and that it will make
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restitution to the Trust Indenture Estate for any actual diminution of the
assets of the Trust Estate resulting from such Lessor Liens attributable to it
in its individual capacity;
(c) in the event the Owner Trustee shall have Actual Knowledge of an Event
of Default, a Default or an Event of Loss, the Owner Trustee will give prompt
written notice of such Event of Default, Default or Event of Loss to the
Mortgagee, each Note Holder, Lessee and the Owner Participant;
(d) the Owner Trustee will furnish to the Note Holders and the Mortgagee,
promptly upon receipt thereof, duplicates or copies of all reports, notices,
requests, demands, certificates and other instruments furnished to the Owner
Trustee under the Lease, including, without limitation, a copy of any
Termination Notice and a copy of each report or notice received pursuant to
Section 9 or 8.2 or Annex D, Paragraph E of the Lease to the extent that the
same shall not have been furnished or is not required to be furnished by the
Lessee to the Note Holders or the Mortgagee pursuant to the Lease;
(e) except with the consent of the Mortgagee (acting pursuant to
instructions given in accordance with Section 9.01 hereof) or as provided in
Sections 2 and 11 of the Participation Agreement, the Owner Trustee will not
contract for, create, incur, assume or suffer to exist 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 be or become contingently liable,
directly or indirectly, in connection with the Debt of any other person; and
(f) the Owner Trustee will not enter into any business or other activity
other than the business of owning the Aircraft, the leasing thereof to Lessee
and the carrying out of the transactions contemplated hereby and by the Lease,
the Participation Agreement and the Trust Agreement and the other Operative
Agreements.
SECTION 4.02. Event of Default
"Event of Default" means any of the following events (whatever the reason
for such Event of Default and whether such event shall be voluntary or
involuntary or come about or be effected by operation of Law or pursuant to or
in compliance with any judgment, decree or order of any court or any order, rule
or regulation of any administrative or governmental body):
(a) any Lease Event of Default (provided that any such Lease Event of
Default caused solely by a failure of Lessee to pay to the Owner Trustee or the
Owner Participant when due any amount that is included in the definition of
Excluded Payments shall not
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constitute an Event of Default unless notice is given by the Owner Participant
to the Mortgagee that such failure shall constitute an Event of Default); or
(b) the failure of the Owner Trustee to pay when due any payment of
Original Amount of, interest on, Make-Whole Amount, if any, or other amount due
and payable under any Equipment Note or hereunder (other than as a result of a
Lease Event of Default or a Lease Default) and such failure shall have continued
unremedied for ten Business Days in the case of any payment of Original Amount
or interest or Make-Whole Amount, if any, thereon and, in the case of any other
amount, for ten Business Days after the Owner Trustee or the Owner Participant
receives written demand from the Mortgagee or any Note Holder; or
(c) any Lien required to be discharged by the Owner Trustee, in its
individual capacity pursuant to Section 4.01(b) hereof or in its individual or
trust capacity pursuant to Section 7.3.1 of the Participation Agreement, or by
the Owner Participant pursuant to Section 7.2.1 of the Participation Agreement
shall remain undischarged for a period of 30 days after the Owner Trustee or the
Owner Participant, as the case may be, shall have received written notice from
the Mortgagee or any Note Holder of such Lien; or
(d) any representation or warranty made by the Owner Participant or the
Owner Trustee in the Participation Agreement or this Trust Indenture or in any
certificate furnished by the Owner Participant or the Owner Trustee to the
Mortgagee or any Note Holder in connection with the transactions contemplated by
the Operative Agreements shall prove to have been false or incorrect when made
in any material respect and continues to be material and adverse to the
interests of the Mortgagee or the Note Holders; and if such misrepresentation is
capable of being corrected and if such correction is being sought diligently,
such misrepresentation shall not have been corrected within 60 days (or, without
affecting Section 4.02(f) hereof, in the case of the representation made in
Section 6.3.6 or 6.2.6 of the Participation Agreement as to citizenship of the
Owner Trustee in its individual capacity or of the Owner Participant,
respectively, as soon as is reasonably practicable but in any event within 60
days) following notice thereof from the Mortgagee or any Note Holder to the
Owner Trustee or the Owner Participant, as the case may be; or
(e) other than as provided in (c) above or (f) below, any failure by the
Owner Trustee or Owner Participant to observe or perform any other covenant or
obligation of the Owner Trustee or Owner Participant, as the case may be, for
the benefit of the Mortgagee or the Note Holders contained in the Participation
Agreement, Section 4.2.1 of the Trust Agreement, the Equipment Notes or this
Trust Indenture which is not remedied within a period of 60 days after notice
thereof has been given to the Owner Trustee and the Owner Participant; or
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(f) if at any time when the Aircraft is registered under the Laws of the
United States, the Owner Participant shall not be a "citizen of the United
States" within the meaning of Section 40102(a)(15) of Part A of Subtitle VII of
Xxxxx 00, Xxxxxx Xxxxxx Code, and as the result thereof the registration of the
Aircraft under the Federal Aviation Act, and regulations then applicable
thereunder, shall cease to be effective; provided that no Event of Default shall
be deemed to have occurred under this paragraph (f) unless such circumstances
continue unremedied for more than 30 days after the Owner Participant has Actual
Knowledge of the state of facts that resulted in such ineffectiveness and of
such loss of citizenship; or
(g) at any time either (i) the commencement of an involuntary case or other
proceeding in respect of the Owner Participant, the Owner Trustee, the Trust or
the Trust Estate 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 seeking the appointment
of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or
similar official) of the Owner Participant, the Owner Trustee, the Trust or the
Trust Estate 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 60 consecutive
days; or (ii) the commencement by the Owner Participant, the Owner Trustee, the
Trust or the Trust Estate of a voluntary case or proceeding 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 the Owner Participant, the Owner Trustee, the
Trust or the Trust Estate to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of the Owner Participant, the Owner Trustee, the Trust or the
Trust Estate or for all or substantially all of its property, or the making by
the Owner Participant, the Owner Trustee, the Trust or the Trust Estate of any
assignment for the benefit of creditors or the Owner Participant or the Owner
Trustee shall take any action to authorize any of the foregoing; provided,
however, that an event referred to in this Section 4.02(g) with respect to the
Owner Participant shall not constitute an Event of Default if within 30 days of
the commencement of the case or proceeding a final non-appealable order,
judgment or decree shall be entered in such case or proceeding by a court or a
trustee, custodian, receiver or liquidator, to the effect that, no part of the
Trust Estate (except for the Owner Participant's beneficial interest therein)
and no right, title or interest under the Trust Indenture Estate shall be
included in, or be subject to, any declaration or adjudication of, or
proceedings with respect to, the bankruptcy, insolvency or liquidation of the
Owner Participant referred to in this Section 4.02(g).
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SECTION 4.03. Certain Rights
The Mortgagee shall give the Note Holders, the Owner Trustee and the Owner
Participant prompt written notice of any Event of Default of which the Mortgagee
has Actual Knowledge and shall give the Note Holders, the Owner Trustee and the
Owner Participant not less than ten Business Days prior written notice of the
date (the "Enforcement Date") on or after which the Mortgagee may, subject to
the limitation set forth in Section 4.04(a), commence and consummate the
exercise of any remedy or remedies described in Section 4.04, 4.05 or 4.06
hereof; provided, however, that in the event the Mortgagee shall have validly
terminated the Lease, the Mortgagee shall not sell or lease, or otherwise afford
the use of, the Aircraft or any portion thereof to the Lessee or any Affiliate
thereof. Without limiting the generality of the foregoing, the Mortgagee shall
give the Owner Trustee, the Owner Participant and the Lessee at least ten
Business Days prior written notice (which may be given concurrently with notice
of the Enforcement Date) of any declaration of the Lease to be in default
pursuant to Sections 14 and 15 of the Lease or any termination of the Lease or
of the exercise of any remedy or remedies pursuant to Section 15 of the Lease.
If an Event of Default shall have occurred and be continuing, the Owner Trustee
shall have the rights set forth below, any of which may be exercised directly by
the Owner Participant.
If as a result of the occurrence of an Event of Default in respect of the
nonpayment by Lessee of Basic Rent due under the Lease, the Mortgagee shall have
insufficient funds to make any payment of Original Amount and interest on any
Equipment Note on the day it becomes due and payable, the Owner Trustee may, but
shall not be obligated to pay the Mortgagee prior to the Enforcement Date, in
the manner provided in Section 2.04 hereof, for application in accordance with
Section 3.01 hereof, an amount equal to the portion of the Original Amount and
interest (including interest, if any, on any overdue payments of such portion of
Original Amount and interest) then due and payable on the Equipment Notes, and,
unless the Owner Trustee has cured Events of Default in respect of payments of
Basic Rent on each of the three immediately preceding Basic Rent payment dates,
or the Owner Trustee has cured six previous Events of Default in respect of
payments of Basic Rent, such payment by the Owner Trustee shall, solely for
purposes of this Trust Indenture be deemed to cure any Event of Default which
would otherwise have arisen on account of the nonpayment by Lessee of such
installment of Basic Rent (but not any other Default or Event of Default which
shall have occurred and be continuing).
If any Event of Default (other than in respect of the nonpayment of Basic
Rent by the Lessee) which can be cured by the payment of money has occurred, the
Owner Trustee may, but shall not be obligated to, cure such Event of Default by
making such payment prior to the Enforcement Date as is necessary to accomplish
the observance or per-
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formance of the defaulted covenant, condition or agreement to the party entitled
to the same.
Except as hereinafter in this Section 4.03 provided, the Owner Trustee
shall not, as a result of exercising the right to cure any such Event of
Default, obtain any Lien on any of the Mortgaged Property or any Rent payable
under the Lease for or on account of costs or expenses incurred in connection
with the exercise of such right, nor shall any claim of the Owner Trustee
against Lessee or any other party for the repayment of such costs or expenses
impair the prior right and security interest of the Mortgagee in and to the
Mortgaged Property. Upon any payment by the Owner Trustee pursuant to the first
or second preceding paragraphs of this Section 4.03, the Owner Trustee shall be
subrogated to the rights of the Mortgagee and the Note Holders in respect of the
Basic Rent which was overdue at the time of such payment and interest payable by
the Lessee on account of its being overdue and any Supplemental Rent in respect
of the reimbursement of amounts paid by Owner Trustee pursuant to the
immediately preceding paragraph (but in either case shall have no rights as a
secured party hereunder), and thereafter, the Owner Trustee shall be entitled
(so long as the application thereof shall not give rise to an Event of Default
hereunder) to receive such overdue Basic Rent or Supplemental Rent, as the case
may be, and interest thereon upon receipt thereof by the Mortgagee; provided,
however, that (i) if the Original Amount and interest on the Equipment Notes
shall have become due and payable pursuant to Section 4.04(b) hereof, such
subrogation shall, until the Secured Obligations shall have been paid in full,
be subordinate to the rights of the Mortgagee, the Note Holders and the
Indenture Indemnitees in respect of such payment of overdue Basic Rent,
Supplemental Rent and such interest and (ii) the Owner Trustee shall not
otherwise attempt to recover any such amount paid by it on behalf of the Lessee
pursuant to this Section 4.03 except by demanding of the Lessee payment of such
amount, or by commencing an action at law against the Lessee and obtaining and
enforcing a judgment against the Lessee for the payment of such amount or taking
appropriate action in a pending action at law against the Lessee (provided, that
at no time while an Event of Default shall have occurred and be continuing shall
any such demand be made or shall any such action be commenced (or continued) and
any amounts nevertheless received by the Owner Trustee in respect thereof shall
be held in trust for the benefit of, and promptly paid to, the Mortgagee for
distribution as provided in Section 3.03 hereof).
Neither the Owner Trustee nor the Owner Participant shall have the right to
cure any Lease Event of Default or Lease Default except as specified in this
Section 4.03.
SECTION 4.04. Remedies
(a) If an Event of Default shall have occurred and be continuing and so
long as the same shall continue unremedied, then and in every such case the
Mortgagee may,
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subject to the second and third paragraphs of this Section 4.04(a), exercise any
or all of the rights and powers and pursue any and all of the remedies pursuant
to this Article IV and shall have and may exercise all of the rights and
remedies of a secured party under the Uniform Commercial Code and, in the event
such Event of Default is also a Lease Event of Default, any and all of the
remedies pursuant to Section 15 of the Lease and may take possession of all or
any part of the properties covered or intended to be covered by the Lien created
hereby or pursuant hereto and may exclude the Owner Participant, the Owner
Trustee and Lessee and all persons claiming under any of them wholly or partly
therefrom; provided, that the Mortgagee shall give the Owner Trustee and the
Owner Participant 20 days prior written notice of its intention to sell the
Aircraft, and provided, further, that in the event the Mortgagee shall have
validly terminated the Lease, the Mortgagee shall not sell or lease, or
otherwise afford the use of, the Aircraft or any portion thereof to the Lessee
or any Affiliate thereof. Unless an Event of Default not resulting from or
relating to a Lease Event of Default has occurred and is continuing, the Owner
Participant may bid at the sale and become the purchaser. Without limiting any
of the foregoing, it is understood and agreed that the Mortgagee 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 Trust Indenture to the contrary notwithstanding, if the
Event of Default arises solely by reason of one or more circumstances which
constitutes a Lease Event of Default, the Mortgagee shall not be entitled to
exercise any remedy hereunder unless the Mortgagee as security assignee of the
Owner Trustee shall have exercised or concurrently be exercising one or more of
the dispossessory remedies provided for in Section 15 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
Mortgagee 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 "New 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 New Section 1110 Period to the extent that the
continuation of such Continuous Stay Period subsequent to the expiration of the
New Section 1110 Period (A) results from an agreement by the trustee or the
debtor-in-possession in such proceeding during the New 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 New Section 1110 Period with the consent of the Mortgagee
pursuant to Section 1110(b) of the Bankruptcy Code or (C) results from the
Les-
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see's assumption during the New 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 Mortgagee'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 Mortgagee 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 Mortgagee hereunder.
It is expressly understood and agreed that, subject only to the two
preceding paragraphs, the inability, described in such paragraphs, of the
Mortgagee to exercise any right or remedy under the Lease shall in no event and
under no circumstances prevent the Mortgagee from exercising any or all of its
rights, powers and remedies under this Trust Indenture, including, without
limitation, this Article IV.
(b) If an Event of Default shall have occurred and be continuing, then and
in every such case the Mortgagee may (and shall, upon receipt of a written
demand therefor from a Majority in Interest of Note Holders), subject to Section
4.03 hereof, at any time, by delivery of written notice or notices to the Owner
Trustee and the Owner Participant, declare all the Equipment Notes to be due and
payable, whereupon the unpaid Original Amount of all Equipment Notes then
outstanding, together with accrued but unpaid 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; provided that if an Event of Default referred to in clause (g) of
Section 4.02 hereof shall have occurred or a Lease Event of Default under
Section 14.5 of the Lease shall have occurred, then and in every such case the
unpaid Original Amount then outstanding, together with accrued but unpaid
interest and all other amounts due thereunder and hereunder shall immediately
and without further act become due and payable without presentment, demand,
protest or notice, all of which are hereby waived; provided further that in the
event of a reorganization proceeding involving the Lessee instituted under
Chapter 11 of the Bankruptcy Code, if no Lease Event of Default (including any
Lease Event of Default set forth in Section 14.3 of the Lease) and no other
Event of Default (other than the failure to pay the Original Amount of the
Equipment Notes which by such declaration shall have become payable) exists at
any time after the consummation of such proceeding, such declaration shall be
automatically rescinded without any further action on the part of any Note
Holder.
This Section 4.04(b), however, is subject to the condition that, if at any
time after the Original Amount of the Equipment Notes shall have become so due
and payable, and before any judgment or decree for the payment of the money so
due, or any thereof, shall be entered, all overdue payments of interest upon the
Equipment Notes and all other
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amounts payable under the Equipment Notes (except the Original Amount of the
Equipment Notes which by such declaration shall have become payable) shall have
been duly paid, and every other Default and Event of Default with respect to any
covenant or provision of this Trust Indenture shall have been cured, then and in
every such case a Majority in Interest of Note Holders may (but shall not be
obligated to), by written instrument filed with the Mortgagee, rescind and annul
the Mortgagee's declaration (or such automatic acceleration) and its
consequences; but no such rescission or annulment shall extend to or affect any
subsequent Default or Event of Default or impair any right consequent thereon.
Any acceleration pursuant to this Section 4.04(b) shall be automatically
rescinded and any related declaration of an Event of Default annulled in the
event that the Owner Trustee shall have cured, in accordance with Section 4.03
hereof, the Event of Default that resulted in such acceleration or declaration.
(c) The Note Holders shall be entitled, at any sale pursuant to Section 15
of the Lease or this Section 4.04, to credit against any purchase price bid at
such sale by such holder all or any part of the unpaid obligations owing to such
Note Holder and secured by the Lien of this Trust Indenture (but only to the
extent that such purchase price would have been paid to such Note Holder
pursuant to Article III hereof if such purchase price were paid in cash and the
foregoing provisions of this subsection (c) were not given effect).
(d) 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 terms of this Trust Indenture, the
unpaid Original 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.
(e) Notwithstanding anything contained herein, so long as the Pass Through
Trustee under any Pass Through Trust Agreement (or its designee) is a Note
Holder, the Mortgagee will not be authorized or empowered to acquire title to
any Mortgaged Property or take any action with respect to any Mortgaged Property
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 4.05. Return of Aircraft, Etc.
(a) If an Event of Default shall have occurred and be continuing and the
Equipment Notes have been accelerated, subject to Section 4.03 hereof and unless
the Owner Trustee or the Owner Participant shall have elected to purchase the
Equipment
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Notes, at the request of the Mortgagee, the Owner Trustee shall promptly execute
and deliver to the Mortgagee such instruments of title and other documents as
the Mortgagee may deem necessary or advisable to enable the Mortgagee or an
agent or representative designated by the Mortgagee, at such time or times and
place or places as the Mortgagee may specify, to obtain possession of all or any
part of the Mortgaged Property included in the Trust Indenture Estate to which
the Mortgagee shall at the time be entitled hereunder. If the Owner Trustee
shall for any reason fail to execute and deliver such instruments and documents
after such request by the Mortgagee, the Mortgagee may (i) obtain a judgment
conferring on the Mortgagee the right to immediate possession and requiring the
Owner Trustee to execute and deliver such instruments and documents to the
Mortgagee, to the entry of which judgment the Owner Trustee hereby specifically
consents to the fullest extent permitted by Law, and (ii) pursue all or part of
such Mortgaged Property wherever it may be found and, in the event that a Lease
Event of Default has occurred and is continuing, may enter any of the premises
of Lessee wherever such Mortgaged Property may be or be supposed to be and
search for such Mortgaged Property and take possession of and remove such
Mortgaged Property. All expenses of obtaining such judgment or of pursuing,
searching for and taking such property shall, until paid, be secured by the Lien
of this Trust Indenture.
(b) Upon every such taking of possession, the Mortgagee may, from time to
time, at the expense of the Mortgaged Property, make all such expenditures for
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, modifications or alterations to and of the Mortgaged Property, as
it may deem proper. In each such case, the Mortgagee shall have the right to
maintain, use, operate, store, insure, lease, control, manage, dispose of,
modify or alter the Mortgaged Property and to carry on the business and to
exercise all rights and powers of the Owner Participant and the Owner Trustee
relating to the Mortgaged Property, as the Mortgagee shall deem best, including
the right to enter into any and all such agreements with respect to the
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, modification or alteration of the Mortgaged Property or any part
thereof as the Mortgagee may determine, and the Mortgagee shall be entitled to
collect and receive directly all tolls, rents (including Rent), revenues,
issues, income, products and profits of the Mortgaged Property and every part
thereof, except Excluded Payments, without prejudice, however, to the right of
the Mortgagee under any provision of this Trust Indenture to collect and receive
all cash held by, or required to be deposited with, the Mortgagee hereunder
other than Excluded Payments. Such tolls, rents (including Rent), revenues,
issues, income, products and profits shall be applied to pay the expenses of the
maintenance, use, operation, storage, insurance, leasing, control, management,
disposition, improvement, modification or alteration of the Mortgaged Property
and of conducting the business thereof, and to make all payments which the
Mortgagee may be required or may elect to make, if any, for taxes, assessments,
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insurance or other proper charges upon the Mortgaged Property or any part
thereof (including the employment of engineers and accountants to examine,
inspect and make reports upon the properties and books and records of the Owner
Trustee), and all other payments which the Mortgagee may be required or
authorized to make under any provision of this Trust Indenture, as well as just
and reasonable compensation for the services of the Mortgagee, and of all
persons properly engaged and employed by the Mortgagee with respect hereto.
SECTION 4.06. Remedies Cumulative
Each and every right, power and remedy given to the Mortgagee specifically
or otherwise in this Trust Indenture shall be cumulative and shall be in
addition to every other right, power and remedy herein specifically given or now
or hereafter existing at Law, in equity or by statute, and each and every right,
power and remedy whether specifically herein given or otherwise existing may be
exercised from time to time and as often and in such order as may be deemed
expedient by the Mortgagee, and the exercise or the beginning of the exercise of
any power or remedy shall not be construed to be a waiver of the right to
exercise at the same time or thereafter any other right, power or remedy. No
delay or omission by the Mortgagee 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 Lessee or to be an acquiescence therein.
SECTION 4.07. Discontinuance of Proceedings
In case the Mortgagee shall have instituted any proceeding to enforce any
right, power or remedy under this Trust Indenture by foreclosure, entry or
otherwise, and such proceedings shall have been discontinued or abandoned for
any reason or shall have been determined adversely to the Mortgagee, then and in
every such case the Owner Trustee, the Mortgagee and Lessee shall, subject to
any determination in such proceedings, be restored to their former positions and
rights hereunder with respect to the Mortgaged Property, and all rights,
remedies and powers of the Owner Trustee, the Mortgagee or Lessee shall continue
as if no such proceedings had been instituted.
SECTION 4.08. Waiver of Past Defaults
Upon written instruction from a Majority in Interest of Note Holders, the
Mortgagee shall waive any past Default hereunder and its consequences and upon
any such waiver such Default shall cease to exist and any Event of Default
arising therefrom shall be deemed to have been cured for every purpose of this
Trust Indenture, but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon;
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provided, that in the absence of written instructions from all the Note Holders,
the Mortgagee shall not waive any Default (i) in the payment of the Original
Amount, Make-Whole Amount, if any, and interest and other amounts due under any
Equipment Note then outstanding, or (ii) in respect of a covenant or provision
hereof which, under Article IX hereof, cannot be modified or amended without the
consent of each Note Holder.
SECTION 4.09. Appointment of Receiver
The Mortgagee shall, as a matter of right, be entitled to the appointment
of a receiver (who may be the Mortgagee or any successor or nominee thereof) for
all or any part of the Mortgaged Property, whether such receivership be
incidental to a proposed sale of the Mortgaged Property or the taking of
possession thereof or otherwise, and the Owner Trustee hereby consents to the
appointment of such a receiver and will not oppose any such appointment. Any
receiver appointed for all or any part of the Mortgaged Property shall be
entitled to exercise all the rights and powers of the Mortgagee with respect to
the Mortgaged Property.
SECTION 4.10. Mortgagee Authorized to Execute Bills of Sale, Etc.
Subject to the provisions of this Trust Indenture, the Owner Trustee
irrevocably appoints the Mortgagee 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 Trust Indenture,
whether pursuant to foreclosure or power of sale, assignments and other
instruments as may be necessary or appropriate, with full power of 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 Mortgagee or any purchaser, the Owner
Trustee shall ratify and confirm any such sale, assignment, transfer or
delivery, by executing and delivering to the Mortgagee 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 4.11. Rights of Note Holders to Receive Payment
Notwithstanding any other provision of this Trust Indenture, the right of
any Note Holder to receive payment of principal of, and premium, if any, and
interest on an Equipment Note on or after the respective due dates expressed in
such Equipment Note, or to bring suit for the enforcement of any such payment on
or after such respective dates in accordance with the terms hereof, shall not be
impaired or affected without the consent of such Note Holder.
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ARTICLE V
DUTIES OF THE MORTGAGEE
SECTION 5.01. Notice of Event of Default
If the Mortgagee shall have Actual Knowledge of an Event of Default or of a
Default arising from a failure to pay Rent, the Mortgagee shall give prompt
written notice thereof to the Owner Trustee, the Owner Participant, Lessee, and
each Note Holder. Subject to the terms of Sections 2.13, 4.03, 4.04, 4.08, 5.02
and 5.03 hereof, the Mortgagee shall take such action, or refrain from taking
such action, with respect to such Event of Default or Default (including with
respect to the exercise of any rights or remedies hereunder) as the Mortgagee
shall be instructed in writing by a Majority in Interest of Note Holders.
Subject to the provisions of Section 5.03, if the Mortgagee shall not have
received instructions as above provided within 20 days after mailing notice of
such Event of Default to the Note Holders, the Mortgagee may, subject to
instructions thereafter received pursuant to the preceding provisions of this
Section 5.01, take such action, or refrain from taking such action, but shall be
under no duty to take or refrain from taking any action, with respect to such
Event of Default or Default as it shall determine advisable in the best
interests of the Note Holders; provided, however, that the Mortgagee may not
sell the Aircraft or any Engine without the consent of a Majority in Interest of
Note Holders. For all purposes of this Trust Indenture, in the absence of Actual
Knowledge on the part of the Mortgagee, the Owner Trustee or the Owner
Participant, the Mortgagee, the Owner Trustee or the Owner Participant, as the
case may be, shall not be deemed to have knowledge of a Default or an Event of
Default (except, in the case of the Mortgagee, the failure of Lessee to pay any
installment of Basic Rent within one Business Day after the same shall become
due, if any portion of such installment was then required to be paid to the
Mortgagee, which failure shall constitute knowledge of a Default) unless
notified in writing by Lessee, the Owner Trustee, the Owner Participant or one
or more Note Holders.
SECTION 5.02. Action upon Instructions; Certain Rights and Limitations
(a) Subject to the terms of Sections 2.13, 4.03, 4.04(a) and (b), 4.08,
5.01 and 5.03 hereof, upon the written instructions at any time and from time to
time of a Majority in Interest of Note Holders, the Mortgagee shall, subject to
the terms of this Section 5.02, 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 as shall be specified in such
instructions; (ii) give such notice or direction or exercise such right, remedy
or power under the Lease, the Participation Agreement, the Purchase Agreement,
the
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Purchase Agreement Assignment, or any other part of the Trust Indenture Estate
as shall be specified in such instructions; and (iii) approve as satisfactory to
the Mortgagee all matters required by the terms of the Lease to be satisfactory
to the Owner Trustee, it being understood that without the written instructions
of a Majority in Interest of Note Holders, the Mortgagee shall not approve any
such matter as satisfactory to the Mortgagee; provided, that anything contained
in this Trust Indenture, the Lease or the other Operative Agreements to the
contrary notwithstanding, but subject to the next paragraph hereof:
(1) the Owner Trustee or the Owner Participant, may, without the consent of
the Mortgagee, demand, collect, xxx for or otherwise obtain all amounts included
in Excluded Payments from Lessee and seek legal or equitable remedies to require
Lessee to maintain the insurance coverage referred to in Section 11 of the Lease
provided, that the rights referred to in this clause (1) shall not be deemed to
include the exercise of any remedies provided for in Section 15 of the Lease
other than the right to proceed by appropriate court action, either at Law or in
equity, to enforce payment by Lessee of such amounts included in Excluded
Payments or performance by Lessee of such insurance covenant or to recover
damages for the breach thereof or for specific performance of any other term of
the Lease;
(2) (A) the Mortgagee shall not, without the consent of the Owner Trustee,
enter into, execute or deliver amendments or modifications in respect of any of
the provisions of the Lease, and (B) unless a Mortgagee Event shall have
occurred and be continuing, the Mortgagee shall not, without the consent of the
Owner Trustee, which consent shall not be withheld if no right or interest of
the Owner Trustee or the Owner Participant shall be diminished or impaired
thereby, (i) enter into, execute or deliver waivers or consents in respect of
any of the provisions of the Lease, or (ii) approve any accountants, engineers,
appraisers or counsel as satisfactory to render services for or issue opinions
to the Owner Trustee pursuant to the Operative Agreements, provided that whether
or not any Mortgagee Event has occurred and is continuing, the Owner Trustee's
consent shall be required with respect to any waivers or consents in respect of
any of the provisions of Section 5, 7 or 11 of the Lease, or of any other
Section of the Lease to the extent such action shall affect (y) the amount or
timing of, or the right to enforce payment of any Excluded Payment or (z) the
amount or timing of any amounts payable by the Lessee under the Lease as
originally executed (or as subsequently modified with the consent of the Owner
Trustee) which, absent the occurrence and continuance of an Event of Default
hereunder, would be distributable to the Owner Trustee under Article III hereof;
(3) whether or not a Default or Event of Default under this Trust Indenture
has occurred and is continuing, the Owner Trustee and the Owner Participant
shall have the right, together with the Mortgagee, (i) to receive from Lessee
certificates and other documents and information which Lessee is required to
give or furnish to the Owner
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Trustee or the Lessor pursuant to any Operative Agreement and (ii) to inspect in
accordance with the Lease the Airframe and Engines and all Aircraft Documents;
(4) whether or not a Default or Event of Default under this Trust Indenture
has occurred and is continuing, the Owner Trustee shall have the right to adjust
upwards Basic Rent, Stipulated Loss Values, Termination Values and the EBO
Price, and to adjust the EBO Date, as provided in Section 3.2.1 of the Lease;
(5) so long as no Mortgagee Event has occurred and is continuing, the Owner
Trustee shall have the right, to the exclusion of the Mortgagee, to adjust Basic
Rent, Stipulated Loss Values, Termination Values, the EBO Price and the EBO Date
as provided in Section 3.2 of the Lease or to adjust downward any installment or
amount of Basic Rent, Stipulated Loss Value or Termination Value, as such
installments and amounts are set forth in Schedules 2, 3 and 4, respectively, to
the Lease, to the extent of the portion of such installment or amount that
would, under Section 3.01, 3.02 or 3.03 hereof, as the case may be, be
distributable to the Owner Trustee or the Owner Participant;
(6) whether or not a Default or Event of Default under the Trust Indenture
has occurred and is continuing, the Owner Trustee may, without the consent of
the Mortgagee, (i) solicit and make bids with respect to the Aircraft under
Section 9 of the Lease in respect of a termination of the Lease by Lessee
pursuant to Section 9 thereof, (ii) determine Fair Market Sales Value and Fair
Market Rental Value under Section 17 of the Lease for all purposes except
following a Mortgagee Event pursuant to Section 15 of the Lease, and (iii) make
an election pursuant to and in accordance with the provisions of Sections
9.1(b), 9.2 and 9.3 of the Lease; and
(7) so long as no Mortgagee Event shall have occurred and be continuing,
all other rights of the "Lessor" under the Lease shall be exercised by the Owner
Trustee to the exclusion of the Mortgagee including, without limitation, the
right to (i) exercise all rights with respect to Lessee's use and operation,
modification or maintenance of the Aircraft and any Engine which the Lease
specifically confers on the Lessor, and (ii) consent to and approve any
assignment pursuant to Section 13 of the Lease; provided that the foregoing
shall not (x) limit (A) any rights separately granted to the Mortgagee under the
Operative Agreements or (B) the right of the Mortgagee to receive any funds to
be delivered to the "Lessor" under the Lease (except with respect to Excluded
Payments) and under the Purchase Agreement or (y) confer upon the Owner Trustee
the right to adversely affect the validity or enforceability of the lien of this
Indenture.
Notwithstanding anything to the contrary contained herein (including this
Section 5.02), the Mortgagee shall 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 15 thereof and (B) subject only to the provisions of Sections
4.03, 4.04(a) and (b) and 2.13 hereof, exercise the remedies set forth in such
Section 15
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(other than in connection with Excluded Payments and provided that each of the
Owner Trustee, Owner Participant and Mortgagee shall independently retain the
rights set forth in clause (ii) of Section 15.1.5 of the Lease) at any time that
a Lease Event of Default shall have occurred and be continuing. Further and for
the avoidance of doubt, and anything to the contrary contained herein (including
this Section 5.02), in no event may the Owner Trustee amend or otherwise modify
the provisions of Section 3.2.1(e) of the Lease or of the final sentence of the
definition of Stipulated Loss Value or Termination Value, in any such case,
without the prior written consent of the Mortgagee.
The Mortgagee will execute and the Owner Trustee will file or cause to be
filed such continuation statements with respect to financing statements relating
to the security interest created hereunder in the Trust Indenture Estate as may
be specified from time to time in written instructions of a Majority in Interest
of Note Holders (which instructions shall be accompanied by the form of such
continuation statement so to be filed). The Mortgagee will furnish to each Note
Holder (and, during the continuation of a Mortgagee Event, to the Owner Trustee
and Owner Participant), promptly upon receipt thereof, duplicates or copies of
all reports, notices, requests, demands, certificates and other instruments
furnished to the Mortgagee under the Lease or hereunder, including, without
limitation, a copy of any Termination Notice (as defined in the Lease) and a
copy of each report or notice received pursuant to Section 9 and Paragraph E of
Annex D of the Lease, respectively to the extent that the same shall not have
been furnished to such holder pursuant hereto or the Lease.
(b) If any Lease Event of Default shall have occurred and be continuing and
the Owner Trustee shall not have cured fully such Lease Event of Default under
and in accordance with Section 4.03 hereof, on request of a Majority in Interest
of Note Holders, the Mortgagee shall declare the Lease to be in default pursuant
to Section 15 thereof and exercise those remedies specified by such Note
Holders. The Mortgagee agrees to provide to the Note Holders, the Owner Trustee
and the Owner Participant concurrently with such declaration by the Mortgagee,
notice of such declaration by the Mortgagee.
SECTION 5.03. Indemnification
The Mortgagee shall not be required to take any action or refrain from
taking any action under Section 5.01 (other than the first sentence thereof),
5.02 or Article IV hereof unless the Mortgagee shall have been indemnified to
its reasonable satisfaction against any liability, cost or expense (including
counsel fees) which may be incurred in connection therewith pursuant to a
written agreement with one or more Note Holders. The Mortgagee agrees that it
shall look solely to the Note Holders for the satisfaction of any in-
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demnity (except expenses for foreclosure of the type referred to in clause
"First" of Section 3.03 hereof) owed to it pursuant to this Section 5.03. The
Mortgagee shall not be under any obligation to take any action under this Trust
Indenture or any other Operative Agreement and nothing herein or therein shall
require the Mortgagee to expend or risk its own funds or otherwise incur the
risk of any financial liability in the performance 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 written indemnity of any Note Holder who is a QIB, signed by
an authorized officer thereof, in favor of, delivered to and in form reasonably
satisfactory to the Mortgagee shall be accepted as reasonable assurance of
adequate indemnity). The Mortgagee shall not be required to take any action
under Section 5.01 (other than the first sentence thereof) or 5.02 or Article IV
hereof, nor shall any other provision of this Trust Indenture or any other
Operative Agreement be deemed to impose a duty on the Mortgagee to take any
action, if the Mortgagee shall have been advised by counsel that such action is
contrary to the terms hereof or of the Lease or is otherwise contrary to Law.
SECTION 5.04. No Duties Except as Specified in Trust Indenture or
Instructions
The Mortgagee shall not have any duty or obligation to use, operate, store,
lease, control, manage, sell, dispose of or otherwise deal with the Aircraft or
any other part of the Trust Indenture Estate, or to otherwise take or refrain
from taking any action under, or in connection with, this Trust Indenture or any
part of the Trust Indenture Estate, except as expressly provided by the terms of
this Trust Indenture or as expressly provided in written instructions from Note
Holders as provided in this Trust Indenture; and no implied duties or
obligations shall be read into this Trust Indenture against the Mortgagee. The
Mortgagee 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 hereof), promptly take such action as may be
necessary duly to discharge all liens and encumbrances on any part of the Trust
Indenture Estate which result from claims against it in its individual capacity
not related to the ownership of the Aircraft or the administration of the Trust
Indenture Estate or any other transaction pursuant to this Trust Indenture or
any document included in the Trust Indenture Estate.
SECTION 5.05. No Action Except Under Lease, Trust Indenture or Instructions
The Owner Trustee and the Mortgagee agree that they will not use, operate,
store, lease, control, manage, sell, dispose of or otherwise deal with the
Aircraft or any other part of the Trust Indenture Estate except (i) as required
or permitted by the terms of the Lease or (ii) in accordance with the powers
granted to, or the authority conferred upon,
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the Owner Trustee and the Mortgagee pursuant to this Trust Indenture and in
accordance with the express terms hereof.
SECTION 5.06. Replacement Airframes and Replacement Engines
At any time an Airframe or Engine is to be replaced under or pursuant to
Section 10 of the Lease by a Replacement Airframe or Replacement Engine, if no
Lease Event of Default is continuing, the Owner Trustee shall direct the
Mortgagee to execute and deliver to the Owner Trustee an appropriate instrument
releasing such Airframe and/or Engine as appropriate from the Lien of this Trust
Indenture and the Mortgagee shall execute and deliver such instrument as
aforesaid, but only upon compliance by Lessee with the applicable provisions of
Section 10 of the Lease.
SECTION 5.07. Indenture Supplements for Replacements
If a Replacement Airframe or Replacement Engine is being substituted as
contemplated by Section 10 of the Lease, the Owner Trustee and the Mortgagee
agree for the benefit of the Note Holders and Lessee, subject to fulfillment of
the conditions precedent and compliance by Lessee with its obligations set forth
in Section 10 of the Lease and the requirements of Section 5.06 hereof with
respect to such Replacement Airframe or Replacement Engine, to execute and
deliver a Lease Supplement and a Trust Indenture Supplement, as applicable, as
contemplated by Section 10 of the Lease.
SECTION 5.08. Effect of Replacement
In the event of the substitution of an Airframe or of a Replacement Engine
pursuant to Section 10 of the Lease, all provisions of this Trust Indenture
relating to the Airframe or Engine or Engines being replaced shall be applicable
to such Replacement Airframe or Replacement Engine or Engines with the same
force and effect as if such Replacement Airframe or Replacement Engine or
Engines were the same airframe or engine or engines, as the case may be, as the
Airframe or Engine or Engines being replaced but for the Event of Loss with
respect to the Airframe or Engine or Engines being replaced and the provisions
of this Trust Indenture shall cease to be applicable to the Airframe or Engine
or Engines being replaced, which shall be released from the Lien of the Trust
Indenture.
SECTION 5.09. Investment of Amounts Held by Mortgagee
Any amounts held by the Mortgagee as assignee of the Owner Trustee's rights
to hold and invest monies for security pursuant to Section 4.4 of the Lease
shall be held in accordance with the terms of such Section and the Mortgagee
agrees, for the benefit
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of Lessee, to perform the duties of the Owner Trustee under such Section. Any
amounts held by the Mortgagee pursuant to the proviso to the first sentence of
Section 3.01, pursuant to Section 3.02, or pursuant to any provision of any
other Operative Agreement providing for amounts to be held by the Mortgagee
which are not distributed pursuant to the other provisions of Article III hereof
shall be invested by the Mortgagee from time to time in Cash Equivalents as
directed by the Owner Trustee so long as the Mortgagee may acquire the same
using its best efforts. Unless otherwise expressly provided in this Trust
Indenture, any income realized as a result of any such investment, net of the
Mortgagee's reasonable fees and expenses in making such investment, shall be
held and applied by the Mortgagee 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 Mortgagee shall not be liable for any loss resulting from any
investment required to be made by it under this Trust Indenture other than by
reason of its willful misconduct or gross negligence, and any such investment
may be sold (without regard to its maturity) by the Mortgagee without
instructions whenever such sale is necessary to make a distribution required by
this Trust Indenture.
ARTICLE VI
THE OWNER TRUSTEE AND THE MORTGAGEE
SECTION 6.01. Acceptance of Trusts and Duties
The Mortgagee accepts the duties hereby created and applicable to it and
agrees to perform the same but only upon the terms of this Trust Indenture and
agrees to receive and disburse all monies constituting part of the Trust
Indenture Estate in accordance with the terms hereof. The Owner Trustee, in its
individual capacity, and the Mortgagee, in its individual capacity, shall not be
answerable or accountable under any circumstances, except (i) for their own
willful misconduct or gross negligence (other than for the handling of funds,
for which the standard of accountability shall be willful misconduct or
negligence), (ii) in the case of the Mortgagee, as provided in the fourth
sentence of Section 2.04(a) hereof and the last sentence of Section 5.04 hereof,
and (iii) for liabilities that may result, in the case of the Owner Trustee,
from the inaccuracy of any representation or warranty of the Owner Trustee
expressly made in its individual capacity in the Participation Agreement or in
Section 4.01(b) or 6.03 hereof (or in any certificate furnished to the Mortgagee
or any Note Holder in connection with the transactions contemplated by the
Operative Agreements) or, in the case of the Mortgagee, from the inaccuracy of
any representation or warranty of the Mortgagee (expressly made in its
individual capacity) in the Partici-
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pation Agreement or hereunder. Neither the Owner Trustee nor the Mortgagee shall
be liable for any action or inaction of the other or of the Owner Participant.
SECTION 6.02. Absence of Duties
In the case of the Mortgagee, except in accordance with written
instructions furnished pursuant to Section 5.01 or 5.02 hereof, and except as
provided in, and without limiting the generality of, Sections 5.03, 5.04 and
6.08 hereof and, in the case of the Owner Trustee, except as provided in Section
4.01(b) hereof, the Owner Trustee and the Mortgagee shall have no duty (i) to
see to any registration of the Aircraft or any recording or filing of the Lease
or of this Trust Indenture or any other document, or to see to the maintenance
of any such registration, recording or filing, (ii) to see to any insurance on
the Aircraft 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 lien or encumbrance of any kind against any part of the Trust
Estate or the Trust Indenture Estate, (iv) to confirm, verify or inquire into
the failure to receive any financial statements from Lessee, or (v) to inspect
the Aircraft at any time or ascertain or inquire as to the performance or
observance of any of Lessee's covenants under the Lease with respect to the
Aircraft. The Owner Participant shall not have any duty or responsibility
hereunder, including, without limitation, any of the duties mentioned in clauses
(i) through (v) above; provided, that nothing contained in this sentence shall
limit any obligations of the Owner Participant under the Participation Agreement
or relieve the Owner Participant from any restriction under Section 4.03 hereof.
SECTION 6.03. No Representations or Warranties as to Aircraft or Documents
NEITHER THE MORTGAGEE IN ITS INDIVIDUAL OR TRUST CAPACITY NOR THE OWNER
TRUSTEE IN ITS INDIVIDUAL CAPACITY OR AS OWNER TRUSTEE UNDER THE TRUST AGREEMENT
MAKES OR SHALL BE DEEMED TO HAVE MADE AND EACH HEREBY EXPRESSLY DISCLAIMS ANY
REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE TITLE, AIRWORTHINESS,
VALUE, COMPLIANCE WITH SPECIFICATIONS, CONDITION, DESIGN, QUALITY, DURABILITY,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR A PARTICULAR PURPOSE OF THE
AIRCRAFT OR ANY ENGINE, AS TO THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR
NOT DISCOVERABLE, AS TO THE ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK
OR COPYRIGHT, AS TO THE ABSENCE OF OBLIGATIONS BASED ON STRICT LIABILITY IN TORT
OR ANY OTHER REPRESENTATION OR WARRANTY WHATSOEVER, except the Owner Trustee in
its individual capacity warrants that (i) the Owner Trustee has received on the
Delivery Date
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whatever title was conveyed to it, and (ii) the Aircraft is free and clear of
Lessor Liens attributable to the Owner Trustee in its individual capacity.
Neither the Owner Trustee, in its individual capacity or as Owner Trustee under
the Trust Agreement, nor the Mortgagee, in its individual or trust capacities,
makes or shall be deemed to have made any representation or warranty as to the
validity, legality or enforceability of this Trust Indenture, the Trust
Agreement, the Participation Agreement, the Equipment Notes, the Lease, the
Purchase Agreement or the Purchase Agreement Assignment with the Consent and
Agreement and the Engine Consent and Agreement attached thereto, or as to the
correctness of any statement contained in any thereof, except for the
representations and warranties of the Owner Trustee made in its individual
capacity and the representations and warranties of the Mortgagee in its
individual capacity, in each case expressly made in this Trust Indenture or in
the Participation Agreement. The Loan Participants, the Note Holders and the
Owner Participant make no representation or warranty hereunder whatsoever.
SECTION 6.04. No Segregation of Monies; No Interest
Any monies paid to or retained by the Mortgagee pursuant to any provision
hereof and not then required to be distributed to the Note Holders, Lessee or
the Owner Trustee as provided in Article III hereof need not be segregated in
any manner except to the extent required by Law or Section 4.4 of the Lease and
Section 5.09 hereof, and may be deposited under such general conditions as may
be prescribed by Law, and the Mortgagee shall not be liable for any interest
thereon (except that the Mortgagee shall invest all monies held in accordance
with Section 5.09 hereof); provided, however, that any payments received, or
applied hereunder, by the Mortgagee shall be accounted for by the Mortgagee so
that any portion thereof paid or applied pursuant hereto shall be identifiable
as to the source thereof.
SECTION 6.05. Reliance; Agreements; Advice of Counsel
Neither the Owner Trustee nor the Mortgagee shall incur any liability to
anyone in acting upon any signature, instrument, notice, resolution, request,
consent, order, certificate, report, opinion, bond or other document or paper
believed by it to be genuine and believed by it to be signed by the proper party
or parties. The Owner Trustee and the Mortgagee may accept a copy of a
resolution of the Board of Directors (or Executive Committee thereof) of any
party to the Participation Agreement, certified by the Secretary or an Assistant
Secretary thereof as duly adopted and in full force and effect, as conclusive
evidence that such resolution has been duly adopted and that the same is in full
force and effect. As to the aggregate unpaid Original Amount of Equipment Notes
outstanding as of any date, the Owner Trustee may for all purposes hereof rely
on a certificate signed by any Vice President or other authorized corporate
trust officer of the Mortgagee. As to any fact or matter relating to Lessee the
manner of which is not specifically described herein, the
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Owner Trustee and the Mortgagee may for all purposes hereof rely on a
certificate, signed by a duly authorized officer of Lessee, as to such fact or
matter, and such certificate shall constitute full protection to the Owner
Trustee and the Mortgagee for any action taken or omitted to be taken by them in
good faith in reliance thereon. The Mortgagee shall assume, and shall be fully
protected in assuming, that the Owner Trustee is authorized by the Trust
Agreement to enter into this Trust Indenture and to take all action to be taken
by it pursuant to the provisions hereof, and shall not inquire into the
authorization of the Owner Trustee with respect thereto. In the administration
of the trusts hereunder, the Owner Trustee and the Mortgagee each may execute
any of the trusts or powers hereof and perform its powers and duties hereunder
directly or through agents or attorneys and may, at the expense of the Trust
Indenture Estate, advise with counsel, accountants and other skilled persons to
be selected and retained by it, and the Owner Trustee and the Mortgagee shall
not be liable for anything done, suffered or omitted in good faith by them in
accordance with the written advice or written opinion of any such counsel,
accountants or other skilled persons.
SECTION 6.06. Capacity in Which Acting
The Owner Trustee acts hereunder solely as trustee as herein and in the
Trust Agreement provided, and not in its individual capacity, except as
otherwise expressly provided herein, in the Trust Agreement and in the
Participation Agreement.
SECTION 6.07. Compensation
The Mortgagee shall be entitled to reasonable compensation, including
expenses and disbursements (including the reasonable fees and expenses of
counsel), for all services rendered hereunder and shall, on and subsequent to an
Event of Default hereunder, have a priority claim on the Trust Indenture Estate
for the payment of such compensation, to the extent that such compensation shall
not be paid by Lessee, and shall have the right, on and subsequent to an Event
of Default hereunder, to use or apply any monies held by it hereunder in the
Trust Indenture Estate toward such payments. The Mortgagee agrees that it shall
have no right against the Loan Participants, the Note Holders, the Owner Trustee
or the Owner Participant for any fee as compensation for its services as trustee
under this Trust Indenture.
SECTION 6.08. Instructions from Note Holders
In the administration of the trusts created hereunder, the Mortgagee shall
have the right to seek instructions from a Majority in Interest of Note Holders
should any provision of this Trust Indenture appear to conflict with any other
provision herein or should the Mortgagee's duties or obligations hereunder be
unclear, and the Mortgagee shall incur no liability in refraining from acting
until it receives such instructions. The Mortga-
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gee shall be fully protected by the Note Holders for acting in accordance with
any instructions received under this Section 6.08.
ARTICLE VII
INDEMNIFICATION OF MORTGAGEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification
The Owner Trustee, not in its individual capacity, but solely as Owner
Trustee, hereby agrees, whether or not any of the transactions contemplated
hereby shall be consummated, except as to matters covered by any indemnity
furnished as contemplated by Section 5.03 hereof and except as otherwise
provided in Section 2.03 or 2.04(b) hereof, to assume liability for, and does
hereby indemnify, protect, save and keep harmless the Mortgagee (in its
individual and trust capacities), and its successors, assigns, agents and
servants, from and against any and all liabilities, obligations, losses,
damages, penalties, taxes (excluding any taxes payable by the Mortgagee on or
measured by any compensation received by the Mortgagee for its services under
this Trust Indenture), 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
Mortgagee (whether or not also indemnified against by any other person under any
other document) in any way relating to or arising out of this Trust Indenture or
any other Operative Agreement to which it is a party 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, non-acceptance, rejection, ownership,
delivery, lease, possession, use, operation, condition, sale, return or other
disposition of the Aircraft or any Engine (including, without limitation, latent
or 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 Mortgagee hereunder except only in the case of willful misconduct or gross
negligence (or negligence in the case of handling funds) of the Mortgagee in the
performance of its duties hereunder or resulting from the inaccuracy of any
representation or warranty of the Mortgagee ( expressly made in its individual
capacity) in or referred to in Section 6.03 hereof, or as provided in Section
6.01 hereof or in the last sentence of Section 5.04 hereof, or as otherwise
excluded by the terms of Section 9.1 or 9.3 of the Participation Agreement from
Lessee's indemnities under such Sections. In addition, if necessary, the
Mortgagee shall be entitled to indemnification from the Trust Indenture Estate
for any liability, obligation, loss, damage, penalty, claim, action, suit, cost,
expense or disbursement indemnified against pursuant to this Section 7.01 to the
extent not reimbursed by Lessee or others, but without releasing any of them
from their re-
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spective agreements of reimbursement; and to secure the same the Mortgagee shall
have a prior Lien on the Trust Indenture Estate. Without limiting the foregoing,
the Mortgagee agrees that, prior to seeking indemnification from the Trust
Indenture Estate, it will demand, and diligently pursue in good faith (but with
no duty to exhaust all legal remedies therefor), indemnification available to
the Mortgagee from Lessee under the Lease or the Participation Agreement.
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee
In the case of any appointment of a successor to the Owner Trustee pursuant
to the Trust Agreement including upon 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 Mortgagee, Lessee and the Note Holders.
SECTION 8.02. Resignation of Mortgagee; Appointment of Successor
(a) The Mortgagee or any successor thereto may resign at any time without
cause by giving at least 30 days prior written notice to Lessee, the Owner
Trustee, the Owner Participant and each Note Holder, such resignation to be
effective upon the acceptance of the trusteeship by a successor Mortgagee. In
addition, a Majority in Interest of Note Holders may at any time (but only with
the consent of the Lessee, which consent shall not be unreasonably withheld,
except that such consent shall not be necessary if a Lease Event of Default is
continuing) remove the Mortgagee without cause by an instrument in writing
delivered to the Owner Trustee, Lessee, the Owner Participant and the Mortgagee,
and the Mortgagee shall promptly notify each Note Holder thereof in writing,
such removal to be effective upon the acceptance of the trusteeship by a
successor Mortgagee. In the case of the resignation or removal of the Mortgagee,
a Majority in Interest of Note Holders may appoint a successor Mortgagee by an
instrument signed by such holders, which successor, so long as no Lease Event of
Default shall have occurred and be continuing, shall be subject to Lessee's
reasonable approval. If a successor Mortgagee shall not have been appointed
within 30 days after such notice of resignation or removal, the Mortgagee, the
Owner Trustee, the Owner Participant or any Note Holder may apply to any court
of competent jurisdiction to appoint a successor Mortgagee to act until such
time, if any, as a suc-
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cessor shall have been appointed as above provided. The successor Mortgagee so
appointed by such court shall immediately and without further act be superseded
by any successor Mortgagee appointed as above provided.
(b) Any successor Mortgagee, however appointed, shall execute and deliver
to the Owner Trustee, the predecessor Mortgagee and the Lessee an instrument
accepting such appointment and assuming the obligations of the Mortgagee under
the Participation Agreement arising from and after the time of such appointment,
and thereupon such successor Mortgagee, without further act, shall become vested
with all the estates, properties, rights, powers and duties of the predecessor
Mortgagee hereunder in the trust hereunder applicable to it with like effect as
if originally named the Mortgagee herein; but nevertheless upon the written
request of such successor Mortgagee, such predecessor Mortgagee shall execute
and deliver an instrument transferring to such successor Mortgagee, upon the
trusts herein expressed applicable to it, all the estates, properties, rights
and powers of such predecessor Mortgagee, and such predecessor Mortgagee shall
duly assign, transfer, deliver and pay over to such successor Mortgagee all
monies or other property then held by such predecessor Mortgagee hereunder.
(c) Any successor Mortgagee, however appointed, shall be a bank or trust
company having its principal place of business in the Borough of Manhattan, City
and State of New York; Chicago, Illinois; Hartford, Connecticut; Wilmington,
Delaware; or Boston, Massachusetts and having (or whose obligations under the
Operative Agreements are guaranteed by an affiliated entity 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 Mortgagee
hereunder upon reasonable or customary terms.
(d) Any corporation into which the Mortgagee 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 Mortgagee shall be a party, or any
corporation to which substantially all the corporate trust business of the
Mortgagee may be transferred, shall, subject to the terms of paragraph (c) of
this Section 8.02, be a successor Mortgagee and the Mortgagee under this Trust
Indenture without further act.
SECTION 8.03. Appointment of Additional and Separate Trustees
(a) Whenever (i) the Mortgagee shall deem it necessary or desirable in
order to conform to any Law of any jurisdiction in which all or any part of the
Trust Indenture Estate shall be situated or to make any claim or bring any suit
with respect to or in connection with the Trust Indenture Estate, this Trust
Indenture, any other Indenture Agreement, the Equipment Notes or any of the
transactions contemplated by the Participation Xxxxx-
-00-
xxxx, (xx) the Mortgagee shall be advised by counsel satisfactory to it that it
is so necessary or prudent in the interests of the Note Holders (and the
Mortgagee shall so advise the Owner Trustee and Lessee), or (iii) the Mortgagee
shall have been requested to do so by a Majority in Interest of Note Holders,
then in any such case, the Mortgagee and, upon the written request of the
Mortgagee, the Owner Trustee, shall execute and deliver an indenture
supplemental hereto and such other instruments as may from time to time be
necessary or advisable either (1) to constitute one or more bank or trust
companies or one or more persons approved by the Mortgagee, either to act
jointly with the Mortgagee as additional trustee or trustees of all or any part
of the Trust Indenture Estate, or to act as separate trustee or trustees of all
or any part of the Trust Indenture Estate, in each case with such rights,
powers, duties and obligations consistent with this Trust Indenture as may be
provided in such supplemental indenture or other instruments as the Mortgagee or
a Majority in Interest of Note Holders may deem necessary or advisable, or (2)
to clarify, add to or subtract from the rights, powers, duties and obligations
theretofore granted any such additional or separate trustee, subject in each
case to the remaining provisions of this Section 8.03. If the Owner Trustee
shall not have taken any action requested of it under this Section 8.03(a) that
is permitted or required by its terms within 15 days after the receipt of a
written request from the Mortgagee so to do, or if an Event of Default shall
have occurred and be continuing, the Mortgagee may act under the foregoing
provisions of this Section 8.03(a) without the concurrence of the Owner Trustee,
and the Owner Trustee hereby irrevocably appoints (which appointment is coupled
with an interest) the Mortgagee, its agent and attorney-in-fact to act for it
under the foregoing provisions of this Section 8.03(a) in either of such
contingencies. The Mortgagee may, in such capacity, execute, deliver and perform
any such supplemental indenture, or any such instrument, as may be required for
the appointment of any such additional or separate trustee or for the
clarification of, addition to or subtraction from the rights, powers, duties or
obligations theretofore granted to any such additional or separate trustee. In
case any additional or separate trustee appointed under this Section 8.03(a)
shall die, become incapable of acting, resign or be removed, all the assets,
property, rights, powers, trusts, duties and obligations of such additional or
separate trustee shall revert to the Mortgagee until a successor additional or
separate trustee is appointed as provided in this Section 8.03(a).
(b) No additional or separate trustee shall be entitled to exercise any of
the rights, powers, duties and obligations conferred upon the Mortgagee in
respect of the custody, investment and payment of monies and all monies received
by any such additional or separate trustee from or constituting part of the
Trust Indenture Estate or otherwise payable under any Operative Agreement to the
Mortgagee shall be promptly paid over by it to the Mortgagee. All other rights,
powers, duties and obligations conferred or imposed upon any additional or
separate trustee shall be exercised or performed by the Mortgagee and such
additional or separate trustee jointly except to the extent that applicable Law
of any juris-
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diction in which any particular act is to be performed renders the Mortgagee
incompetent or unqualified to perform such act, in which event such rights,
powers, duties and obligations (including the holding of title to all or part of
the Trust Indenture Estate in any such jurisdiction) shall be exercised and
performed by such additional or separate trustee. No additional or separate
trustee shall take any discretionary action except on the instructions of the
Mortgagee or a Majority in Interest of Note Holders. No trustee hereunder shall
be personally liable by reason of any act or omission of any other trustee
hereunder, except that the Mortgagee shall be liable for the consequences of its
lack of reasonable care in selecting, and the Mortgagee's own actions in acting
with, any additional or separate trustee. Each additional or separate trustee
appointed pursuant to this Section 8.03 shall be subject to, and shall have the
benefit of Articles IV through VIII and Article X hereof insofar as they apply
to the Mortgagee. The powers of any additional or separate trustee appointed
pursuant to this Section 8.03 shall not in any case exceed those of the
Mortgagee hereunder.
(c) If at any time the Trustee shall deem it no longer necessary or
desirable or in order to conform to any such Law or take any such action or
shall be advised by such counsel that it is no longer so necessary or desirable
in the interest of the Note Holders, or in the event that the Mortgagee shall
have been requested to do so in writing by a Majority in Interest of Note
Holders, the Mortgagee and, upon the written request of the Mortgagee, the Owner
Trustee, shall execute and deliver an indenture supplemental hereto and all
other instruments and agreements necessary or proper to remove any additional or
separate trustee. The Mortgagee may act on behalf of the Owner Trustee under
this Section 8.03(c) when and to the extent it could so act under Section
8.03(a) hereof.
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 9.01. Instructions of Majority; Limitations
(a) Except as provided in Section 5.02 hereof, the Owner Trustee agrees it
shall not enter into any amendment of or supplement to the Lease, the Purchase
Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the
Engine Consent and Agreement, or execute and deliver any written waiver or
modification of, or consent under, the terms of the Lease, the Purchase
Agreement, the Purchase Agreement Assignment, the Consent and Agreement or the
Engine Consent and Agreement, unless such supplement, amendment, waiver,
modification or consent is consented to in writing by the Mortgagee and a
Majority in Interest of Note Holders. Anything to the contrary contained
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herein notwithstanding, without the necessity of the consent of any of the Note
Holders or the Mortgagee, (i) any Excluded Payments payable to the Owner
Participant may be modified, amended, changed or waived in such manner as shall
be agreed to by the Owner Participant and Lessee and (ii) the Owner Trustee and
Lessee may enter into amendments of or additions to the Lease to modify Section
5 (except to the extent that such amendment would affect the rights or exercise
of remedies under Section 15 of the Lease) or Section 17 of the Lease so long as
such amendments, modifications and changes do not and would not affect the time
of, or reduce the amount of, Rent payments (except to the extent expressly
permitted by Section 5.02 hereof) until after the payment in full of all Secured
Obligations or otherwise adversely affect the Note Holders.
(b) Without limiting the provisions of Section 9.01(a) hereof, the
Mortgagee agrees with the Note Holders that it shall not enter into any
amendment, waiver or modification of, supplement or consent to this Trust
Indenture, the Lease, the Purchase Agreement, the Purchase Agreement Assignment,
the Consent and Agreement, the Engine Consent and Agreement or the Participation
Agreement, or any other agreement included in the Trust Indenture Estate, unless
such supplement, amendment, waiver, modification or consent is consented to in
writing by a Majority in Interest of Note Holders, but upon the written request
of a Majority in Interest of Note Holders, the Mortgagee shall from time to time
enter into any such supplement or amendment, or execute and deliver any such
waiver, modification or consent, as may be specified in such request and as may
be (in the case of any such amendment, supplement or modification), to the
extent such agreement is required, agreed to by the Owner Trustee and Lessee or,
as may be appropriate, the Airframe Manufacturer or the Engine Manufacturer;
provided, however, that, without the consent of each holder of an affected
Equipment Note then outstanding and of each Liquidity Provider, no such
amendment of or supplement to this Trust Indenture, the Lease, the Purchase
Agreement, the Purchase Agreement Assignment, the Consent and Agreement, the
Engine Consent and Agreement or the Participation Agreement or waiver or
modification of the terms of, or consent under, any thereof, shall (i) modify
any of the provisions of this Section 9.01, or of Article II or III or Section
4.02, 4.04(c), 4.04(d), 5.02 or 5.06 hereof, Section 13.3, 14 (except to add an
Event of Default) or 16 of the Lease, Section 15.1 of the Participation
Agreement, the definitions of "Event of Default," "Default," "Lease Event of
Default," "Lease Default," "Majority in Interest of Note Holders," "Make-Whole
Amount" or "Note Holder," or the percentage of Note Holders required to take or
approve any action hereunder, (ii) reduce the amount, or change the time of
payment or method of calculation of any amount, of Original Amount, Make-Whole
Amount, if any, or interest with respect to any Equipment Note, or alter or
modify the provisions of Article III hereof with respect to the order of
priorities in which distribution thereunder shall be made as among the Note
Holders, the Owner Trustee and Lessee, (iii) reduce, modify or amend any
indemnities in favor of the Owner Trustee, the Mortgagee or the Note Holders
(except that the Owner
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Trustee (in its individual capacity) or the Mortgagee, as the case may be, may
consent to any waiver or reduction of an indemnity payable to it), (iv) consent
to any change in the Trust Indenture or the Lease which would permit redemption
of Equipment Notes earlier than permitted under Section 2.10 or 2.11 hereof or
the purchase or exchange of the Equipment Notes other than as permitted by
Section 2.13 hereof, (v) except as contemplated by the Lease or the
Participation Agreement, reduce the amount or extend the time of payment of
Basic Rent, Stipulated Loss Value, or Termination Value for the Aircraft in each
case as set forth in the Lease, or modify, amend or supplement the Lease or
consent to any assignment of the Lease, in either case releasing Lessee from its
obligations in respect of the payment of Basic Rent, Stipulated Loss Value or
Termination Value for the Aircraft or altering the absolute and unconditional
character of the obligations of Lessee to pay Rent as set forth in Sections 3
and 16 of the Lease or (vi) permit the creation of any Lien on the Trust
Indenture Estate or any part thereof other than Permitted Liens or deprive any
Note Holder of the benefit of the Lien of this Trust Indenture on the Trust
Indenture Estate, except as provided in connection with the exercise of remedies
under Article IV hereof.
(c) At any time after the date hereof, the Owner Trustee and the Mortgagee
may enter into one or more agreements supplemental hereto without the consent of
any Note Holder for any of the following purposes: (i) (a) to cure any defect or
inconsistency herein or in the Equipment Notes, or to make any change not
inconsistent with the provisions hereof (provided that such change does not
adversely affect the interests of any Note Holder in its capacity solely as Note
Holder) or (b) to cure any ambiguity or correct any mistake; (ii) to evidence
the succession of another party as the Owner Trustee in accordance with the
terms of the Trust Agreement or to evidence the succession of a new trustee
hereunder pursuant hereto, the removal of the trustee hereunder or the
appointment of any co-trustee or co-trustees or any separate or additional
trustee or trustees; (iii) to convey, transfer, assign, mortgage or pledge any
property to or with the Mortgagee or to make any other provisions with respect
to matters or questions arising hereunder so long as such action shall not
adversely affect the interests of the Note Holders in its capacity solely as
Note Holder; (iv) to correct or amplify the description of any property at any
time subject to the Lien of this Trust Indenture or better to assure, convey and
confirm unto the Mortgagee any property subject or required to be subject to the
Lien of this Trust Indenture, the Airframe or Engines or any Replacement
Airframe or Replacement Engine; (v) to add to the covenants of the Owner Trustee
for the benefit of the Note Holders, or to surrender any rights or power herein
conferred upon the Owner Trustee, the Owner Participant or the Lessee; (vi) to
add to the rights of the Note Holders; and (vii) to include on the Equipment
Notes any legend as may be required by Law.
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SECTION 9.02. Trustees Protected
If, in the opinion of the institution acting as Owner Trustee under the
Trust Agreement or the institution acting as Mortgagee hereunder, any document
required to be executed by it pursuant to the terms of Section 9.01 hereof
affects any right, duty, immunity or indemnity with respect to such institution
under this Trust Indenture or the Lease, such institution may in its discretion
decline to execute such document.
SECTION 9.03. Documents Mailed to Note Holders
Promptly after the execution by the Owner Trustee or the Mortgagee of any
document entered into pursuant to Section 9.01 hereof, the Mortgagee shall mail,
by first class mail, postage prepaid, a copy thereof to Lessee and to each Note
Holder at its address last set forth in the Equipment Note Register, but the
failure of the Mortgagee to mail such copies shall not impair or affect the
validity of such document.
SECTION 9.04. No Request Necessary for Lease Supplement or Trust Indenture
Supplement
No written request or consent of the Mortgagee, the Note Holders or the
Owner Participant pursuant to Section 9.01 hereof shall be required to enable
the Owner Trustee to enter into any Lease Supplement specifically required by
the terms of the Lease or to execute and deliver a Trust Indenture Supplement
specifically required by the terms hereof.
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Trust Indenture
Upon (or at any time after) payment in full of the Original Amount of,
Make-Whole Amount, if any, and interest on and all other amounts due under all
Equipment Notes and provided that there shall then be no other Secured
Obligations due to the Indenture Indemnitees, the Note Holders and the Mortgagee
hereunder or under the Participation Agreement or any other Operative Agreement,
the Owner Trustee shall direct the Mortgagee to execute and deliver to or as
directed in writing by the Owner Trustee an appropriate instrument releasing the
Aircraft and the Engines from the Lien of this Trust Indenture and releasing the
Lease, the Purchase Agreement, the Purchase Agreement Assignment with the
Consent and Agreement and the Engine Consent and Agreement attached
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thereto from the assignment and pledge thereof hereunder and the Mortgagee shall
execute and deliver such instrument as aforesaid and give written notice thereof
to Lessee; provided, however, that this Trust Indenture and the trusts created
hereby shall earlier terminate and this Trust Indenture shall be of no further
force or effect upon any sale or other final disposition by the Mortgagee of all
property constituting part of the Trust Indenture Estate and the final
distribution by the Mortgagee of all monies or other property or proceeds
constituting part of the Trust Indenture Estate in accordance with the terms
hereof. Except as aforesaid otherwise provided, this Trust Indenture and the
trusts created hereby shall continue in full force and effect in accordance with
the terms hereof.
SECTION 10.02. No Legal Title to Trust Indenture Estate in Note Holders
No holder of an Equipment Note shall have legal title to any part of the
Trust Indenture Estate. No transfer, by operation of law or otherwise, of any
Equipment Note or other right, title and interest of any Note Holder in and to
the Trust Indenture Estate or hereunder shall operate to terminate this Trust
Indenture or entitle such holder or any successor or transferee of such holder
to an accounting or to the transfer to it of any legal title to any part of the
Trust Indenture Estate.
SECTION 10.03. Sale of Aircraft by Mortgagee Is Binding
Any sale or other conveyance of the Trust Indenture Estate, or any part
thereof (including any part thereof or interest therein), by the Mortgagee made
pursuant to the terms of this Trust Indenture shall bind the Note Holders and
shall be effective to transfer or convey all right, title and interest of the
Trustee, the Owner Trustee, the Owner Participant and such holders in and to
such Trust Indenture Estate or part thereof. 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 Mortgagee.
SECTION 10.04. Trust Indenture for Benefit of Owner Trustee, Mortgagee,
Owner Participant, Note Holders and the Other Indenture
Indemnitees
Nothing in this Trust Indenture, whether express or implied, shall be
construed to give any person other than the Owner Trustee, the Mortgagee, the
Owner Participant, the Note Holders and the other Indenture Indemnitees, any
legal or equitable right, remedy or claim under or in respect of this Trust
Indenture.
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SECTION 10.05. 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 Trust Indenture to be made, given,
furnished or filed shall be in writing, and shall be personally delivered or
sent by certified mail, postage prepaid, by prepaid courier service or by
facsimile (followed by overnight courier service for next Business Day receipt)
or confirmed telex, and (i) if to the Owner Trustee, addressed to it at 00 Xxxxx
Xxxx Xxxxxx, Xxxx Xxxx Xxxx, Xxxx 00000 with a copy to the Owner Participant
addressed as provided in clause (iii) below, (ii) if to Mortgagee, addressed to
it at its office at Xxxxxx Square North, 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxx 00000-0000, Attention: Corporate Trust Administration, facsimile number
(000) 000-0000, (iii) if to any Participant, Lessee, any Note Holder or any
other Indenture Indemnitee, addressed to such party at such address as such
party shall have furnished by notice to the Owner Trustee and the Mortgagee, or,
until an address is so furnished, addressed to the address of such party (if
any) set forth on Schedule 1 to the Participation Agreement or in the Equipment
Note Register. Whenever any notice in writing is required to be given by the
Owner Trustee, any Participant or the Mortgagee or any Note Holder to any of the
other of them, such notice shall be deemed given and such requirement satisfied
when such notice is received, provided in the case of a facsimile, there is
receipt of such notice the next Business Day from an overnight courier service
or if such notice is mailed by certified mail, postage prepaid, three Business
Days after being mailed, 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 Trust Indenture.
SECTION 10.06. Severability
Any provision of this Trust 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. Any such prohibition or unenforceability in any particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
SECTION 10.07. No Oral Modification or Continuing Waivers
No term or provision of this Trust Indenture or the Equipment Notes may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the Owner Trustee and the Mortgagee, in compliance with
Section 9.01 hereof. 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.
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SECTION 10.08. 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 permitted successors
and assigns of each, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by any Note Holder shall bind the
successors and assigns of such holder. This Trust 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 Trust Indenture to the Trust
Agreement shall mean the Trust Agreement as amended and supplemented from time
to time to the extent permitted hereby, thereby and by the Participation
Agreement. Each Note Holder by its acceptance of an Equipment Note agrees to be
bound by this Trust Indenture and all provisions of the Participation Agreement
applicable to a Loan Participant or a Note Holder.
SECTION 10.09. 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 10.10. Normal Commercial Relations
Anything contained in this Trust Indenture to the contrary notwithstanding,
Owner Trustee, Mortgagee, any Participant or any bank or other Affiliate of such
Participant may conduct any banking or other financial transactions, and have
banking or other commercial relationships, with Lessee [or any Permitted
Sublessee]4, fully to the same extent as if this Trust Indenture were not in
effect, including without limitation the making of loans or other extensions of
credit to Lessee for any purpose whatsoever, whether related to any of the
transactions contemplated hereby or otherwise.
SECTION 10.11. Governing Law; Counterpart Form
THIS TRUST INDENTURE SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE
----------
4 Insert bracketed language if the Lease provides for the assignment of a
permitted sublease.
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STATE OF NEW YORK, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. THIS TRUST INDENTURE IS BEING DELIVERED IN THE STATE OF NEW YORK.
This Trust Indenture may be executed by the parties hereto in separate
counterparts (or upon separate signature pages bound together into one or more
counterparts), each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 10.12. Voting By Note Holders
All votes of the Note Holders shall be governed by a vote of a Majority in
Interest of Note Holders, except as otherwise provided herein.
SECTION 10.13. Bankruptcy
It is the intention of the parties that the Owner Trustee, as lessor under
the Lease (and the Mortgagee as assignee of the Owner Trustee hereunder), shall
be entitled to the benefits of Section 1110 with respect to the right to take
possession of the Aircraft, Airframe, Engines and Parts as provided in the Lease
in the event of a case under Chapter 11 of the Bankruptcy Code in which Lessee
is a debtor, and in any instance where more than one construction is possible of
the terms and conditions hereof or any other pertinent Operative Agreement, each
such party agrees that a construction which would preserve such benefits shall
control over any construction which would not preserve such benefits.
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IN WITNESS WHEREOF, the parties hereto have caused this Trust Indenture and
Mortgage to be duly executed by their respective officers thereof duly
authorized as of the day and year first above written.
FIRST SECURITY BANK,
NATIONAL ASSOCIATION,
not in its individual
capacity, except as
expressly provided
herein, but solely as
Owner Trustee
By:__________________________________
Name:________________________________
Title:_________________________________
WILMINGTON TRUST COMPANY, not in its
individual capacity, except as expressly
provided herein, but solely as Mortgagee
By:__________________________________
Name:________________________________
Title:_________________________________
EXHIBIT A
TO TRUST INDENTURE AND MORTGAGE
TRUST INDENTURE AND MORTGAGE SUPPLEMENT
This TRUST INDENTURE AND MORTGAGE SUPPLEMENT NO. 1, dated ___________, ____
(herein called this "Trust Indenture Supplement") of FIRST SECURITY BANK,
NATIONAL ASSOCIATION, not in its individual capacity, but solely as Owner
Trustee (herein called the "Owner Trustee") under that certain Trust Agreement
dated as of ___________, ____ (the "Trust Agreement"), between the Owner Trustee
and the Owner Participant named therein.
W I T N E S S E T H:
WHEREAS, the Trust Indenture and Mortgage, dated as of ____________, ____
(as amended and supplemented to the date hereof, the "Trust Indenture") between
the Owner Trustee and Wilmington Trust Company, not in its individual capacity,
but solely as Mortgagee under the Trust Indenture (the "Mortgagee"), provides
for the execution and delivery of a supplement thereto substantially in the form
hereof, which shall particularly describe the Aircraft, and shall specifically
mortgage such Aircraft to the Mortgagee; and
WHEREAS, each of the Trust Agreement and Trust Indenture relates to the
Airframe and Engines described below, and a counterpart of the Trust Indenture
is attached hereto and made a part hereof and this Trust Indenture Supplement,
together with such counterpart of the Trust Indenture, is being filed for
recordation on the date hereof with the FAA as one document;
NOW, THEREFORE, this Trust Indenture Supplement witnesseth that the Owner
Trustee hereby confirms that the Lien of the Trust Indenture on the Trust
Indenture Estate covers all of Owner Trustee's right, title and interest in and
to the following described property:
AIRFRAME
One airframe identified as follows:
FAA
Registration Manufacturer's
Manufacturer Model Number Serial Number
------------ ----- ------ -------------
The Boeing Company 747-47UF
A-2
together with all of the Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereinafter acquired and which
are from time to time incorporated or installed in or attached to said airframe.
AIRCRAFT ENGINES
Four aircraft engines, each such engine having 750 or more rated take-off
horsepower or the equivalent thereof, identified as follows:
Manufacturer Manufacturer's Model Serial Number
General Electric CF6-80C2B5FGO4
General Electric CF6-80C2B5FGO4
General Electric CF6-80C2B5FGO4
General Electric CF6-80C2B5FGO4
together with all of Owner Trustee's right, title and interest in and to all
Parts of whatever nature, whether now owned or hereafter acquired and which are
from time to time incorporated or installed in or attached to either of such
engines.
Together with all of Owner Trustee's right, title and interest in and to
(a) all Parts of whatever nature, which from time to time are included within
the definition of "Airframe" or "Engine," whether now owned or hereafter
acquired, including all substitutions, renewals and replacements of and
additions, improvements, accessions and accumulations to the Airframe and
Engines (other than additions, improvements, accessions and accumulations which
constitute appliances, parts, instruments, appurtenances, accessories,
furnishings or other equipment excluded from the definition of Parts) and (b)
all Aircraft Documents.
As further security for the obligations referred to above and secured by
the Trust 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 Mortgagee, its successors and assigns, for the security and
benefit of the Loan Participants, the Note Holders and the Indenture
Indemnitees, in the trust created by the Trust Indenture, all of the right,
title and interest of the Owner Trustee in, to and under the Lease Supplement of
even date herewith covering the property described above.
A-3
Notwithstanding any provision hereof, no Excluded Payment shall constitute
security for any of the aforementioned obligations.
TO HAVE AND TO HOLD all and singular the aforesaid property unto the
Mortgagee, its successors and assigns, in trust for the equal and proportionate
benefit and security of the Loan Participants, the Note Holders and the
Indenture Indemnitees, except as provided in Section 2.14 and Article III of the
Trust Indenture without any preference, distinction or priority of any one
Equipment Note over any other by reason of priority of time of issue, sale,
negotiation, date of maturity thereof or otherwise for any reason whatsoever,
and for the uses and purposes and subject to the terms and provisions set forth
in the Trust Indenture.
This Trust Indenture Supplement shall be construed as supplemental to the
Trust Indenture and shall form a part thereof. The Trust Indenture is each
hereby incorporated by reference herein and is hereby ratified, approved and
confirmed.
AND, FURTHER, the Owner Trustee hereby acknowledges that the Aircraft
referred to in this Trust Indenture Supplement and the aforesaid Lease
Supplement has been delivered to the Owner Trustee and is included in the
property of the Owner Trustee covered by all the terms and conditions of the
Trust Agreement, subject to the pledge and mortgage thereof under the Trust
Indenture.
* * *
IN WITNESS WHEREOF, the Owner Trustee has caused this Trust Indenture
Supplement to be duly executed by one of its officers, thereunto duly
authorized, on the day and year first above written.
FIRST SECURITY BANK, NATIONAL ASSOCIATION, not
in its individual capacity, but solely as
Owner Trustee
By:____________________________________
Name:
Title:
TRUST INDENTURE AND MORTGAGE
SCHEDULE I
Original Amount Interest Rate
Series A-1: %
Series B: %
Series C: %
Trust Indenture and Mortgage
Equipment Note Amortization
SERIES A-1
Percentage of
Original Amount
Payment Date to Be Paid
Trust Indenture and Mortgage
Equipment Note Amortization
SERIES B
Percentage of
Original Amount
Payment Date to Be Paid
Trust Indenture and Mortgage
Equipment Note Amortization
SERIES C
Percentage of
Original Amount
Payment Date to Be Paid
