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TRUST INDENTURE AND MORTGAGE ___
Dated as of ____________, 199_
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 ________ AIRCRAFT
BEARING U.S. REGISTRATION XXXX N_____
LEASED BY CONTINENTAL AIRLINES, INC.
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TABLE OF CONTENTS
PAGE
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GRANTING CLAUSE ...................................................... 1
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........... 15
SECTION 2.04. Method of Payment................................... 16
SECTION 2.05. Application of Payments............................. 18
SECTION 2.06. Termination of Interest in Trust Indenture Estate... 19
SECTION 2.07. Registration Transfer and Exchange of Equipment
Notes............................................... 19
SECTION 2.08. Mutilated, Destroyed, Lost or Stolen Equipment
Notes............................................... 20
SECTION 2.09. Payment of Expenses on Transfer; Cancellation....... 21
SECTION 2.10. Mandatory Redemptions of Equipment Notes............ 21
SECTION 2.11. Voluntary Redemptions of Equipment Notes............ 21
SECTION 2.12. Redemptions; Notice of Redemption................... 22
SECTION 2.13. Option to Purchase Equipment Notes.................. 22
SECTION 2.14. Subordination....................................... 24
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. Basic Rent Distribution............................. 25
SECTION 3.02. Event of Loss; Replacement; Voluntary Termination;
Optional Redemption................................. 26
SECTION 3.03. Payments After Event of Default..................... 27
SECTION 3.04. Certain Payments.................................... 29
SECTION 3.05. Other Payments...................................... 30
SECTION 3.06. Payments to Owner Trustee........................... 30
ARTICLE IV
COVENANTS OF OWNER TRUSTEE; EVENTS OF
DEFAULT; REMEDIES OF MORTGAGEE
SECTION 4.01. Covenants of Owner Trustee.......................... 31
SECTION 4.02. Event of Default.................................... 32
SECTION 4.03. Certain Rights...................................... 34
SECTION 4.04. Remedies............................................ 35
SECTION 4.05. Return of Aircraft, Etc............................. 38
SECTION 4.06. Remedies Cumulative................................. 40
SECTION 4.07. Discontinuance of Proceedings....................... 40
SECTION 4.08. Waiver of Past Defaults............................. 40
SECTION 4.09. Appointment of Receiver............................. 41
SECTION 4.10. Mortgagee Authorized to Execute Bills of Sale, Etc.. 41
SECTION 4.11. Rights of Note Holders to Receive Payment........... 41
ARTICLE V
DUTIES OF THE MORTGAGEE
SECTION 5.01. Notice of Event of Default.......................... 41
SECTION 5.02. Action Upon Instructions; Certain Rights and
Limitations......................................... 42
SECTION 5.03. Indemnification..................................... 45
SECTION 5.04. No Duties Except as Specified in Trust Indenture or
Instructions........................................ 45
SECTION 5.05. No Action Except Under Lease, Trust Indenture or
Instructions........................................ 46
SECTION 5.06. Replacement Airframes and Replacement Engines....... 46
SECTION 5.07. Indenture Supplements for Replacements.............. 46
SECTION 5.08. Effect of Replacement............................... 47
SECTION 5.09. Investment of Amounts Held by Mortgagee............. 47
ARTICLE VI
THE OWNER TRUSTEE AND THE MORTGAGEE
SECTION 6.01. Acceptance of Trusts and Duties..................... 48
SECTION 6.02. Absence of Duties................................... 48
SECTION 6.03. No Representations or Warranties as to Aircraft or
Documents........................................... 49
SECTION 6.04. No Segregation of Monies; No Interest............... 49
SECTION 6.05. Reliance; Agreements; Advice of Counsel............. 50
SECTION 6.06. Capacity in Which Acting............................ 50
SECTION 6.07. Compensation........................................ 50
SECTION 6.08. Instructions from Note Holders...................... 51
ARTICLE VII
INDEMNIFICATION OF MORTGAGEE BY OWNER TRUSTEE
SECTION 7.01. Scope of Indemnification............................ 51
ARTICLE VIII
SUCCESSOR AND SEPARATE TRUSTEES
SECTION 8.01. Notice of Successor Owner Trustee................... 52
SECTION 8.02. Resignation of Mortgagee; Appointment of Successor.. 52
SECTION 8.03. Appointment of Additional and Separate Trustees..... 53
ARTICLE IX
SUPPLEMENTS AND AMENDMENTS TO THIS TRUST INDENTURE
AND OTHER DOCUMENTS
SECTION 9.01. Instructions of Majority; Limitations............... 55
SECTION 9.02. Trustees Protected.................................. 57
SECTION 9.03. Documents Mailed to Note Holders.................... 57
SECTION 9.04. No Request Necessary for Lease Supplement or Trust
Indenture Supplement................................ 57
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Termination of Trust Indenture...................... 58
SECTION 10.02. No Legal Title to Trust Indenture Estate in Note
Holders............................................. 58
SECTION 10.03. Sale of Aircraft by Mortgagee Is Binding............ 58
SECTION 10.04. Trust Indenture for Benefit of Owner Trustee,
Mortgagee, Owner Participant, Note Holders
and the other Indenture Indemnitees................. 59
SECTION 10.05. Notices............................................. 59
SECTION 10.06. Severability........................................ 59
SECTION 10.07. No Oral Modification or Continuing Waivers.......... 59
SECTION 10.08. Successors and Assigns.............................. 60
SECTION 10.09. Headings............................................ 60
SECTION 10.10. Normal Commercial Relations......................... 60
SECTION 10.11. Governing Law; Counterpart Form..................... 60
SECTION 10.12. Voting By Note Holders.............................. 61
SECTION 10.13. Bankruptcy.......................................... 61
EXHIBIT A Form of Trust Indenture and Mortgage Supplement
SCHEDULE I Equipment Notes Amortization and Interest Rates
TRUST INDENTURE AND MORTGAGE ___
TRUST INDENTURE AND MORTGAGE ___, dated as of ___________, 199_
("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, 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 the Participation Agreement and all payments and other amounts received
hereunder or thereunder in accordance with the terms hereof or thereof, as
security for, among other things, the Owner Trustee's and the Lessee's
obligations to the Noteholders 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
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 ______ aircraft with the FAA
Registration number of N_____ and the manufacturer's serial number of
_______ and Engines, each of which Engines is a
____________________________ engine with the manufacturer's serial numbers
of _____ 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 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) 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, 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) Each Permitted Sublease assignment and each assigned Permitted
Sublease (to the extent assigned under such Permitted Sublease assignment),
and including, without limitation, all rents or other payments of any kind
made under such assigned Permitted Sublease (to the extent assigned under
such Permitted Sublease assignment);]
[(3)/(4)] All right, title, interest, claims and demands of the Owner
Trustee in, to and under:
(a) the Purchase Agreement and the GTA;
(b) the Purchase Agreement Assignment, with the Consent and
Agreement and the Engine Consent and Agreement attached thereto;
(c) the Bills of Sale; and
___________________
Insert bracketed language if the Lease provides for the assignment of a
permitted sublease.
(d) any and all other contracts, agreements and instruments
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;
together with all rights, powers, privileges, licenses, easements,
options and other benefits of the Owner Trustee under each contract,
agreement and instrument referred to in this clause [(3)/(4)], 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)/(5)] All rents, issues, profits, revenues and other income 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;
[(5)/(6)] 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;
[(6)/(7)] 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)/(8)] 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; and
[(8)/(9)] All proceeds of the foregoing; excluding, however, in all
events from each of foregoing clauses (1) through [(8)/(9)] inclusive all
Excluded Payments and the right 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), 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 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 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 [or any Permitted Sublessee] 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 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 described or
referred to 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.
___________________
Insert bracketed language if the Lease provides for the assignment of a
permitted sublease.
Notwithstanding the Granting Clause or any of the preceding
paragraphs, there is hereby excluded from the foregoing sale, transfer,
assignment, grant, pledge and security interest all 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 _______________, 199_. SERIES [_____] LIMITED
RECOURSE EQUIPMENT NOTE DUE [____] ISSUED IN CONNECTION WITH THE BOEING MODEL
_______ AIRCRAFT BEARING UNITED STATES REGISTRATION NUMBER N_____.
No. ____ Date: [ __________, 199__ ]
$-----------------------
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 ____________,
199_, 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 semiannual installments commencing on
_____________, 199_, and thereafter on April 1 and October 1 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 _____________, 199_, 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 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, the Equipment Note shall be
surrendered promptly thereafter to the Mortgagee for cancellation.
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 the 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. In addition, this Equipment Note may be accelerated as provided in
Section 4.04 of the Trust Indenture.
[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 Equipment Notes
[Series A and Series B Equipment Notes], 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.]
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:
___________________
To be inserted in the case of a Series B Equipment Note.
To be inserted in the case of a Series C Equipment Note.
To be inserted for each Equipment Note other than any Series A Equipment
Note.
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 I
EQUIPMENT NOTE AMORTIZATION
PERCENTAGE OF
ORIGINAL AMOUNT
PAYMENT DATE TO BE PAID
-------------------------------------- ---------------------------------------
[SEE SCHEDULE I TO TRUST INDENTURE
WHICH IS INSERTED UPON ISSUANCE]
* * *
SECTION 2.02. ISSUANCE AND TERMS OF EQUIPMENT NOTES
The Equipment Notes shall be dated the date of issuance thereof, shall
be issued in three separate series consisting of Series A, 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 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
on _____________, 199_, 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 which shall be attached as
Schedule I to the Equipment Notes. Notwithstanding the foregoing, the final
payment made under each Equipment Note shall be in an amount sufficient to
discharge in full the unpaid 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
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 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); and (iv) if any payment default
shall have occurred and be continuing with respect to interest on any Series A
Equipment Note, Series B Equipment Note or Series C Equipment Note, (x) the
excess, if any, of (1) the amount 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 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 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"). 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 or
the Intercreditor Agreement referred to therein.
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 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 __% 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 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 Trustee 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 12:30
p.m., 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 hereunder and under such holder's Equipment Note or Equipment Notes to
such holder or a nominee therefor (including all amounts distributed pursuant to
Article III of this Trust Indenture) by transferring, or causing to be
transferred, by wire transfer of immediately available funds in Dollars, prior
to 2:00 p.m., New York City time, on the due date of payment, to an account
maintained by such holder with a bank located in the continental United States
the amount to be distributed to such holder, for credit to the account of such
holder maintained at such bank. If the Mortgagee shall fail to make any such
payment as provided in the immediately foregoing sentence after its receipt of
funds at the place and prior to the time specified above, the Mortgagee, in its
individual capacity and not as trustee, agrees to compensate such holders for
loss of use of funds at the Debt Rate until such payment is made and the
Mortgagee shall be entitled to any interest earned on such funds until such
payment is made. 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.
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.
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 registration 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 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.
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
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 thereof, 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, if such redemption is made prior to the Premium Termination Date,
Make-Whole Amount, if any.
SECTION 2.11. VOLUNTARY REDEMPTIONS OF EQUIPMENT NOTES
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 upon at
least 30 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 the Note Holders plus (except as provided in Section 11 of
the Participation Agreement), if such redemption is made prior to the Premium
Termination Date, Make-Whole Amount, if any.
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 25 nor more than 60 days prior to the applicable redemption
date, to each Note Holder of such Equipment Notes to be redeemed or purchased,
at such Note Holder's address appearing in the Equipment Note Register; PROVIDED
that, in the case of a redemption to be made pursuant to Section 2.10(b) or
Section 2.11, 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. All notices of redemption shall state: (1) the
redemption date, (2) the applicable basis for determining the redemption price,
(3) that on the redemption date, the redemption price will become due and
payable upon each such Equipment Note, and that, if any such Equipment Notes are
then outstanding, interest on such Equipment Notes shall cease to accrue on and
after such redemption date, and (4) the place or places where such Equipment
Notes are to be surrendered for payment of the redemption price.
(c) On or before the redemption date, the Owner Trustee (or any person
on behalf of the Owner Trustee) shall, to the extent an amount equal to the
redemption price for the Equipment Notes to be redeemed or purchased on the
redemption date shall not then be held in the Trust Indenture Estate, deposit or
cause to be deposited with the Mortgagee by 12:00 noon on the redemption date in
immediately available funds the redemption price of the Equipment Notes to be
redeemed or purchased.
(d) Notice of redemption or purchase having been given as aforesaid
(and not 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,
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 (unless there shall be a default in the payment
of the redemption price) any such Equipment Notes then outstanding shall cease
to bear interest. Upon surrender of any such Equipment Note for redemption or
purchase in accordance with said notice, such Equipment Note shall be redeemed
at the redemption price. If any Equipment Note called for redemption or purchase
shall not be so paid upon surrender thereof for redemption, the principal amount
thereof shall, until paid, continue to bear interest from the applicable
redemption date at the interest rate in effect for such Equipment Note as of
such redemption date.
SECTION 2.13. 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
nominee 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 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) at a time prior to the Premium
Termination Date when there shall have occurred and be continuing for less than
120 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.
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), 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 until the Secured Obligations in respect of
Series A Equipment Notes have been paid in full, (ii) after the Secured
Obligations in respect of Series A Equipment Notes have been paid in full, the
Note Holders of Series B until the Secured Obligations in respect of Series B
Equipment Notes have been paid in full and (iii) after the Secured Obligations
in respect of Series B Equipment Notes have been paid in full, the Note Holders
of Series C until the Secured Obligations in respect of Series C Equipment Notes
have been paid in full.
ARTICLE III
RECEIPT, DISTRIBUTION AND APPLICATION OF
INCOME FROM THE TRUST INDENTURE ESTATE
SECTION 3.01. 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) then due under all Series A Equipment Notes
shall be distributed to the Note Holders of Series A ratably,
without priority of one over the other, in the proportion that
the amount of such payment or payments then due under each Series
A Equipment Note bears to the aggregate amount of the payments
then due under all Series A Equipment Notes;
(ii) after giving effect to 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 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 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, or (iii)
pursuant to an optional redemption of the Equipment Notes pursuant to Section 11
of the Participation Agreement 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 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 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 declaration specified in Section
4.04(b) hereof, 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, 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 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 Equipment Notes (other than Make-Whole
Amount) to the date of distribution, shall be distributed to the
Note Holders of Series A, and in case the aggregate amount so to
be distributed shall be insufficient to pay in full as aforesaid,
then ratably, without priority of one over the other, in the
proportion that the aggregate unpaid Original Amount of all
Series A Equipment Notes held by each holder plus the accrued but
unpaid interest and other amounts due hereunder or thereunder
(other than Make-Whole Amount, if any) to the date of
distribution, bears to the aggregate unpaid Original Amount of
all Series A Equipment Notes held by all such holders plus the
accrued but unpaid interest and other amounts due thereon (other
than Make-Whole Amount) to the date of distribution;
(ii) after giving effect to paragraph (i) above, so much of such
payments or amounts remaining as shall be required to pay in full
the aggregate unpaid 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 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.
(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 [or
any Permitted Sublease assignment] 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
___________________
Insert bracketed language if the Lease provides for the assignment of a
permitted sublease.
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 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 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 constitute an Event of Default unless notice is
given by the Owner Trustee 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
(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).
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] [six] immediately preceding
Basic Rent payment dates, or the Owner Trustee has cured [six] [eight]
___________________
Insert appropriate term for Owner Participant
Insert appropriate term for Owner Participant
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 performance 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, 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 pursuant to any
Permitted Sublease assignment] 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 twenty 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, the
Mortgagee shall not be entitled to exercise any remedy hereunder as a result of
an Event of Default which arises solely by reason of one or more events or
circumstances which constitute a Lease Event of Default 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
___________________
Insert bracketed language if the Lease provides for the assignment of a
permitted sublease.
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 Lessee'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 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 (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 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,
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; 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.
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 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 [(or the comparable provisions of
any assigned Permitted Sublease)] 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 [(or the comparable provisions of any assigned Permitted
Sublease)];
(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[, any assigned Permitted
Sublease or any Permitted Sublease assignment], 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
___________________
Insert bracketed language if the Lease provides for the assignment of a
permitted sublease.
Insert bracketed language if the Lease provides for the assignment of a
permitted sublease.
Insert bracketed language if the Lease provides for the assignment of a
permitted sublease.
(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 the 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 [or any Permitted Sublessee] certificates and other documents
and information which Lessee is required to give or furnish to the Owner 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 the Trust
Indenture has occurred and is continuing, the Owner Trustee shall have the right
to adjust upwards Rent, Stipulated Loss Values and Termination Values 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 and Termination Values 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
___________________
Insert bracketed language if the Lease provides for the assignment of a
permitted sublease.
(7) so long as no Mortgagee Event shall have occurred and be
continuing, all other rights of the "Lessor" under the Lease [or any assigned
Permitted Sublease] 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 2.14 hereof, exercise the remedies set forth
in such Section 15 (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.
_________________
Insert bracketed language if the Lease provides for the assignment of a
permitted sublease.
(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 indemnity
(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 by the terms of the Lease or (ii) in accordance with the powers granted
to, or the authority conferred upon, 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.
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 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 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 (in its individual
capacity), from the inaccuracy of any representation or warranty of the
Mortgagee (in its individual capacity) in the Participation Agreement or
expressly made 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 [or any of the Permitted
Sublessee's covenants under any assigned Permitted Sublease] 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,
___________________
Insert bracketed language if the Lease provides for the assignment of a
permitted sublease.
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 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
as directed by Lessee so long as no Lease Event of Default or Lease Default has
occurred and is continuing (or in the absence of such direction, by the Majority
In Interest of Note Holders) in Cash Equivalents; 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 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 Mortgagee shall be fully protected 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 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 (in its individual capacity) 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 respective 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 successor 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 Agreement, (ii) 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 moved, 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 jurisdiction 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 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 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 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 Trustee shall from time to time
enter into any such supplement or amendment, or execute and deliver any such
waiver, modification or consent, as may be specified in such request and as may
be (in the case of any such amendment, supplement or modification), to the
extent such agreement is required, agreed to by the Owner Trustee and Lessee or,
as may be appropriate, the 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 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.
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 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.
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, personally delivered or mailed by
certified mail, postage prepaid, or by facsimile 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, 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, 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.
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], fully to the same extent as if this Trust
Indenture were not in effect, including without limitation the making of loans
___________________
Insert bracketed language if the Lease provides for the assignment of a
permitted sublease.
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 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.
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,
Owner Trustee
By:____________________________________
Name:_______________________________
Title:______________________________
WILMINGTON TRUST COMPANY, 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
___________, 199_ (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 ___________, 199_ (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
____________, 199_ (as amended and supplemented to the date hereof, the "Trust
Indenture") between the Owner Trustee and Wilmington Trust Company, as Mortgagee
(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
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
Two 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
-------------------- ------------------------------------ --------------------
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.
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,
Owner Trustee
By:____________________________________
Name:
Title:
TRUST INDENTURE AND MORTGAGE
SCHEDULE I
ORIGINAL AMOUNT INTEREST RATE
--------------- -------------
Series A:
Series B:
Series C:
TRUST INDENTURE AND MORTGAGE
Equipment Note Amortization
PERCENTAGE OF
ORIGINAL AMOUNT
PAYMENT DATE TO BE PAID
------------------------------------- -----------------------------------------
